Treasury teams are becoming increasingly strategic, but most areill-prepared to leverage the technologies that can move themfurther down this path. That's the headline news from Deloitte's"2019 Global Treasury Survey," released latelast year.

Deloitte surveyed treasury professionals from an array ofdifferent industries, who are located primarily in Europe, theAsia-Pacific region, and the Americas. Nearly two-thirds ofrespondents (62 percent) reported that visibility into globaloperations, cash, and financial risk exposures is their biggeststrategic challenge, followed by liquidity (57 percent) andcurrency volatility (50 percent). These results make sense becausealmost every respondent (97 percent) said liquidity risk managementis a critical or very important mandate for their function, and 94percent placed high importance on serving as a steward forfinancial risk management for the company. (See Figure 1,below.)

At the same time, 86 percentrated being a value-added partner to the CFO as a critical or veryimportant treasury function. Eighty-four percent said the samething about being a strategic adviser to the business. And 47percent attribute at least some degree of importance to becoming aprofit center. Compared with Deloitte's 2017 survey, all three of theseproportions are trending upward.

In fact, the proportion of treasurers reporting that becoming aprofit center is a critical task for their team has nearly doubledsince 2017, up from 15 percent to 27 percent. Melissa Cameron,finance advisory leader for Deloitte, advises reading thatstatistic in context. "I think for most companies, becoming aprofit center is not about proprietary trading," she says. Thisyear's survey added a descriptive phrase providing examples of howa treasury function might become a profit center: "performingproprietary trading and the ability to directly improve the bottomline."

Cameron thinks the survey's increased view of treasuries asprofit centers is primarily attributable to treasury teams "workingwith businesses more and seeing the advice they give to thebusiness directly affecting the bottom line." For example, shesays, "treasury might be helping procurement with contract termsaround any indexation for commodity price volatility, or withresetting prices with suppliers if the markets move during theyear.

"In aggregate," she adds, "the survey results indicate thattreasurers are seeking to be more strategic. Rather than stayingsiloed and tactical and operational in what they're doing, treasuryteams are becoming more proactive within their businesses." Theyare increasingly taking central roles in merger and acquisition(M&A) decision-making, in understanding emerging-market risks,in repatriating funds out of restricted markets, and in improvingmanagement of working capital. "It seems like there has been animprovement, across the board, in the strategic focus of treasury,"Cameron says.

Another example she offers is helping sales and marketing withpricing of goods and services globally. "A lot of tech companiesprice their services in dollars in different regions around theworld," Cameron says. "Then they try to pass off that risk byhaving their foreign subsidiaries buy goods and services, such aslocal marketing, in U.S. dollars. But if you really drill down intothose transactions, you'll see that the U.S. dollar prices thesubsidiaries are paying vary with the exchange rate. So the localU.S. dollar spending is only masking, not mitigating, any currencyvolatility."

If the treasury team gets involved, she says, they might ask theprocurement or sourcing team, "'Is this spend in this local marketreally a U.S. dollar cost, or is it a local currency cost? Becauseif it's a local currency cost, we're in a better position to hedgethe foreign exchange risk than our local supplier is.' In otherwords, it's more efficient for the big tech company to pay in localcurrency and handle the conversions to and from dollars." Cameronadds that treasury teams in some companies have been involved inthese processes for years, but many others are just starting toexpand beyond their function's traditional purview.

Helping treasury teams along are several technologies thatimprove automation—thus reducing tedious manual workloads andsupporting treasury's pivot to a more strategic focus. Most surveyrespondents place at least some degree of importance on visualanalytics (93 percent of respondents), robotics (89 percent), bigdata (91 percent), machine learning (88 percent), and blockchain(77 percent). Unfortunately, however, fewer than 5 percent ofrespondents claim to be well-versed in most of thesetechnologies.

"What concerns me about the survey," Cameron says, "is that astreasurers are becoming more strategic, they appear to be feelingless enabled by the technology that supports them. Treasurydepartments need to be well-versed in visualization and roboticsand these other technologies in order to make the case forinvestment. If they don't improve their understanding of what thesesystems have to offer, then our survey two years from now will showpeople continuing to complain about their technology but not doingmuch about it."

She adds that the changes these technologies facilitate—and themove toward more involvement in corporate strategy—will beuncomfortable for some treasury teams. "This is a scary situationin many respects," Cameron says. "Over time, these technologieswill change the way in which work is done, and will change some ofthe skill sets treasurers are looking for in new hires. You mayneed to start recruiting a couple of data scientists into the team,rather than additional cash analysts.

"Ultimately, though, this will take the robot out of the person.Rather than spending most of their time compiling data, treasuryprofessionals will spend most of their time thinking about theimplications of that data."