GCBG Update: Identifying World Class Cash Management Principles for MNCs

First phase results of the GCBG world-class cash management survey

Citi and The NeuGroup have announced results from the first phase of their partnership to identify best practices in corporate cash management. This was an outcome of a joint research program with The NeuGroup’s Global Cash and Banking Group, a peer group of senior treasury practitioners from global companies across a variety of industries.

Highlights of world-class principles identified in the first phase include:

• Organization – Owning core functions, while maintaining significant influence over those that can impact financial results
• Centralization – Striking the right balance between HQ centralization vs. regional and local coordination and execution
• Technology – Continually driving to minimize the number of core platforms, supplemented by “best of breed” special-purpose applications where necessary
• Talent Management – Developing and utilizing tools and philosophies for effective recruiting, development and retention of star performers 
• Bank Relationship Management – Standardizing internal management and control of bank accounts and signatories, and the use of scorecards for measuring the performance of global partner banks
• Policies and Procedures – Covering critical functions, including performance metrics, segregation of duties and control processes, and thorough, tested business continuity plans

Phase two of the principles of world-class cash management project will be completed in March of 2011 and cover processes including in-house banks, cash pooling, and cash forecasting and positioning.

Citi and The NeuGroup each have ongoing research programs on best practices in global treasury management. The partnership brings together Citi’s award-winning Treasury Diagnostics tools and resources and The NeuGroup’s member-driven, peer group forum process dedicated to the exchange of knowledge among treasury professionals at global corporations.

• Citi Treasury Diagnostics, now in its second year, provides companies with independent benchmarking of their treasury operations practices. The comprehensive benchmarking tool helps companies compare performance across six key pillars of treasury operations: liquidity, working capital, risk, intercompany funding, technology, and policy and governance. Participants are able to benchmark treasury practices and processes with peers and best-in-class companies worldwide. The tool helps companies identify key opportunities and challenges, and provides a basis for prioritizing investments in change.
• The NeuGroup’s Global Cash and Banking Group (GCBG) recently initiated a two-part year-long project to identify principles of world class cash management for companies. Members, all global corporations, decided to emulate similar, successful work by The NeuGroup’s Foreign Exchange Peer Groups. The scope of the GCBG world class cash management project encompasses key functions and processes managed by corporate treasury organizations. The first phase, just completed, focuses on policies and governance, centralization, talent management, bank relationship management and a vision for the optimal application of technology in treasury. The second phase will cover core cash management processes and the actual use of technology.

Joseph Neu, President and CEO of The NeuGroup said: Since the formation of the GCBG in 2004, The NeuGroup has facilitated the sharing of members’ experiences, approaches to common challenges and benchmarking of treasury practices. We are pleased to have partnered with Citi on this member-initiated and driven project to help the group to continue their march toward treasury excellence.”

Elyse Weiner, Global Head of Liquidity and Investments, Citi Global Transaction Services said: “As a partner to global corporations, Citi brings worldwide experience and local insights to bear in crafting tailored solutions for our clients. This collaboration further demonstrates our commitment as a trusted advisor to our clients as they re-evaluate and re-engineer their global treasury management practices in response to environmental and market challenges.”