Why it pays to think long-term when establishing your Treasury function

There’s a reason the term ‘growing pains’ is so often used to describe the experience of trying to take a scale-up company to the next level: fundamentally, growing a company is difficult.

As a scale-up’s growth accelerates, founders and their teams are suddenly expected to become astute businesspeople, adept at managing everything from overlapping regulatory obligations to client services and complaint handling, without taking their eye off what really matters: products and the experience they deliver to customers.

It’s this overload of expectation that makes it so tempting for scale-ups to build business operations by piecemeal, implementing a series of just-in-time solutions which meet their current needs, but are incapable of scaling with a company’s growth.

Overwhelmingly, this method is used because it works.

Often, when the time is right for significant change, it’s brought about by new partners offering the right combination of capital and skills to facilitate a serious upgrade to business processes and technology, bringing many growing pains to an end at once.

This is not the case when it comes to financial operations, however.

Companies which persist with a piecemeal approach to financial operations can see founders maintain oversight of critical Treasury responsibilities, including adding accounts and processing payments using entry-level banking services.

While this approach may suffice early in a company’s development, it becomes a serious limitation when positioning for growth, with decision makers suffering from a lack of accurate real-time insights into the company’s financial health, which can lead to liquidity problems and hamper expansion efforts.

Moreover, the absence of a cohesive and evolving financial strategy exposes scale-ups to significant risks, leading to potential financial losses.

For example, some scale-ups seeking growth in international markets might employ basic foreign exchange risk management strategies, which fail to adequately protect them from volatile currency fluctuations, causing financial instability.

Another challenge is in regulatory compliance, which becomes increasingly challenging without robust financial operations, potentially resulting in legal and reputational repercussions.

Scale-up companies face unique challenges, and having the right partner that understands these challenges and can help navigate complex financial landscapes is essential.

Start-ups in Australia always have a lens towards scaling their operations internationally as they reach a critical mass. This requires:

a) foundational treasury capabilities that support integration across jurisdictions without involving significant change management;
b) working capital solutions that are interoperable across markets;
c) workflow tools that simplify cash flow forecasting across entities and
d) technological solutions such as Real-time payments, APIs and wallet solutions that respond to a diverse set of consumer expectations across boundaries.

At HSBC, we have developed a leading Treasury solution designed to evolve with scale-ups, by providing flexibility to adapt to a scale-ups changing needs and dynamic market conditions.

Our solutions integrate several Treasury functions into a cohesive system, enhancing operational efficiency, reducing risks, and providing a comprehensive view of your company’s financial health.

It’s critical for scale-ups to build a Treasury function which can serve their purposes not only for today, but for the growth of tomorrow.

HSBC is one of the world’s largest banking and financial services organisations, with assets of US$3,001bn at 31 March 2024.

In Australia, the HSBC Group offers an extensive range of financial services through a network of 34 branches and offices. These services include retail and commercial banking, trade finance, treasury and financial markets, payments and cash management and securities custody.

HSBC works to support innovative companies to grow quicker, easier and more efficiently, by combining decades of experience banking startups with a global focus on technology coverage and an international footprint, including capabilities in 62 countries.

HSBC offers start-ups with a range of specialised banking services designed to meet the specific needs of innovative companies, including access to a range of APIs and digital payment solutions, the award-winning HSBCnet digital platform, and digital onboarding.

For more information, contact:

Alan Watters | Director | Corporate Origination and Tech Sector Lead | Corporate Banking
alan.watters@hsbc.com.au

Steve Hughes | Managing Director, Head of Wholesale Banking Australia & New Zealand
steve.hughes@hsbc.com.au