fix fragmented treasury operating models

10 ways to fix fragmented treasury operating models

When trying to fix fragmented treasury operating models, consider the following steps and ideas:

1.    Assess the Current State:

Evaluate the current treasury operating model to understand the extent of fragmentation. Identify areas where fragmentation is causing inefficiencies, risks, or lack of visibility. Assess the current processes, systems, and organizational structure related to treasury operations. Use risk exposure assessment ratings, methodologies, and heatmap visual aids for presentation. (See our previous blog post on visual aids)

2.    Define the Target Operating Model:

Clearly define the desired future state of the treasury operating model and services. Decide how much centralization or decentralization matches the organization’s goals and risk appetite. When making decisions, think about cash management, risk management, trading options, financial control, and locations. Keep it simple and question asset class investment/technology/data requirements. Do you need this desk, location, service, tech vendor, data feed?

3.    Standardize Processes:

Discover and document common treasury processes and workflows that can be standardized across business units or subsidiaries. Develop standardized policies, procedures, and guidelines to ensure consistency and streamline operations. We cover areas such as cash forecasting, cash positioning, payment processing, pricing, and risk management. Challenge system / service vendors for the same!

4.    Streamline Technology Infrastructure:

Evaluate the treasury technology landscape and identify opportunities for integration and consolidation. To simplify treasury management, use a centralized TMS or risk management system. It can centralize data, automate processes, and provide visibility into treasury activities. Consider integrating with providers with existing ecosystem partnerships. Watch item – security master.

5.    Enhance Data Integration, Reporting and Security:

Create systems to combine data from different sources into one reliable source. Create powerful reports that show current cash, liquidity, risk, and control information instantly. Ensure that reporting is standardized and accessible to consumers. Internal and external providers should  have necessary data and cyber security protocol and practices.

6.    Optimize Organizational Structure:

Examine how the organization is structured to achieve a good balance of setup, simplicity, and growth. One option is to centralize or reshape certain treasury functions. These functions include cash management, derivatives, back-office processing, and risk management. This can be done at the corporate and accountable level. Consider business complexity, regulatory requirements, risk measurement, and cost efficiencies when determining the ideal balance between centralization and decentralization. Be careful of the word – Enterprise.

7.    Enhance Communication and Collaboration:

Encourage clear communication and teamwork among treasury and other departments such as finance, accounting, operations, and risk management. Break down silos and encourage cross-functional teamwork. Get all actors on the transformation journey from day 1. Over communicate awareness and plans!

8.    Talent Development:

To improve skills in treasury and transformation, invest in talent development and training programs. Make sure treasury staff have the skills and knowledge to support the new operating model.

9.    Change Management:

Implement a robust change management strategy to support the transition to the new operating model. (see 7 steps to review your treasury operating model)

10.Continuous Improvement:

Establish a culture of continuous improvement within the treasury function. Regularly monitor and evaluate the effectiveness of the integrated operating model. Seek feedback, healthy debate and challenges from stakeholders and accountable executives. Identify areas for improvement. Continuously adapt and evolve the treasury operating model to meet the next 10 years. Enjoy the successes and the challenges!

To fix fragmented treasury operating models, we need an approach that includes processes, technology, people, culture, and communication. By implementing these steps, firms can achieve greater efficiency, control, and visibility in their treasury operations.

Please share your considerations? If you need help with fragmented operating models – please reach out.