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Treasury Management
Centralization or decentralization
TREASURY MANAGEMENT SUMMIT
JULY 2014 - BOSTON
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
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
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
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
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
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)
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.
Treasury Management
Question - Comments

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Treasury Management

  • 1. Treasury Management Centralization or decentralization TREASURY MANAGEMENT SUMMIT JULY 2014 - BOSTON
  • 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.