U.S. Corporate Treasurers Opening Their Wallets, Increased Spending in Both Staffing and IT

Treasury departments have coped with tight budgets in the five years since the financial crisis. But as U.S. economic indicators pick up, there are signs that treasury budget constraints are easing. According to the Greenwich Market Pulse, U.S. Corporate Treasurers Seen Opening Their Wallets,  of 177 finance executives, more than a third of companies increased the budget allocated to their treasury department this year. This is allowing treasury departments to increase the level of automation and be more strategic in their activities.

The budget for treasury staffing was forecast to increase at 35% of companies, according to respondents to the study conducted in November 2012, with approximately 21% seeing an increase of 1-3%. The budget for treasury technology grew at 39% of companies, with 23% seeing an increase of 1-3%.

In some ways, the 2008 financial crisis and subsequent recession are credited with raising the profile of treasury departments within their companies. The crisis cut into banks’ willingness to lend and threw into disarray such sources of short-term funding as the commercial paper market, undermining companies’ ability to easily obtain additional credit. As senior executives’ concerns about liquidity and access to credit grew, they turned to their treasury departments for advice.

Challenging Business and Regulatory Environment Creates New Demands

Given the limits on their ability to add staff, treasuries have responded to the new demands on their time by relying more on automation to handle routine work. The cost of the technology to enable such automation may be beyond the financial means of the many treasury departments that still face budget constraints, though, leaving those treasuries and their companies at a competitive disadvantage. The 2013 treasury staffing budget was flat at 55.4% of companies, while 9% saw a decrease, and the treasury technology budget was flat at 51.4%, while 9% saw a decrease. A third expected an increase in both staffing and technology budgets.

Annual treasury budgets varied, with most executives citing a budget of less than $5 million. Looking ahead to 2016, executives see budgets continuing to grow, with 60.5% anticipating a rise in treasury’s staffing budget over the next four years and 53.1% predicting treasury’s technology budget will be higher at that point. “What we are seeing is a consistent need for treasury talent that can meet the needs of a challenging regulatory and economic environment,” said Diana Blaney, analyst with Greenwich Associates. “We are going to see companies spending more money on people that bring in knowledge from different jurisdictions.”

Most of the executives surveyed say their company provides solid support for treasury, with 66.7% describing the company as “extremely supportive” or “supportive” of the treasury function. Treasurers and cash managers are a little less enthusiastic on this point than other executives, though, with just 58.1% of them describing the company as “extremely supportive” or “supportive.”

With regard to staffing, 45.8% of the executives participating in the Greenwich Market Pulse said their treasury organization includes a treasurer, and that rises to 65.7% among those at companies with more than $500 million in revenue. Forty-eight percent of companies overall and 64.3% of those with more than $500 million in revenue say the treasury group includes a cash manager. Just 11.3% of the companies have an international treasurer, although that rises to 14.3% at the largest companies.

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