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The Treasury and Globalization

We take a look at the impact that globalisation is having on treasury departments

2Mar

Globalization has placed increased scrutiny on the treasurer, with the shift towards regions such as Latin America and Africa creating new pressures for them to deal with.

Borne out of fast growth and ever-changing regulations, Chief Finance Officers are demanding that their treasures pick up their performance and improve their capacity to deal with the challenges that come from expansion into emerging nations.

Even the best treasury departments have found it difficult to create operational models which connect their activities, risk and portfolios together, with newfound banking protocols and language barriers often causing considerable problems.

The impact of the treasury’s performance is critical to the overall performance of an organisation - with it possible for a company’s financial performance to be damaged by unnecessary taxes and inaccurate forecasting, leading to unnecessary loans. To add to this, companies which have poor control over their finances will find that they’re at an increased risk of fraud, which could see them lose money and more importantly, their reputation.

Although we’ve been in the midst of globalisation for some time now, it’s only recently that many companies have expanded their operations abroad. This has meant that that many treasury departments are still going through a transitional phase, which could be the biggest indicator of why some are still lagging.

Despite this, the pressure that CFOs are putting on the treasury comes from the fact that their actions can lead to lower credit ratings and even bankruptcy. Whether they are under-performing or not, the role of the treasurer has taken on heightened importance when going through an expansion project and due to this, they should be looking to get a tighter hold on their respective companies finances.

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