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Issued January 2015(Updated June 2015)
2015 Global Corporate Treasury Survey
2
Executive summary 4
Survey demographics 6
CFO mandates 7
Strategic challenges for treasury organizations 8
Current transformation initiatives 9
Treasury services likely to be outsourced 10
Current and future state treasury operating models 11
Benefits and perceived disadvantages of centralized treasury organizations 12
Treasury technology 14
Deloitte Advisory and Deloitte Touche Tohmatsu Limited (DTTL) member firm global treasury contacts 19
Contents
2015 Global Corporate Treasury Survey 3
As used in this document, “Deloitte Advisory” means Deloitte & Touche LLP, which provides audit and enterprise risk services; Deloitte Financial Advisory Services LLP, which provides forensic, dispute, and other consulting services; and its affiliate, Deloitte Transactions and Business Analytics LLP, which provides a wide range of advisory and analytics services. Deloitte Transactions and Business Analytics LLP is not a certified public accounting firm. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
Deloitte Advisory is pleased to release its biennial Global Corporate Treasury Survey.
In preparing for the survey this year, our colleagues contemplated the following:
• Is treasury truly a strategic function?
• What mandates are provided by the chief financial officer (CFO) and board to treasury?
• What are the key challenges facing treasury?
• Has automation addressed the needs of treasurers, or is it still a pipe-dream?
• How are operating models evolving?
• What are the emerging trends, and how will these affect the treasurer of the future?
Strategic or tacticalMuch has been written over the years about the role of treasury. The modern treasury group is strategic, collaborates with the businesses it serves, and is using automation, offshoring and treasury centers of excellence to consolidate and standardize tactical areas.
CFO mandatesTreasurers clearly have strong mandates to be strategic. More than 70% of respondents noted the following mandates from their CFOs:
• Liquidity risk management• Efficient capital markets access• Steward for risk management company• Strategic advisor to the business• Value-add partner to the CFO in areas such as mergers
and acquisitions (M&A)• Leading, governing and driving working capital
improvement initiatives• Enhanced governance and control over domestic and
overseas operations• Creation of scalable treasury organization to support
company growth
Key challenges persistFifty percent of treasurers noted their biggest challenges are the ability to repatriate cash and to manage foreign exchange (FX) volatility. These challenges continue, despite the ongoing trend toward leveraging technology solutions.
Technology has not cured all illsForty percent of companies remain challenged by visibility into global operations, including cash and financial exposures. Forty percent also cited insufficient technology infrastructure to support their department.
Key causes may include the following:• Treasury management systems (TMS) may be
implemented for the 73–76% of business covered by corporate treasury, preventing the ability to look at the residual business.
• Sufficiency of two-way integration with enterprise resource planning (ERP) systems. Sixty-four percent of respondents noted more than one ERP from which to source and send data.
• Reliable, complete and consistent data, available on a timely basis, as a tool for treasury.
Operating model evolutionTreasury departments are growing more comfortable with the use of centers of excellence to support global operations, including the use of in-house banks (IHB) and shared services centers.
Emerging trendsThe sum of the parts may be more than the wholeShould corporate treasury play an integral role in the evolution of company structure? Should a company possess its own skills to value the whole and parts of the business, to support M&A and evolution of company structure and capital structure – including share buy-back strategies? We believe these are core internal skills that should reside in treasury or corporate development groups.
Executive summary
4
2015 Global Corporate Treasury Survey 5
In the technology, life sciences and health care sectors, in particular, Deloitte Advisory sees companies taking a decision to split into parts. Suggested preparation for treasury may include the following:
• Learn divisional business models, including supply chain, sales cycles, liquidity flows and related asset concentrations rather than having an aggregated country view
• Map businesses and flows to legal entities
• Consider redundancy in bank account and pooling structures
• Build modularity and redundancy into technology architecture and divestment strategies
Navigating restricted economiesMany companies face the opportunity of emerging market growth with the constraints of repatriation. Treasurers need to be able to speak to their boards and executives about the inter-play (and sometimes divergent outcomes) of these growth opportunities on earnings-per-share vs. cash returns, as well as discuss the liquidity and balance sheet consequences.
Increasing need for substance in foreign jurisdictionsTax authorities are looking closely at the substance of global financing and treasury activities. Treasury teams should expect to see greater substance (decision making, scope of activities, and scale in offshore teams) in foreign treasury centers. This creates a unique opportunity to gather up the activities of countries not previously supported by treasury centers or shared services organizations.
