Treasury 4.0 – How does your treasury department stand? | KPMG | DE

Treasury 4.0 – How does your treasury department stand? What needs to be done?

Treasury 4.0 – How does your treasury department stand?

The issues around Treasury 4.0 are constantly evolving, which means that new technologies are continually being brought to the fore.

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For several years now, we have written frequently about the trends, implications and challenges inherent to Treasury 4.0. There continues to be considerable interest in this issue and the need to deal with it remains high. The issues around Treasury 4.0 are constantly evolving, which means that new technologies, keywords and perspectives are continually being brought to the fore. While blockchain and fintechs were hot topics last year, the focus has recently been on artificial intelligence. However, many treasury departments continue to be perplexed by these developments and do not know where to begin implementing the new concepts in the treasury reality.

The classic method: Positioning for Treasury 4.0

Where can companies begin as they attempt to scale the formidable peak known as Treasury 4.0, without losing sight of the current, immediate challenges?

First, treasurers need to address the question: "What will this actually mean for my treasury department at the end of all this?" Answering this question will help to define a rough objective for Treasury 4.0.

The question to be addressed next is: "How do I get there?" Generally, there are two ways in which companies can define their treasury's position and implement new approaches: You can either assemble an internal project team to deal with these processes over a specific timeframe or alongside (daily) operating business, or you can look to an external advisor to tailor Treasury 4.0 concepts to your needs and implement these concepts with your company. The cross-functional expertise of internal employees represents an argument for the first approach. It's not just treasury that is confronted with trends and challenges like automation, digitalisation, embedded compliance and performance as an indicator of quality. Other departments, such as accounting or purchasing, are having to deal with similar issues. However, it is important to avoid a situation where everyone in the company works in isolation on processes and tasks; instead, it is crucial for this to be done under the close supervision of a project manager using a project plan and the objectives stated above. This ensures that all Industry 4.0 initiatives to be implemented in the company are harmonised and standardised.

External advisors take a similar approach. First, a questionnaire or an assessment is used to determine the treasury department's position. Using new workshop methods, for example design thinking, the results from the survey and analysis are transferred to a company-specific treasury roadmap.

At the end of this, treasury should have a list that ranks existing development and adjustment measures according to urgency, complexity and priority, considering the implementation costs for each area.

Fast track: KPMG Treasury 4.0 Readiness Assessment

KPMG has developed a Treasury 4.0 Readiness Assessment based on an online questionnaire. The assessment comprises 65 questions on the Treasury 4.0 topic resulting from five maturity dimensions. The evaluation concentrates on the following areas:

  • Future viability of the treasury strategy and treasury IT as well as the operating model
  • Requirements on treasury personnel and their changing skill profiles
  • Efficiency and effectiveness of treasury processes and methods

One of the five dimensions is, for example, "Strategic Focus". Answering all questions relating to this dimension will help to indicate how the treasury strategy, the operating model and technologies are adapted to each other and to what extent Treasury 4.0 elements have already been implemented. A further dimension, "Systems & Processes", will shed light on whether flexible and scalable systems are used to implement data availability and processing, and to what extent suitable methods and instruments are used for data analysis and evaluation. Analyses of the five dimensions will allow treasury to assess its standing, how it compares to benchmarks and where action is required. The result is then displayed graphically: the information on the maturity dimensions is arranged on a numerical scale and compared to other parameters. For many treasury processes, the current development standard of treasury IT determines how best practice is designed.

These methods will produce a multidimensional picture that shows where there is need for action, which strengths the respective company can specifically build on or where other companies are further advanced. Building on this, all treasury-relevant company processes can also be viewed according to the efficiency and effectiveness of the Treasury 4.0 processes. 

Conclusion

Which path companies take is up to them, but there is no escaping the fact that, in the foreseeable future, you will have to choose one of the approaches described. Technologies, regulations, restructuring, and new business models demand extensive changes for treasury, meaning that the numerous tasks directly relevant for treasury will soon be accompanied by other areas of responsibility that affect treasury indirectly, for example due to requirements imposed by and on controlling, purchasing and sales.

You can find more information on the topic of the Treasury 4.0 Readiness Assessment at https://atlas.kpmg.de/business-assessments/treasury-4-0.html.

Source: KPMG Corporate Treasury News, Edition 71, September 2017
Author: Stephan Plein, Senior Manager, Finance Advisory, splein@kpmg.com 

© 2017 KPMG AG Wirtschaftsprüfungsgesellschaft, ein Mitglied des KPMG-Netzwerks unabhängiger Mitgliedsfirmen, die KPMG International Cooperative (“KPMG International”), einer juristischen Person schweizerischen Rechts, angeschlossen sind. Alle Rechte vorbehalten.

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