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Q&A: Challenges for Middle Market Treasury

  • By Andrew Deichler
  • Published: 8/6/2015
Beadle1AFP recently spoke with Terry Beadle, global corporate treasury business manager at Bloomberg, about the challenges middle market corporate treasury organizations are facing in today’s business environment.
Based in London, Beadle has been working for the past several years on Bloomberg’s global corporate treasury strategy, particularly treasury management systems (TMS). He previously ran the treasury business at Wall Street Systems, and has also been a management consultant in the treasury and capital markets space.

AFP: As head of Bloomberg’s global corporate treasury business, which corporate treasury clients are you focused on?

Terry Beadle:
Bloomberg has quite a history with corporate treasury; we have about 8,000 corporate clients. In the past year, we’ve introduced a product that focuses on the middle market of corporate treasury ($500 million to $5 billion). I would say that, at the moment, the middle market is relatively underserved and where we’re focusing on right now.  

AFP: What issues would you say the majority of middle market corporate treasurers are facing today? Cash management, cash flow forecasting, FX, SWIFT connectivity? What are you hearing from your clients?

The corporate treasurer today has a few specific pain points. You have a lack of cash and risk visibility, you have 1,001 spreadsheets, it’s a time consuming and messy process to bring all of your numbers together, you have multiple banks, and there’s probably a lack of focus on value-added activities. So those are the problems we’re trying to solve.

AFP: We’ve heard from some treasurers that they’ve been forced to stick with the tools that they already have because upper management doesn’t fully comprehend why dedicated systems could help treasury do its job better. Could this also be part of the reason why the middle market has been underserved up until this point? If so, might those attitudes be changing now?  

Yes, I think there was a time when corporate treasurers in the middle-sized space were very budget-constrained or maybe didn’t have management’s attention enough. I think those times have changed. I think that management is actually much more open to those kinds of decisions.

I think problems now are much more practical. Firstly, there are 10,000 middle market corporates, and they’re not neatly clustered around financial centers like banks are. Vendor partners have to be able to engage with those corporates, and you need to have the organization footprint to engage. The second issue is that, if you’re a first-time buyer of TMS, it’s very difficult to find a product that fits into any kind of reasonable budget and doesn’t put any huge pressure on your internal resources for implementation, and is manageable on a day-to-day basis.

AFP: Are you seeing more interest in TMS products in particular regions? Has the U.S. market, for example, been more willing to adopt dedicated systems than the UK or other parts of Europe?

We’re a global company, and we are selling our product on a global basis. But so far, we’ve launched in Western Europe and the U.S. I would say we have pretty much even results. There is perhaps a little bit more interest in cash management in the U.S., which I think reflects the nature of the market. I think there is a little bit more of a bias towards risk management challenge in Europe. But in terms of interest, it’s strong on both sides.

AFP: Europe is obviously concerned about FX risk right now, what with the ongoing turmoil in Greece. Have any of your European clients expressed concerns about their exposures there?

Yes, I think for everybody it’s been a pretty exciting year because of FX volatility. That’s certainly been an issue for our clients who have that exposure. But actually, the challenge for the middle market is establishing the basics; being able to be clear on what the exposures are, learning how to calculate them accurately and regularly, and developing risk management strategies based on a firm foundation. The middle market is probably more cash-led than risk-led.

AFP: As we see more reliance on TMS, some treasury functions have found that they’re able to do more with less people. Is this a concern for the treasurers of tomorrow? As technology reduces certain manual processes, do you see some treasury positions actually being phased out?

We don’t see headcount going down. But what we do see is more automation, which allows one to become more value-focused. I think one of the problems in the middle market in particular is, one could spend huge amounts of time establishing the basics; establishing data that you need to run a business. For example, you could spend a whole day just establishing where you are in terms of bank balances. But this can be completely transformed by a TMS. You could come in the morning and already know where your bank balances are. So what has happened is a change of focus.

So I don’t see it as a negative at all. I don’t think there is a diminishing number of people or resources; just a change in focus to more value-adding things. I think the ambition is there for treasury to be strategic; one just needs the capability. You have to have automation; you just can’t keep working with all the spreadsheets and all the manual stuff. It’s just too much of a burden.

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