Cyber threats have made it to treasuryTreasury departments are now being targeted in elaborate phishing, social engineering and hacking attacks. With the growing complexity of the technology infrastructure, data storage surface, and multiple access points for cyber threat, an organization's internal monitoring and surveillance strategies by the organization as a whole may not be covering the assets treasury protects. Many treasury teams have focused on traditional process and financial controls, relying on team members to support systems administration and maintenance within its "four walls."
A big thank youThank you to the companies around the world that responded to our survey online or by interview. For those of you who did, please contact your Deloitte Advisory professional for a download about how your company responded or compares to your peer group.
We would also like to thank the following Deloitte Advisory professionals for their contribution to this publication: Niklas Bergentoft, Joan Cheney, Lisa Hallman, Myla Kozak, Prashant Patri, Carolyn Thompson, and Neha Verma.
Want to engageDeloitte Advisory and DTTL have emerged as the largest global professional services treasury practices. We offer services across all areas of treasury M&A, strategy, operating model and process transformation, treasury technology strategy, selections and implementations. If this survey resonates with the issues that your company faces, please contact us. Our international contact points are provided on page 19.
Sincerely,
Melissa Cameron Deloitte Advisory PrincipalDeloitte & Touche LLP Global Treasury Leader
Carina Ruiz-SinghDeloitte Advisory PartnerDeloitte & Touche LLPM&A and Treasury Transformation Leader
5
Responses were received from the treasury groups of more than 100 top corporations from around the globe, representing a wide array of global scales, industrial footprints and geographic headquarters. Benchmarking comparisons are available for clients against peer industry and revenue counterparts.
*All revenue amounts in this document are quoted in U.S. billion dollars
Geographic location
Survey demographics
United States
Other Americas
EMEA
APAC
47%
4%4%
45%
Consumer & Industrial Products
Technology, Media & Telecommunication
Energy & Resources
Other
Life Sciences & Health Care
Financial Services (non-bank)
38%
23%
13%
12%
10%
4%
55%
38%
7%
<$10 $10–$50 >$50
62%
14%23%
0-20 20-40 >40
Annual revenue
Treasury staff Industries
6
2015 Global Corporate Treasury Survey 7
Treasury is increasingly taking on strategic roles with corporations and continues to be viewed as a risk management function. Despite the record amounts of cash that are managed by treasury groups, and the resulting focus on capital markets investments, there is little push from CFOs to transform treasury into a profit center.
CFO mandates
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Important Neutral Not important
Liquidity risk management
Access to capital market to finance growth
Steward for risk management company
Strategic advisor to the business
Value-add partner to the CFO1
Leading, governing and driving working capital improvement initiatives
Enhanced governance and control over domestic and overseas operations
Creation of scalable treasury organization to support company growth
Lower cost effective provider of services
Becoming a profit center
1 e.g., support or drive M&A activity
The primary challenges facing treasury groups today have not yet been resolved with the increased investment in treasury technology, a trend over the past few years. Inadequate systems, FX management, and visibility to global operations continue to be difficult. As you will see on page 15, most corporate treasury groups rely on multiple ERPs for data sources and use multiple solutions (some manual) to address their company's needs. This may lead to increased operational difficulties and risk rather than providing sufficient solutions to address these challenges.
Strategic challenges for treasury organizations
50% 24% 22% 29% 50% 40% 10% 10% 40% 9% 14% 0
10
20
30
40
50
60
Cashrepatriation
Enteringrestrictedmarkets
Leverage Liquidity FX volatility Visibility intoglobal
operations,cash and
financial riskexposures
Lack ofunderstanding
by Board/executive
management
Ability torespond to theboard/ad hoc
requests
Inadequatetreasurysystems
infrastructure
Treasuryoperations cost
Other
8
2015 Global Corporate Treasury Survey 9
Respondents have the opportunity to leverage broader company-wide transformation initiatives. Transformation in key strategic areas can lead to more streamlined systems and processes and potentially reduce overall costs within treasury. Legal entity rationalization can provide an opportunity for improved liquidity and cash management structures. Migration onto a single ERP platform can allow for improved data sourcing and consolidation. And global restructuring of tax can provide the foundation for intercompany capital and liquidity considerations.
Current transformation initiatives
Single enterpriseresource planning
system (ERP)
Global restructuringof tax
Legal entityrationalization
Captive sharedservice center(s)implementation
Outsourcing offinance activities
Cost cuttinginitiatives
Global growth/ramp up
47% 20% 47% 33% 16% 69% 43% 0
10
20
30
40
50
60
70
80
While sixteen percent of respondents were looking to outsource in finance over the next three to five years, and a slightly smaller percentage saw this applying to treasury. There is a stronger trend among respondents toward internal offshore methods, such as in-house banks and shared service centers. The three treasury functions that respondents indicated are most likely to be outsourced are retirement plans, international treasury support and long-term investments.
