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Citi Perspectives for the Public Sector - Vol 1, 2012

Creating greater efficiency in treasury operations

Public sector entities around the world are struggling to manage tighter budgets and decrease their expenses. This in turn is leading to demands for greater efficiency, specifically in treasury operations.

by Kevin Fitzgerald
Head of Public Sector, North America
Citi

Pressure on public sector entities comes from voters and the politicians they elect. As a result, there are constant demands on public servants to run their operations more efficiently. These demands have increased, especially in advanced countries, as governments struggle to balance their budgets and reduce their deficits. The focus is on maximizing tax and other revenues and minimizing spending.

It is incumbent on officials to make every government function more effective and cost-efficient. They must strive to improve controls, enhance transparency, keep up with regulatory and market changes, innovate, and manage security and risk. Increasingly, government entities are looking to best practices developed in the private sector to determine what efficiencies can be achieved. A recent Deloitte report identifies several key actions that governments can undertake to reduce costs, such as improving property and facilities management, selling unnecessary assets, tackling hidden costs and process inefficiencies, reducing staff costs and expanding partnerships with the private sector (i.e. share utilities, offices, IT, etc.).

In order to reduce their costs and improve efficiencies, public sector entities should look to improve their payments and treasury management processes. Examples of such solutions include: liquidity management, e-payments, collections, commercial cards, supplier finance, investments / securities processing, data aggregation, secure systems integration and shared service centers (SSC).

To address these challenges, public sector entities are beginning to closely engage with their banking partners to seek advice in this area. With that being said, it is critical for senior officials to commit to making cost efficiency a high level, strategic policy that is properly explained to staff at all levels; in turn, this will likely lead to departmental heads embracing cost-saving directives.

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