A Fresh Approach to Treasury Optimisation
by Sigrun Fredriksson, Deputy Head of GTS, Norway, SEB and Tom Lea, Global Business Manager, GTS, Norway, SEB
As we saw from Erik Seifert’s article, ‘Meet Today’s Treasurer’, treasurers’ activities have never been so much in the limelight, nor valued so much as they are today. Continuing economic uncertainty and an ongoing focus on risk management, cost control and liquidity have fixed the spotlight on treasury, which in many organisations is leading to treasurers taking on an expanded role, particularly taking oversight of the financial supply chain and enterprise-wide risk management. There are other factors too that are resulting in treasurers’ horizons expanding. Sarbanes-Oxley and similar corporate governance initiatives around the world necessitate end-to-end control and visibility over financial processes. Ongoing pressure on working capital is also a driver. No longer is treasury engaged simply in the outcome of processes that contribute to working capital, but with constrained liquidity and an increased awareness of risk counterparty, liquidity and operational risk, it is becoming more influential in controlling these processes.
To respond to changing organisational and external demands, and continue to find ways to add value to the organisation, treasurers need a new approach to reviewing and refining their treasury strategy, processes and technology. With such a broad scope of responsibility, it can be difficult to prioritise improvements that would deliver the greatest value. Consequently, to support treasurers in their enhanced role, at SEB we have successfully pioneered a proven new framework to support treasurers, known as the Corporate Financial Value Chain™ (CFVC) which is already delivering substantial value to many of the world’s leading organisations.
Continuing economic uncertainty and an ongoing focus on risk management, cost control and liquidity have fixed the spotlight on treasury.
The CFVC is a powerful, innovative approach to optimising the financial supply chain that helps our clients to identify, prioritise and deliver improvements to financial processes, release working capital and create additional value. We help our clients to map every process in the financial supply chain, from purchasing and sales to payments and collections, combining both cash management and trade finance processes. Trade finance is frequently excluded from cash and liquidity optimisation projects, which disregards an area in which substantial value can be added in accelerating the cash conversion cycle, supporting imports and exports more effectively and enhancing forecasting capabilities. Consequently, SEB was one of the first banks to promote an integrated approach to trade and cash. The CFVC is based around six ‘mega processes’ as outlined in figure 1.