Outsourcing is a well-known concept. Organisations increasingly outsource their customer service, parts of production, back-office, IT services, or HR activities to specialised service providers. Tasks that were previously managed internally or are theoretically feasible to be performed internally are transferred to another organisation. While the decision to outsource HR or IT activities is widely accepted, there is still reluctance when it comes to financial activities. However, treasury in particular is exceptionally well-suited for outsourcing!

The decision to outsource is often strategic, driven by three main reasons:

  1. There is an issue with the current task implementation; it is challenging to recruit the right people or balance quality, costs, and/or lead time.
  2. An organisation wants to focus more on core activities or cannot afford nor wants to take risks.
  3. There is an acquisition, merger, or new technological development.

The most common reason for choosing outsourcing is cost savings, closely followed by the need for greater flexibility than an in-house department can provide.

This also applies to treasury

Given these reasons, treasury is ideally an activity that can be outsourced. For a smaller organisation, it is incredibly challenging to optimise and leverage a treasury function. Consequently, treasury is often unintentionally overlooked. While the organisation wants to maintain focus on core activities, the failure to fully and accurately structure the treasury poses risks. These risks can be managed through external and technological support.

When weighing the pros and cons of outsourcing, consider the following aspects:

  • Determine what will and will not be outsourced. Understanding the processes that may be outsourced and where tasks and responsibilities will be delegated is necessary.
  • Cost savings should not be the main focus.
  • The outsourced business activity must be the core competency of the service provider. The service provider must be able to ensure continuity and quality. (Part of) the intended service may require the service provider to have a license.
  • Ensure a certain level of flexibility; the ability to scale services up or down according to (market) conditions provides significant freedom.
  • The relationship between the organisation and the service provider is crucial to the success of outsourcing; a similar work culture is important.
  • The organisation remains responsible for the outsourced work. Regular evaluation of the outsourced work is necessary.

When treasury is outsourced to a specialised service provider, the organisation no longer has to perform recurring treasury tasks. Through collaboration, the organisation gains access to capacity, knowledge, experience, a network, and all necessary treasury systems. Time is freed up for the core activities of the organisation without relegating treasury to a secondary position or relinquishing control over finances to another party.

Proper preparation is key, also for outsourcing. Once the decision to outsource is made, the actual outsourcing of specific activities can commence. Details on how this is done can be found in our article ‘Treasury outsourcing in 4 steps’.