Naresh Aggarwal, Association of Corporate Treasurers
“Treasurers are ideally placed to lead the charge in optimising how trade – especially cross border activity is managed”
International trade is a complex operation for most businesses and often relegated to a clerical process driven activity. But like so many other business processes, the opportunity to cut costs, grow revenues and improve controls is being transformed. Treasurers are ideally placed to lead the charge in optimising how trade – especially cross border activity is managed.
Trade experts will already be familiar with how international trade is being made easier at an operational level. With the increasing implementation of MLETR at national levels, opportunities to reduce paperwork and speed up the exchange of documents is making the process simpler and enabling more straight through processing.
But it shouldn’t stop there. The benefits that can arise from initiatives such as MLETR can spread more widely across an organisation. However, achieving this requires engaging with a number of different parts of an organisation – from sales and procurement teams, tax and accounting experts through to payment and settlement experts. It also needs an understanding of value at an enterprise level so that benefits in one area do not create additional costs in other parts of the organisation. Implementing the necessary changes will require some diversion of internal resources and likely additional costs and capturing and measuring these benefits will be important to the C-suite.
And treasurers are ideally placed to play a key role. Good treasurers will have already developed a strong internal network with all of the relevant teams and be able to articulate the benefits available. They will be experienced with how to manage sometimes competing objectives from different teams and present outcomes to senior management. Treasurers will be able to draw on existing processes (such as cash forecasting inputs) to capture key data points both in the “as-is” and in the “to-be” states – critical to ensure that tangible benefits are both achievable and measurable, and capable of being reported on.
International trade requires expertise in managing the settlement processes and currency risks so treasurers should already have a seat at the table. Financing requirements will undoubtably change and treasurers will need to explore how to use these changes to reduce their borrowing costs and bank charges and also to diversify their sources of funding the business. They should have strong networks with banks and other trade finance organisations and should be able to lean into their expertise as these organisations will already have deep expertise and experience in helping corporates. This will help treasurers to avoid any obvious mistakes and enable businesses to create effective project plans that bring together the various isolated (but interconnected) activities. It will ensure that proper structures are implemented rather than creating workarounds that overcome existing process failures. Building a strong foundation will also provide the opportunity to future-proof any future operating model so that new payment mechanisms (such as central bank digital currencies) and new innovations (such as smart contracts) can be applied quickly and relatively cheaply.
If there was ever a time to focus on improving the cross-border trading process it is now. With existing trade routes being changed – sometimes at frightening speed, it is important that businesses are sufficiently agile to manage the changes with the minimal disruption to their sales activities. This requires coordination across all parts of an organisation that engages with external aspects of the value chain – from suppliers through to customers and finance, accounting and tax teams. Treasurers, with their ability to read across an organisation, assess enterprise-wide risks and monitor working capital movements are ideally placed to place a critical role if not lead.