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Finding the Right Treasury Structure

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July 11, 2017

No companies are alike of course but some parallels exist and can be useful.

Organization-collaboration 209In a period of change for many US multinationals functions can take on new looks and new strategies. At a recent NeuGroup Assistant Treasurers’ Group of Thirty (AT30), members going through change discussed how their departments are taking on a whole new look (in good and bad ways) and dutiies.

Just about all members in the group pulling in or pushing out activities to align with the company’s overall strategy. In the group’s pre-meeting survey, it was revealed that most members are trying to get cash reconciliation out of treasury, with 50% indicating that it is owned by the SSC. This contrasts sharply with cash forecasting and bank account management, where more than 80% indicated the activity was owned by treasury. On the cash forecasting side, one of the challenges is keeping the short, medium and long-term forecasts in sync, or at least using the same numbers (with proper accounting for FX translation etc.), which is why treasury has been quick to take ownership. Account management simply dovetails with treasury ownership of bank relationship management, but it is likely an area where treasury can delegate more as it is doing with cash reconciliation.

At least two companies are managing costs and thus reducing headcount. At one of those companies, the reduction has led to treasury personnel being assigned to specifics groups within the department. There are services, which handles cash management, operations and FP&A; the advisors who function more as go-betweens and handle interactions between stakeholders; and a capital markets group that executes FX trades and other transactions. This company also has met with challenges of inconsistencies when employees in different locales are engaged in the same activity. To that end, the company is seeking to create a common catalogue of activities across the different groups, so someone in a specific position in one geography is doing the same things as his or her counterpart in another location.

The other company reducing costs is having certain tasks done in lower-cost jurisdictions or stations staff where it can get the biggest bang for the buck. Cash management might be done in Latin America while ERM and FX might be done in the US. Asia or Europe might also have some FX responsibilities.

One member company that presented on its structure has things down to the lean and mean stage, having started a reorg several years ago. This company, which for its size has a very small treasury headcount, relies on automation for much of its operations and uses one instance of SAP across all operations.

There are no fast rules for designing corporate treasuries, which will evolve to meet the changing needs of growing companies. Shifting treasury activities to less costly regional hubs and share service centers appears set to continue.

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