The ROI of Treasury Outsourcing

Intro

Treasury outsourcing is becoming an increasingly strategic option for organisations seeking cost-effective, efficient, and scalable financial solutions. As companies grow, the complexity of managing cash flow, liquidity, and risk multiplies.

Treasury outsourcing provides a modern approach to address these challenges by leveraging specialised expertise and world-class treasury technology, reducing operational costs, and enhancing financial visibility. 

Companies have reported reducing treasury costs by up to 50% by implementing an outsourced treasury function.

Traditional Treasury Management Challenges

Managing treasury functions in-house comes with significant costs and operational burdens. Key challenges include:

Staffing and Training Costs: Recruiting and training skilled treasury professionals is expensive and time-consuming. Onboarding processes and turnover further increase costs, while retaining experienced staff often requires offering competitive salaries and benefits.

Technology Investment: Implementing, maintaining and unlocking the full potential of advanced treasury management systems (TMS) involves substantial initial investment and ongoing costs for upgrades, support, and security measures.

Scalability and Risk: As businesses expand, their treasury operations often struggle to keep pace, leading to inefficiencies and risks. Internal systems and processes can become outdated, leaving companies vulnerable to errors, fraud, or regulatory compliance issues.

Benefits of Treasury Outsourcing

Outsourcing treasury operations offers a streamlined, cost-effective alternative with the following advantages:

Cost Efficiency: Treasury outsourcing eliminates the need for heavy investments in personnel, training, and technology. Providers offer flexible, scalable pricing models, ensuring predictable costs aligned with business growth.

Access to Expertise: Outsourced providers bring a team of seasoned professionals with deep knowledge of treasury functions, including cash management, forecasting, and risk mitigation. This expertise translates to more accurate and strategic decision-making. Outsourcing providers often leverage advanced economic research, market analytics, and data-driven models to identify and mitigate risks, such as currency volatility, before they materialise.

Technology Integration: Leading outsourcing firms leverage cloud-based TMS platforms that provide real-time visibility into financial data. Automated workflows reduce redundancies, improve accuracy, and enhance overall operational efficiency. With the advancement of API technology, and changes in payment message communication, internal IT resources lack the specialised skills outsourcing treasury firms offer.

Risk Mitigation and Security: Treasury outsourcing providers adhere to strict compliance standards and implement robust internal controls, reducing the likelihood of fraud and ensuring data security.

Focus on Core Business: By delegating treasury functions to a trusted partner, companies can redirect resources and focus on core competencies, driving innovation and growth.

Key Considerations for Treasury Outsourcing

When evaluating treasury outsourcing, businesses should assess the following:

• Outsourcing Partners Expertise: Select a provider with a proven track record, industry experience, and robust technology solutions.
• Scalability: Ensure the solution can adapt to your company’s evolving needs.
• Transparency and Reporting: Look for a provider that offers detailed, real-time reporting to maintain oversight and accountability.
• Technology: Your outsourcing provider must perform the outsourcing tasks on a world-class treasury system, that digitises the approved treasury policy with clear segregation between treasury functions. 

The Strategic Value of Treasury Outsourcing

Companies that adopt treasury outsourcing gain not only financial efficiency but also strategic insights into managing liquidity and risk. Whether it’s navigating global markets, optimising cash flow, or ensuring compliance, outsourced treasury solutions provide the tools and expertise necessary for success.

By embracing treasury outsourcing, businesses position themselves to thrive in a competitive, fast-paced financial environment, ensuring sustainable growth and profitability.

How TreasuryONE helped Thungela set up a treasury function in less than a month

Thungela was formed when the South African thermal coal operations demerged from the parent company and listed on the JSE and LSE in June 2021. As a result of the demerger, Thungela had to set up its own treasury department.

Financial Director Deon Smith approached TreasuryONE to assist with the set-up of a treasury department that runs on world-class treasury technology. Within just four weeks, Thungela’s treasury function was up and running – utilising TreasuryONE’s team of experts.