Organization of the Treasury Function
May 30, 2009 – 6:22 amTechnology is the driving force and enabler behind many of the changes in treasury. It is the timely availability of information that allows balance management to be consolidated, liquidity to be optimized, and global risks to be measured and monitored. This section discusses the role of technology in enabling some of the major trends in the organization of the treasury function.
Centralization through Shared Service Centers (SSCs)
When business units perform the same function throughout a company, such as payroll, there is an opportunity to eliminate the duplication by using an SSC. Often described as “insourcing,” an SSC acts as an independent business bureau within the company to present a single interface to the internal and outside worlds. Companies have been using SSCs for legal staff, real estate management, advertising, and travel services for many years. Applications in treasury, accounts payable, and accounts receivable are more recent. In larger companies, the SSC may evolve to be the in-house bank for the internal entities of the company, undertaking all the foreign exchange and currency management. SSCs provide the company with economies of scale, rationalization, and streamlining of processes and functions.
There are several critical elements to developing a successful SSC:
-
Efficient communications and technology infrastructure to provide common platforms, often involving enterprise resource planning (ERP) systems
-
Responsiveness to the needs of business units, often attained through service level agreements (SLAs) to assure an acceptable level of performance
-
An organizational commitment to centralization
The launch of the EMU and the euro (see Chapter 7) has been a major driver for companies establishing SSCs for treasury functions, to help them compete more effectively in the new regionalized global economy.
Enterprise Resource Planning (ERP)
ERP systems claim to offer a common technology platform throughout the company, between and across the business units. A key technology issue for treasurers has always been integration with underlying business systems to obtain risk and exposure information for senior management reports. In theory, enterprisewide systems offer end-to-end business processing, from data input at the raw data level of accounts payable and receivable through inventory management, order processing, working capital management, and currency forecasting. Major providers of ERP systems are SAP, Oracle, J.D. Edwards, SunGard, and PeopleSoft.
Taken From : Essentials of Managing Corporate Cash
2 Trackback(s)