What happened to the tree supply? Bad harvest, drought, insects, weather? No, the great recession.
It takes up to about 9 years for trees to grow, mature and ready themselves for your Christmas Party. The economy went downhill in 2008 and the price of trees dropped. Farmers, because of the lower prices, lost money, so they deferred investments in the future of their farms. In a short-term effort to save money, Farmers didn’t plant as many trees. Nine years later we see the impact on supply and the price you will pay.
So, what does this have to do with Treasury and FP&A (Financial, Planning & Analysis)?
Businesses operate on a fairly simple formula: grow revenues faster than you grow expenses.
The great recession and resulting low-growth economy put a strain on organizations across all sectors and functional departments. Corporate treasury practitioners (managers of corporate Treasury departments, both strategic and operational) were expected to accomplish more with fewer resources (staff, budget & IT support) which resulted in projects being deferred, downsized or outright eliminated. Sometimes these projects are classified as improvements or upgrades but often they are related to mission-critical systems, technologies or processes.
So much like Farmers, deferred investments in the Treasury Function appear to deliver short-term gains, but at the expense of long-term growth and profitability.
Demands on the function, to deliver greater business value at lower cost, continue unabated as finance leaders ponder the list of incomplete projects on their 2017 scorecard…and as they prepare the arguments for their defense. What can’t be overlooked are the implications of deferred maintenance in finance (inefficiency, cost, risk and diminished scalability). The unfortunate reality is that a “cost containment” mentality is the new normal. Reinvestment in Treasury operations is critical and, in many cases, overdue. The good news is that resources exist to bridge the gap between stretched & stressed corporate Treasury departments and the providers and solutions that can extend their teams and ease the burden.
It’s time to examine treasury process, providers and price and position for future opportunities. The alternative of deferring further is likely to be paying more for crisis management in the long term while still suffering with inadequate systems today.
Contact Joseph Krzywicki, VP of Business Development at Vizant, to discuss how your Treasury Function can deliver greater business value with fewer resources. Joe can be reached at 704.815.5601 or email@example.com.