Today’s business climate is bringing major change to the role of the treasury.

Treasuries are under pressure from globalization, the need to improve cash flow, regulatory and compli-ance issues, and a trend toward centralized treasury operations. Combine this with the need to pro-tect the business from payments fraud, contain costs, and automate transactional processes, and you have a challenging time to run a treasury.

In response to changing market conditions, more Canadian compa-nies are looking to take advantage of opportunities in the U.S. and other foreign markets. My organiza-tion has seen a 12% year-over-year increase in transactions originating from foreign-currency accounts, signaling that our clients are looking overseas for growth opportunities.

These companies want their banks to help them seize offshore oppor-tunities and provide valuable advice along the way. Some of us have re-sponded with a streamlined ap-proach that focuses on navigating the global marketplace on behalf of our clients. After all, banks are well-positioned to assist in managing the critical components of these expan-sions, such as regulatory compli-ance, foreign currency risk, global cash control, and technology issues.

Too many banking relationships and accounts in a decentralized environ-ment can create cash-flow prob-lems such as idle cash balances, ex-cessive processing costs and inaccu-rate cash forecasting. In the past, treasurers worked to eliminate these inefficiencies by centralizing their operations and consolidating their cash-management relation-ships.

Today however, the consolidation trend is reversing. Cash managers are being very cautious not to con-centrate too much of their activity with a small number of banks. This likely arises from the recent credit market turmoil in the U.S. and the increasing scrutiny of investors.

Although it is more difficult to con-tain costs in a decentralized envi-ronment, corporate treasurers hope that decentralization will give them access to a wider range of services and help dilute risk.

As the mandate of corporate treasurers grows, the quality of relationship management and customer service is becoming the key decision factor when selecting a primary bank. A single, dedicated relationship manager that provides a centralized touch-point for clients is an invaluable resource. With client-centric banks doing the heavy lifting, companies can focus on their core businesses and implementing their strategic plans.

In the meantime, many countries are adopting an electronic process for clearing cheques. In North America, banks are taking advantage of image-based processing to improve cheque-clearing and streamline cash management processes for clients.

Although Canada’s cheque-clearing system effectively eliminates cheque float, it lags behind the U.S. and other countries in the use of image-based clearing. This situation will quickly reverse once Truncation and Electronic Cheque Presentment (TECP) is fully implemented in late 2008. Heralded as one of the most significant regulatory changes in Canadian cash management, TECP has been mandated by the Canadian Payments Association as the standard for cheque clearing. Businesses will ultimately benefit from easier account reconciliation, earlier notification of returned or un-paid cheques, automated processes to prevent payments fraud, as well as the proliferation of value-added image-based services.

We are also seeing a continuation of the trend toward electronic payments. For corporate treasurers, the advantages of shifting to a paperless environment are numerous. Benefits for clients include: accelerated availability of funds, improved cash-flow forecasting, reduction of payments fraud, cost and processing efficiencies, faster notification of returns, fewer NSF returns and earlier fraud detection, as well as a more sustainable path for the organization. For companies expanding globally, electronic-based solutions make it easier to build relationships with trading partners and centralize information reporting.

In this environment, the treasurer is also being challenged to maintain compliance with industry regulations, such as Sarbanes-Oxley, that require enhanced controls and reporting. Tools that offer improved cash-flow forecasting and tighter integration with Enterprise Resource Planning (ERP) systems are in demand.

Many treasurers are turning to banks for advice or to assume some of the responsibility for matters of compliance and governance. This is a growing opportunity for banks that are looking to deepen their relationships with business clients. Many tierone and tier-two banks around the world are developing such capabilities to expand their advisory role with clients.

In response to the growing need for transparency within the treasury environment, treasurers are also looking for the ability to customize their reporting to include information such as the segregation of duties within treasury, employee permissions and general access rights to cash management services, as well as account permissions and transaction histories.

As more companies take a global approach to growing their businesses, more banks are offering cross-border transaction and reporting services for the middle market. Large corporate clients are also demanding greater straight-through-processing from their banks, which entails tighter integration between bank and customer ERP systems. More-over, corporations want to receive informative files from their banks in a format that is suitable for exchange with other financial institutions. This is especially important for companies that manage multiple banking relationships both on a regional or global basis.

Once they have selected a provider, Canadian companies looking for expansion opportunities outside Canada want foreign exchange, money market, trade finance and cash management services to be available in one place.

Eliminating the paper-intensive processes traditionally associated with trade finance, paying foreign suppliers in a timely manner, determining liquidity positions and capitalizing on trade opportunities around the world necessitates a tight integration of trade finance and cash management platforms into a single web portal. Many Canadian banks are responding to this growing need with development plans over the next few years that would tightly integrate trade finance and cash management into their treasury gateways.

There is also intense pressure on treasury to centralize functions to achieve process improvements, cost savings and tighter controls. Centralization and the need for efficiencies in the financial supply chain are driving demand for bank services, including multi-bank reporting capabilities, SWIFT for corporate clients, real-time information, as well as netting and pooling services. As global needs continue moving further into the middle-market, look for demand for these services to increase.

With all these economic, technological and regulatory issues at play, this is an exciting time to be a treasurer. Corporate treasurers are agents of change and custodians of critical information. As such, they have a strategic role to play. Today’s visionary companies are realizing this and making the corporate treasurer a cornerstone in strategic planning.

Marnie Kinsley is Executive Managing Director and Head of Global Treasury Management for BMO Capital Markets. This article was reproduced with permission from Canadian Treasurer.