If you are reading this, you are either already outsourcing functions of your business or considering it. Either way, no big hard pitch is required for you to continue reading and as such, all this article is going to do is highlight some reasons as to why outsourcing your treasury or some aspects thereof may be beneficial to your company. While the cost aspect is important, it is the numerous other value added, and sometimes non-calculable aspects that need to be taken into account as well. Businesses used to only outsource aspects of their business that were non-essential (cleaning etc) for cost reasons, but the trend is now changing to business transformation around core competencies, value adding and focusing on strategic business strategies.

Here are some of the main reasons for you to outsource your treasury department (or parts thereof) to Ilizwe Financial Services:

  1. Cost saving through economies of scale - There are two aspects to this:
    • Firstly, a treasury requires skilled staff (salaries), technology (IT costs), infrastructure and continuous training to be of real value to your company. Ilizwe has already covered these costs and may require little further to upgrade to handle your extra capacity
    • Secondly, an outsourcing company, through its many clients and banking relationships can offer better pricing through its ‘collective bargaining’ power base to clients with little or no clout on their own credit base.
  2. Freeing up of management time – In smaller businesses, the treasury function normally falls under the direct authority of the Financial Director who, more often than not, does not have the time to concentrate on the markets as well as look after his normal core business function. Outsourcing, with all the correct controls, policies and procedures in place frees him up, while providing the confidence that there are other ‘professionals’ in place to look after the firms financial exposures.
  3. Increased intellectual capacity and skills within the company – From above, a company with few surplus resources can greatly improve its intellectual capacity and skills at a fraction of the cost that it would take to implement its own treasury.
  4. Reduction of risk – Continuity is a big risk in treasuries as skilled traders and settlement staff are often coaxed to ‘greener pastures.’ An outsourced treasury negates this risk by contracting a service that removes all the risk of replacing staff or antiquated computers or software.
  5. Value added – By their very nature, outsourcing companies have to perform above benchmarks more so than employees due to the competition and contractual basis of the work. As such, the desire to add value is greater and adds to the bottom line, while the risk controls remain the same for both scenarios.
  6. Upgrade treasury activities to “best practice” – Outsourcing companies, need to stay on the cutting edge of banking products, economic developments worldwide, accounting principles and risk management techniques. By outsourcing to Ilizwe your company will always have exposure to the latest developments in the areas of financial risk management and corporate governance.
  7. Quality information from an independent source – A failure in many small (or one man) treasury environments is that there is exposure to only one or perhaps two banks as far as research, market updates and general risk trends are concerned, and as such, the chance of the information from a single source being incorrect is higher.
  8. Collective bargaining – Banks have increasingly cut costs on margin business to chase fee income business in an attempt to free up their own balance sheets. As a result of this, more marginalized ‘commercial’ clients are being pushed back to branch service mentality, and even the ‘corporate’ client does not get the service that they once enjoyed due to the person servicing him having many more clients to provide a service to. Outsourcing companies, through their collective size, do not experience this as much even though client facilities are based on individual bank-client credit assessments.
  9. Centralization – many companies are now becoming conglomerates that are multi faceted. The centralization of management competencies at a ‘head office’ level allows for all of the above through a central outsourced treasury, the pooling of funds (in-house-banking) and the netting of FX exposures and a single control (policy compliance) environment from a corporate governance point of view. Ilizwe has the communication skills and know-how to run centralized treasuries.
  10. Focused - Outsourcing environments normally have streamlined processes, efficiencies of application and coordinated effort as a central philosophy as opposed to the often incidental attitude of in-house operations.

Ilizwe offers all of the above in a personalized manner, but most of all, independent from any outside shareholders or parents that could influence business flows, advice and risk management decisions.

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