Treasury services likely to be outsourced
Retirement plans(e.g., pension, 401k plans) management
54% Unlikely
25% neutral
21% Likely
International treasury support(e.g., treasury IT and treasury accounting)
74% Unlikely
12% Likely
14% Neutral
Long-term investments
81% Unlikely
14% Likely
5% Neutral
Retirement plans(e.g., pension, 401k plans) management
54% Unlikely
25% neutral
21% Likely
International treasury support(e.g., treasury IT and treasury accounting)
74% Unlikely
12% Likely
14% Neutral
Long-term investments
81% Unlikely
14% Likely
5% Neutral
Retirement plans(e.g., pension, 401k plans) management
54% Unlikely
25% neutral
21% Likely
International treasury support(e.g., treasury IT and treasury accounting)
74% Unlikely
12% Likely
14% Neutral
Long-term investments
81% Unlikely
14% Likely
5% Neutral
10
Retirement plans (e.g., pension, 401k plans) management Long-term investments
International treasury support (e.g., treasury IT and treasury accounting)
2015 Global Corporate Treasury Survey 11
Current and future state treasury operating models
Corporate treasury is still the most widely used operating model with between 73% and 76% of respondents mentioning that treasury activities are currently being handled there. This trend looks to continue for companies in the largest and smallest brackets. This significant decrease in decentralized operations across all company sizes is strongly indicative of greater interest on the part of the respondents to create more centralized models (e.g., corporate treasury and the use of centers of excellence or in-house banks).
* SSC provides services to the rest of the organization through the execution of specific operational activities, which include primarily accounts payable (A/P), accounts receivable (A/R), accounting, treasury, IT, etc., on behalf of other legal entities.
** IHB is an internal funding vehicle which can be used both for concentrating global liquidity and meeting short- and longer-term capitalization strategies. At its most evolved form, IHB capability can be used to collect and pay on behalf of group subsidiaries and also be the conduit for centralized foreign exchange risk management and improved hedging.
Current treasury responsibilities organization based on company revenue
Shared Service Center* (SSC)
Outsourced to third party (bank, service provider)
Centers of excellence/In-house Bank* (IHB)
Corporate Treasury
Decentralized (generally performed locally)
8%
10%
1%
7%
3%
4%
6%
13%
13%
67%
60%
63%
11%
15%
19% >$50
$10-$50
<$10
>$50
$10-$50
<$10 8%
11%
3%
6%
4%
5%
8%
11%
19%
67%
64%
68%
11%
10%
5%
Future treasury responsibilities organization based on company revenue
Current treasury responsibilities organization based on company revenue
Shared Service Center* (SSC)
Outsourced to third party (bank, service provider)
Centers of excellence/In-house Bank* (IHB)
Corporate Treasury
Decentralized (generally performed locally)
8%
10%
1%
7%
3%
4%
6%
13%
13%
67%
60%
63%
11%
15%
19% >$50
$10-$50
<$10
>$50
$10-$50
<$10 8%
11%
3%
6%
4%
5%
8%
11%
19%
67%
64%
68%
11%
10%
5%
Future treasury responsibilities organization based on company revenue
Decentralized functions are less likely to have the same technology as other parts of treasury, so effectiveness controls and processes could suffer
Current treasury responsibilities organization based on company revenue
Future treasury responsibilities organization based on company revenue
Benefits of centralized treasury organizations
Organizations are acknowledging the benefits to the centralization of treasury, particularly standardization of strategic and tactical activities, controls and liquidity management.
12
46% 46%
40% 39%
32%
35%
29%
15%
19%
24%
5%
20%
15%
6%
40%
35% 36%
55%
48%50%
65%
0%
10%
20%
30%
40%
50%
60%
70%
Shared service center (SSC) Outsourcing to third party (bank, service provider) Center of excellence/in-house bank (IHB)
Centralized liquiditymanagement structurefor entire organization
Lower transactioncosts with banking/
external counterparties
In-depth subjectmatter expertise
Control Scalability tosupport growth
Cost-efficiency Standardization
2015 Global Corporate Treasury Survey 13
Perceived disadvantages of centralized operating models
Change management is an important factor in ensuring that a transformation initiative, such as centralization, is embraced throughout the organization. Treasury teams can predict apprehensions from offshore businesses and incorporate change management programs into centralization/regionalization initiatives.
