SSC perspectives TREASURY IS DEAD. LONG LIVE TREASURY? If Global Business Services models can do a better job at HR, procurement, networks, IT and data analytics, why doesn’t it just take over treasury? At some firms, it’s already happening. By Simon Brady. Shared services are again all the rage as and applied it to an ever-broader range structure and in-country cash pooling, as companies search for the short-term wage of products and processes like payments well as providing forecasts on cash flow arbitrage of offshoring. At the end of and FX. Often this is accompanied by a and FX exposure. The Dublin treasury 2016, Warner Music Group announced restructuring of fragmented ERP sys- centre and in-house bank manages the the creation of a new US centre of excel- tems, or at least the centralisation of regional multicurrency notional pool, FX lence for Shared Services in Nashville, feeds from multiple ERPs into a single hedging and liquidity and investments. Tennessee, to aggregate its US Account- system with analytics – such as SAP’s ing Operations, Cash Management and HANA – with a view to automating From SSC to GBS Recorded Music Rights Administration. functions such as cash forecasting. So what happens next? Large companies In June 2016, Eltel announced its inten- Later process migration is not simply a end up with a global patchwork of func- tion to establish a new Global Shared case of moving transactions and their tional SSCs, as well as, sometime, third- Services centre in Poland later this year. associated processes, but one of breaking party business process outsource (BPO) The decision has now been taken to down and re-designing existing on-shore firms. This patchwork creates exactly the locate the centre to Gdansk. The centre jobs. In other words, once established, problem of fragmentation and de-cen- will provide all Eltel businesses globally SSCs expand their remit by identifying tralisation that the SSCs were designed with support services in the field of other processes inside the company that to cure in the first place. One answer has finance, human resources and procure- would benefit from being re-engineered been the evolution of a Global Business ment. And Nestlé, as part of an ongoing by what has become a centre of excel- Services model to integrate all shared programme of structural cost saving, has lence in process efficiency. For example, services and outsourcing activities across recently set up two more SSCs, one in commercial payments and collections, the enterprise. This model abandons China and one in Portugal taking the which are not part of the definition of structures defined by narrow business total to nine. treasury at a surprising proportion of functions such as finance or IT and Initially, treasury is in control of the out- companies, also naturally sit in a shared focuses on delivering standardised, end- sourcing of its functions. The creation of service centre. to-end processes. Companies can achieve one or more shared service centres is this with their SSC structures – and driven by a corporate desire for lower- So, over time, companies end up with Shell, AstraZeneca and others have their cost, higher efficiency processes. Treas- structures like Pfizer. It has in-country own models for achieving standardisa- urers’ solution has been to centralise SSCs where necessary – its SSC in China tion – but others believe the multifunc- treasury operations and to outsource manages its in-country bank account tional GBS model is best. non-strategic treasury processes. Typically, this process starts with stream- lining bank account structures, bank account management and pooling mech- anisms, often by moving to a single bank- ing partner. This eliminates manual processes, creates greater cash visibility and gives treasury access to real-time information, allowing it to develop better cash forecasting and insights into the underlying businesses. Standardisation is achieved through the adoption of ISO standards or the creation of company- wide process templates. Shell for example, as part of the compa- ny’s long-running treasury centralisa- tion, started by templating the bank reconciliations process and then rolling that into the SSC. It then developed this idea of a single company-wide process 36 // TREASURY PERSPECTIVES 2017/2018 www.eurofinance.com