For almost every treasurer out there, the ideal treasury functionality would be able to seamlessly address issues around visibility, control and optimization. Asset Benchmark Research’s Treasury Survey last year revealed that the lack of visibility was one of the top three pain points expressed by survey participants. However, for treasurers to attain those three key objectives they need to embark on a challenging and often long journey of treasury transformation.

While multinationals will already have some sort of sophisticated treasury centre in place, other companies would typically start their treasury transformation at a decentralized level. At this level a company and its subsidiaries would follow a global treasury policy but would delegate local treasury teams to manage bank accounts, payments and collections, and risk management. This setup tends to cause problems as the treasury team at the headquarter level may not get a full picture of the financial health of its subsidiaries.

The next natural step for any group treasurer in this situation would be to establish a basic treasury centre. This would commonly involve a system whereby cash, financing decisions and exchange rate risk is centralized. Account management and banking relationships will also be managed from this centre.

The next phase entails a drive toward a full-service treasury centre, which means increased connectivity with banking counterparties through a host-to-host connection with the company’s enterprise resource planning system. A company can obtain better visibility on payments and collections from this scheme as it results in an end-to-end solution for payments and better reconciliation on collections.

Once a full-service treasury centre is established, treasurers further enrich their operations by creating of a shared service centre (SSC). Under an SSC, companies can concentrate not only payments and collections processes in a single operating entity, but also streamline decisions on tax, accounting and risk management eventually leading to better control. The SSC model can also significantly reduce costs in a variety of ways, such as by lowering the number of systems needed to carry out everyday treasury actions.

The final goal in any treasurer’s transformational journey lies in the creation of an in-house bank (IHB) structure. A sophisticated system, the IHB financially connects the parent company and subsidiaries and is able to take deposits, pay interest and make loans to ensure the highest level of funding and liquidity for the group’s operations. Under an IHB scheme there is also the possibility of intercompany netting and pooling. For fast growing companies with a global mindset it is important their treasury operations consist of visibility, control and optimization to support their expansion plans.


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