Lack of control Limited expertise Personnel turn-over Not a widely usedoption in the market
Higher cost Limited organizationalacceptance
Investment requiredto support/technologyinfrastructure required
16%
63%
48%
22%
5%
31%35%
80%
30%
42%
62% 63%
47%
26%
4%7%
10%
16%
32%
22%
38%
Shared service center (SSC) Outsourcing to third party (bank, service provider) Center of excellence/in-house bank (IHB)
Treasury technology: choosing a treasury management system
Respondents indicate that the primary driver when choosing a new system is the fit to identified treasury requirements. In addition to treasury requirements, the needs of all key system and business stakeholders sending and receiving information from treasury and third-parties (e.g., banks) should be understood and considered as part of the selection and implementation processes. Bank connectivity improvements available outside of treasury, but within the company, may add a compelling business justification to improved technology infrastructure and improve global cash visibility and control.
14
Best fit to treasury requirements
53%
Reasons for choosing current treasury management system
Cost
10% Highly customizable
4%
Part of a global ERP
19%
Time to implement
1%
Other
13%
Reasons for choosing current treasury management system
2015 Global Corporate Treasury Survey 15
Treasury technology: vendor systems
Leading respondents avoided key challenges by addressing integration requirements with multiple ERPs and source data quality/consistency, to avoid the pitfalls of limited visibility to global operations cash and financial exposures.
40%
Visibility intoglobal
operations,cash and
financial riskexposures
Cash
man
agem
ent
& acco
untin
g
Bank
adm
inistr
ation
&
relat
ionsh
ip m
anag
emen
t
Inves
tmen
t &
debt
man
agem
ent
FX an
d int
eres
t
rate
man
gem
ent
Comm
odity
pric
e
risk m
anag
emen
tOth
er
40%
Inadequatetreasurysystems
infrastructure
Cash management & accounting
FX and interest rate management
Investment & debt management
Bank administration & relationship management
Commodity price risk management
Other
27%
23%22%
15%
7%
6%
One System36%
Multiple Systems64%
Use of proprietary and other solutions
Eight most frequentlyused systems
Other TMS and ancillary Treasury tools
Homegrown capabilities
0
20
40
60
80
100
23%
34%
14%
31%34%
38% 50%
17%9%10%11%
40%
Visibility intoglobal
operations,cash and
financial riskexposures
Cash
man
agem
ent
& acco
untin
g
Bank
adm
inistr
ation
&
relat
ionsh
ip m
anag
emen
t
Inves
tmen
t &
debt
man
agem
ent
FX an
d int
eres
t
rate
man
gem
ent
Comm
odity
pric
e
risk m
anag
emen
tOth
er
40%
Inadequatetreasurysystems
infrastructure
Cash management & accounting
FX and interest rate management
Investment & debt management
Bank administration & relationship management
Commodity price risk management
Other
27%
23%22%
15%
7%
6%
One System36%
Multiple Systems64%
Use of proprietary and other solutions
Eight most frequentlyused systems
Other TMS and ancillary Treasury tools
Homegrown capabilities
0
20
40
60
80
100
23%
34%
14%
31%34%
38% 50%
17%9%10%11%
40%
Visibility intoglobal
operations,cash and
financial riskexposures
Cash
man
agem
ent
& acco
untin
g
Bank
adm
inistr
ation
&
relat
ionsh
ip m
anag
emen
t
Inves
tmen
t &
debt
man
agem
ent
FX an
d int
eres
t
rate
man
gem
ent
Comm
odity
pric
e
risk m
anag
emen
tOth
er
40%
Inadequatetreasurysystems
infrastructure
Cash management & accounting
FX and interest rate management
Investment & debt management
Bank administration & relationship management
Commodity price risk management
Other
27%
23%22%
15%
7%
6%
One System36%
Multiple Systems64%
Use of proprietary and other solutions
Eight most frequentlyused systems
Other TMS and ancillary Treasury tools
Homegrown capabilities
0
20
40
60
80
100
23%
34%
14%
31%34%
38% 50%
17%9%10%11%
40%
Visibility intoglobal
operations,cash and
financial riskexposures
Cash
man
agem
ent
& acco
untin
g
Bank
adm
inistr
ation
&
relat
ionsh
ip m
anag
emen
t
Inves
tmen
t &
debt
man
agem
ent
FX an
d int
eres
t
rate
man
gem
ent
Comm
odity
pric
e
risk m
anag
emen
tOth
er
40%
Inadequatetreasurysystems
infrastructure
Cash management & accounting
FX and interest rate management
Investment & debt management
Bank administration & relationship management
Commodity price risk management
Other
27%
23%22%
15%
7%
6%
One System36%
Multiple Systems64%
Use of proprietary and other solutions
Eight most frequentlyused systems
Other TMS and ancillary Treasury tools
Homegrown capabilities
0
20
40
60
80
100
23%
34%
14%
31%34%
38% 50%
17%9%10%11%
Key challenges
System functionality used by treasury
ERPs to connect to TMS
Use of proprietary and other solutions
16
Treasury technology: use of systems by functionality
Respondents sought to leverage full functionality of treasury management systems (TMS), implementing cash management, investment and debt management, and FX capabilities where possible.
