Insights for Procure-to-Pay and Finance Leaders

Treasury: opportunity knocks (part one)

Damian Glendinning has 41 years of experience working in finance functions at multinational corporations. He’s spent the last 24 years in corporate treasury, most recently leading Lenovo’s global treasury team in Singapore where he also chaired the local ACT charter. In this first post, Damian looks back on his career in treasury and shares his views on what lays ahead for the profession.  

As I look back over more than two decades in treasury, two things strike me: the enormous amount of change I have seen and the huge opportunities that change has presented. As I look forward, I see many more changes coming.

What’s changed over the past 24 years?

First, the businesses we serve have evolved considerably. When I started working for a multinational, each company in each country had its own full suite of management, with its own banking relationships, own funding, own treasury teams, etc.

In fact, my first job in treasury was to take part in the centralisation of IBM’s European cash management structure. This involved cutting edge activities such as using SWIFT (via a hosting bank) to collect balance information around Europe and send payment instructions to different banks. We also had an in-house bank whose main function was to centralise funding and manage the interest rate and currency mismatches between Germany, Italy, and France. And yes, back then, they all used different currencies!

Since those days, we have seen the introduction of the euro, a massive opening up of national boundaries around the world, and the installation of treasury management systems which collect balance data and issue payment instructions across many banks.

SEPA and the IBAN have made it much easier to do cross border payments, especially in Europe. And we have a global real time gross settlement system (CLS), as well as serval real time national gross settlement systems—these all reduce or eliminate the risk and complexity associated with settlements. For currencies trading, we have seen online portals almost completely replace voice trading—this change has given us much better transparency and controls.

The opportunity for treasurers has been immense: we are now able to manage operations across much broader territories, and drive significant efficiencies. It also means we are able to be a much better strategic partner for the business: we now know—or should know—exactly how much cash we have, where it is, and how much we need. As national borders around the world have become more open, it has become commonplace for us to be managing operations, or at least payments and collections, across half the globe or more.

What changes do we have ahead of us?

First, there is a concern: the opening up of national boundaries we have seen over the past forty years may be reversed—at least, partially. Brexit, U.S. protectionism, the tension in the eurozone—these are all forces which treasurers need to regard with suspicion and fear, as they could bring back all the inefficiencies we worked so hard to remove. As the underlying economies become more fragmented and splintered, so will the treasury processes and teams which manage the resulting cash flows. Personally, I think—or rather, hope—that these are merely speed bumps, and not the beginning of a march backwards at full speed into the 1950s. But we cannot afford to be complacent. If we have to go back to a treasury structure by country, the budget discussions about headcount and treasury expenses will add even less value than usual.

At the same time, we have the arrival of new technologies, which could open up whole new ways of working. The internet has already made a massive difference: with internet banking, we no longer care where the people who operate a bank account are actually sitting. In my last employer, we ran all the world’s bank accounts with a small team out of Singapore.

But we are only just scratching the surface of what is possible.

In Part Two, Damian will take a closer look at the technology transforming the world of finance and the opportunities this creates for treasury professionals. Subscribe to our blog to have it delivered directly into your inbox.

You can also read Damian’s top tips for integrating treasury into the business.