Corporate Companies Believe Centralized Treasury Operations Can Deliver Benefits
Companies are seeing a positive impact from centralizing treasury operations, found recent findings from a poll of nearly 50 clients attending the Shared Service Center Conference hosted by Bank of America Merrill Lynch. During the forum, held recently in Chicago, representatives from client companies met for an interactive discussion of ideas and best practices regarding global operating models and shared service centers that serve a company’s global operations.
The two-day program offered attendees a unique opportunity to voice their thoughts on global operating models through a series of polling questions addressing “myths, misconceptions and controversies.” Among key findings from the companies:
- For 52 percent, centralizing treasury operations exceeded their expectations for delivering tangible benefits.
- Fifty percent disagreed that an Asian treasury operation can be effectively managed from Europe.
- Ninety percent disagreed with “if we centralize we lose control of processes and outputs – controls, service delivery and quality.”
- Only 26 percent agreed that U.S. multinational companies are managed as global companies (as opposed to U.S. companies with international operations).
“The collective message from our clients is that they view centralizing treasury operations as beneficial, but regional centralization may be preferable to total global centralization in some cases,” said Paul Simpson, head of Global Transaction Services at BofA Merrill. “Most believe they still have progress to make toward operating in a true global operating model and mindset.”
Themed “Perspectives on Global Operating Models,” the forum featured sessions co-led by corporate treasurers and the BofA Merrill Global Business Solutions team from Global Transaction Services. A central focus of the forum were case studies and perspectives of corporate treasurers such as Ed Scott of Caterpillar, Inc., who explained what led Caterpillar to establish shared service centers as part of its global operating model.
“For Caterpillar, the 2008 financial crisis drove change and a refocus on cash flow, including generating cash from working capital,” Scott said. "In regards to shared service centers, the key elements of our successful deployments included processes that were rules-based, well documented and enabled by effective technology platforms. Timing of deployment was best during business expansion when work could be transitioned to shared service centers at a time when the people displaced by the transfer could be moved to different positions."
The forum also featured breakout sessions led by the BofA Merrill Global Business Solutions team. Clients chose between sessions focused on either the Americas or Europe and Asia Pacific, and then sessions focused on the emerging phase or the mature phase regarding their global operating model.
“The conference was a success for bringing together global clients to exchange ideas and hear a wide range of views, to learn about new opportunities and collaborate on solutions,” Simpson added. “Some companies who attended discovered they shared many of the same challenges and opportunities regarding centralizing global operations. Others found the discussions reassuring, as they realized their company was moving in the direction.”
BofA Merrill’s Global Business Solutions team works with clients to provide holistic, integrated solutions that enable them to improve their operating model and achieve increased efficiencies in their finance organization. Team members are based around the globe in five continents, are fluent in six languages and have a combined 240+ years of experience in corporate treasury, finance and business transformation.