Notably, respondents’ functional use varied with the primary TMS solutions used.
Despite the increasing trend of treasury transformations and deployment of TMS, many are still supported or augmented with the use of homegrown approaches. Homegrown solutions may pose greater cyber and operational risks.
0
2
4
6
8
10
12
14
16
18
SAP Treasury SunGard(excl. Quantum)
Quantum WSS (excl. WSS Suite) WSS Suite Oracle/PeoplesoftTreasury
Kyriba Reval Homegrown
Systems used by Functionality (ex Other Systems)
Cash management and treasury accounting Bank administration and relationship management Investments and debt management
FX and interest rate risk management Commodity price risk management Other
Systems used by functionality (ex. other systems)
2015 Global Corporate Treasury Survey 17
Treasury technology used
Over 30 different vendor solutions were cited as being used by the respondents, often in conjunction with a primary treasury management system. These systems include FX trade execution and trade management platforms, smaller, niche treasury systems, Excel, Access, and banking portals.
<$10 billion $10 - $50 billion >$50 billion
0 10 20 30 40 50 60 70
SAP Treasury
SunGard (excl. Quantum)
Quantum
Oracle/PeopleSoft Treasury
WSS (excl. Suite)
WSS Suite
Kyriba
Reval
Home-grown technology solution
Other TMS and ancillary treasury tools
Treasury technology solutions based on revenue
Treasury technology solutions used based on revenue
18
Treasury technology: engagement with third-party vendorsThe majority of respondents indicated that the treasury group is engaged directly with its technology vendors.
A key success factor to maximizing the impact of a treasury technology implementation is including all primary stakeholders as part of the implementation and transformation process. These groups often include accounting, accounts payable, collections, finance, and IT internally, and vendors, counterparties, and banking partners externally.
55%
69%
50%
5% 3%
25%
8%0%
13%18%
13% 13%13% 16%
0%
<$10 billion revenue $10-50 billion revenue >$50 billion revenue
Organization's practice with third party outsourcing vendors
Engages directly Engages in other way(s)* Engages indirectly through finance Engages indirectly through procurement Engages indirectly through shared services center
*Derivatives advisory, IFRS, EMIR, directly and through procurement, procurement & treasury jointly, Saas tool
Managing third-party treasury vendors
2015 Global Corporate Treasury Survey 19
Contacts
Global & United States United States United States United States
Melissa [email protected]+1 415 706 8227
Niklas [email protected]+1 203 905 2859
Carina [email protected]+1 408 704 2158
Kesavan [email protected]+1 732 207 8429
Australia Belgium Canada China
Steven [email protected]+61 3 9671 7024
Kristine [email protected]+32 2 800 26 51
Paul [email protected]+1 416 643 8037
Floyd Min [email protected]+86 21 23166585
China Denmark France Germany
Kang Keng [email protected]+852 28526778
Michael [email protected]+45 20304990
Corrine [email protected]+33 1 40 88 84 37
Volker [email protected]+49 21187722399
India Japan Singapore South Africa
Muzammil [email protected]+91 226185 5490
Kaoru [email protected]+81 8045974232
Benny [email protected]+65 6800 2266
Michael [email protected]+27 112098038
Spain United Kingdom United Kingdom
Alejandro Gonzalez de [email protected]+34 914432552
Dino [email protected]+44 20 7007 8545
Karlien [email protected]+44 20 7303 5153
Product names mentioned in this document are the trademarks or registered trademarks of their respective owners and are mentioned for identification purposes only.
This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. In addition, this presentation contains the results of a survey conducted by Deloitte. The information obtained during the survey was taken “as is” and was not validated or confirmed by Deloitte.
Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.
Copyright © 2015 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited