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Treasury Transformation Can Also Mean Moving Locations

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May 08, 2018

Some companies are moving to low-cost US states or aligning services centers to “follow the sun.”

Blue fish red fish(1)Want to really make your treasury transformation project transformative? Try moving. That is, to a low-cost location. Treasury transformation has been a recurring theme at NeuGroup meetings since the end of 2017. Much of the discussion has revolved around organizational structures and technology. But several members at a recent NeuGroup Treasurers’ Group of Mega-Caps (tMega) meeting noted that treasury transformation projects that involve moving staff, especially for nonstrategic treasury operations, to lower-cost parts of the US (especially if they’re currently in California) can save a ton of money.

Florida is a popular destination because it gives treasury an East Coast time zone presence at as much as 70% of a cost reduction to HQ (lower real estate prices, no state income tax, etc.). What’s more, talent also seems to be there. Moves like this are often coupled with shifting treasury roles to “global business services” or “business services centers.” This would also create the need for a global shared services head to boost efficiency and spread business value-enhancing best practices across centers globally.

At a fall 2017 NeuGroup Tech20 meeting, one member uses a “follow the sun” approach to utilizing these centers. The objective of this transformation arrangement is to enable treasury to scale its support to the rapid global growth of an increasingly diverse product offering, the member said. This is a departure from a tech treasury mindset that has tended to be entirely HQ-centric. The new structure will now follow-the-sun with treasury centers in London and Singapore.

Another aspect of moving treasury around is rotating people through the department to create cross-fertilization of skills and to develop more bench strength. It also serves to cultivate deeper experience among top talent to prepare them to take on senior finance leadership. One tMega member noted that the first 10 minutes of every CFO staff meeting focuses on talent; who is excelling at what, who needs to build skills in what, and where people might be moved next.

So while that move might not be to the island of Madagascar, it might be a good idea to keep the theme song to the movie Madagascar in mind when thinking transformation: “I like to move it!”

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