From CGMA Magazine: Outsourcing treasury management


The global financial crisis transformed corporate priorities, pushing financial risk management high up the list—a shift that has elevated the profile and broadened the role of the executive who is often responsible for managing that risk: the corporate treasurer.

Treasurers have become more involved in big-picture strategy, working closely with CFOs to find ways to improve cash flow predictability and performance forecasts. The evolution comes as corporate treasurers are wrestling with outdated technology, struggling to recruit qualified employees, and trying to do the kind of work they did before the crisis.

Indeed, three-quarters of treasuries surveyed in 2011 expected their roles to increase over the next two years, but only 20% expected to see big staff increases, according to Ernst & Young.

The scenario has caused some to assess the benefits of outsourcing some treasury roles—to manage the workload and, of course, to get the most value out of the money that they are working harder to manage.

“For most businesses, a case can be made for a large chunk of their corporate treasury administration, cash and debt management, or foreign exchange to be outsourced, whereas treasury risk, forecasting, and bank relations may need to remain, at least initially, within the business,” said Sabimir Sabev, a director at Novo Altum, a CFO advisory firm in London.

Done correctly, outsourcing can yield benefits such as cost savings, better business processes, and performance improvements. However, as with any major organizational change, it is important to be aware of the risks involved.

“Clearly understanding your own specific requirements and finding the right supplier to meet them, through thorough due diligence, is critical to maximizing your return on investment and creating a sustainable solution that will help to drive your business forward,” Sabev said.


The key to a successful treasury outsourcing arrangement is for the service provider to be clear about its cost structure, demonstrate that it understands the client’s financial requirements, and be capable of delivering the customer’s strategy—whether it be process-driven, high-volume transactional work, or more judgment-intensive, midoffice functions, such as corporate treasury, said Anthony Hesketh, a senior lecturer at the U.K.’s Lancaster University Management School.

“CFOs need to be clear about what success looks like, understand governance processes, and be clear about which service-level agreements really matter, and once the deal has been signed off, that both parties stick to it,” he said. “If you try to change things once the project is up and running, you will be out of scope, and your costs will increase, chomping your original business case.”

For more on this topic, read:

Jack Hagel, editorial director
CGMA Magazine


CGMA Magazine is published exclusively online at in conjunction with the AICPA’s and CIMA’s new designation, the Chartered Global Management Accountant. The magazine offers daily news and feature articles focused on elevating and emphasizing
management accounting issues.


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