In a dynamic world, treasurers are under constant pressure to operate as efficiently as possible as they try to support their organizations’ business strategies.

From time to time, there is an opportunity to effect change within the treasury department to enhance operational efficiency. This change can take many forms. Some are major undertakings, such as changing a manual-process-driven department to a fully digitalized, real-time treasury. Others are more incremental, in the form of an ongoing process running over many years, focused on the desire to become more efficient over time.

The focus of the change can vary, too. Some transformations cover a wider range of activity across liquidity and cash planning, cash management and forecasting, and working capital management, Others focus on a small number of core activities, such as bank relationship rationalization or foreign exchange management.

A company’s complexity and the stage of development of the treasury department typically set the baseline from which any new transformation project will be built. The attitude of internal stakeholders, including the treasurer, executive management and investors, will help frame the ambition of each project. External factors, such as the functionality offered by banks and technology providers, as well as the prevailing regulatory regime, will define what is possible.

The 2023 AFP Treasury Benchmarking Survey on Treasury Transformation, conducted in the Asia-Pacific (APAC) and Middle East and Africa (MEA) regions, found that common underlying reasons driving a treasury transformation project were:

• A general aim to become more efficient. Along with other departments, treasury is under pressure from senior management to streamline operations. Many treasurers view treasury transformation projects as individual steps in an ongoing process, for example, by gradually adopting more functionality from a previously installed treasury management system (TMS).
• A specific objective to support a growing business, especially when establishing operations in new jurisdictions. Change may be driven by the need to manage a more significant foreign exchange risk or a recognition that existing manual processes are not scalable and so cannot support an expanding business.
• A new hire brings a new approach. Often, it takes a fresh pair of eyes to identify opportunities to make changes, as there can be a reluctance to change a process “that works.
• To meet regulatory requirements. While companies need to be able to demonstrate that they know their customers (e.g., to protect against the risk of money laundering), multinational companies operating in jurisdictions that apply exchange controls have to meet another layer of regulation to make and receive cross-border payments.

While the details of every company’s treasury transformation journey are different, there are some best practices for a framework within which to manage a transformation project.