2. Treasury Management
What are Treasury’s main responsibilities?
Protect the assets of the company
Cash management
Risk management
Liquidity management
Debt management
Cash forecasting
Banking relationships
International funding
Repatriation strategies
Strategic partner to the business units
3. Treasury Management
Benefits of a decentralized Treasury
Flexibility – local subs manage their cash and investments in
line with local market conditions
Proximity and knowledge of local market provides an
advantage to select appropriate debt/investment vehicles, fx
hedging instruments, banking partners
Local staff has more intimate knowledge about local
rules/regulations, business/legal/tax/banking environment
and local customs
Local staff takes pride in managing all aspects of the
operations
4. Treasury management
Benefits of centralized treasury
Economies of scale
Rationalization of costs
Identification of cash and risk
Cash flow forecasting
Investment performance and risk
Access to financing and liquidity
Banking relationships
Allows local staff to focus on growing the business
5. Treasury Management
What factors have an impact on a Company’s
selection of centralized versus decentralized
treasury?
Management’s attitude
Company’s specific situation
International presence
Type of business
Growth prospects/cycle
Sophistication ERP systems
Treasury Management Systems
External Factors
Global-regional financial crisis
6. Treasury Management
The movement toward treasury centralization has been in
progress for many years and led by the need for greater:
1. Control and efficiency
Centralization of processes across the organization
provides better control and efficiency
2. Visibility
Provides treasury with a view of exposures and ability to
manage liquidity
3. Cost reduction
Multiple bank accounts and systems can be consolidated
7. Treasury Management
What factors have allowed more Treasurers to continue
toward centralization?
Globalization of markets
The global financial crisis emphasized the importance of
managing liquidity and risks (counterparty, FX, interest
rate)
Technology
Legislation (Single Euro Payment Area, Payment Services
Directives)
8. Treasury Management
Summary
In general, companies have been moving toward Treasury
centralization for many years due to the numerous benefits.
Treasury needs the communication and cooperation of the
local staff to provide insight.
Standardization of processes is not easy to implement globally
due to different rules and regulations.
Centralization is not only the standardization of data and
processes which results in improved visibility and control.
