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Centralising treasury: a new frontier

Treasury centralisation is not a new topic. Corporate treasurers have been centralising processes for the last 20 years, but the techniques that they use continue to evolve. In particular, developments in technology are opening up centralisation techniques to companies which have not previously undertaken a centralisation exercise, writes FX-MM’s Rebecca Brace.

Jeff Diorio, a Managing Director at Treasury Strategies, says that while long-standing treasury management system vendors like SunGard and Wall Street Systems have supported companies in their use of shared service centres and in-house banks for some time, the landscape is continuing to evolve. More recently, new entrants offering software-as-a-service solutions have opened the market up to comp anies which might not have been able to afford this type of technology in the past.

But centralisation can bring drawbacks as well as benefits. For one thing, it is important to recognise that centralisation can also reduce the company’s local market knowledge. “There’s a balancing act that we frequently help our clients navigate,” explains Paul LaRock, Principal at Treasury Strategies. “If you have operations in Europe and Asia, and you are centralising into New York, you are going to be dealing with some time zone challenges. You are also going to be pulling back from vendor facing and customer facing positions. So you will need someone to act as the eyes and ears on the ground for treasury to understand the needs of vendors and customers who are far away from the central location.”

Rebecca Brace/FX-MM Magazine

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