Organizational types of corporate treasury. Digital transformation as optimization through (de)centralization

Table of contents

Table of contents

List of figures

1 Introduction

2 Corporate treasury function and its management
2.1 Organizational types of corporate treasury
2.1.1 Fully decentralized corporate treasury
2.1.2 From decentralized towards the centralized treasury
2.1.3 Regional treasury centres
2.1.4 Fully centralized corporate treasury
2.2 Important regulatory aspects for the corporate treasury
2.3 Criteria catalogue for an optimal corporate treasury

3 Decentralized vs. centralized organization of corporate treasury
3.1 Cash and liquidity management
3.1.1 Decentralized cash and liquidity management
3.1.2 Centralized cash and liquidity management
3.1.3 Central vs. decentral cash and liquidity management
3.2 Governance and risk management
3.2.1 Decentralized risk management
3.2.2 Centralized risk management
3.2.3 Central vs. decentral risk management
3.3 Bank relationships management
3.3.1 Decentralized bank relationships management
3.3.2 Centralized banking relationships management
3.3.3 Central vs. decentral bank relationships management
3.4 In-house banks as an enabler of centralized corporate treasury

4 Future vision – digital corporate treasury
4.1 Digital corporate treasury – a technology ecosystem
4.2 Transformation path towards digital corporate treasury

5 Conclusion

Bibliography

The author is very grateful for the lively discussions during this thesis and would like to thank Prof. Dr. Rainer Lenz and Prof. Dr. Andreas Uphaus for their mentorship and Otto Johannsen and Oliver Schreiber for their valuable ideas and suggestions .

List of figures

Figure 1: Corporate treasury key performance indicators

Figure 2: Main organizational types of corporate treasury

Figure 3: Fully decentralized treasury model

Figure 4: Global treasury centre with decentralized treasury activities

Figure 5: Regional treasury centres

Figure 6: Fully centralized treasury centre

Figure 7: Benefits and complexity of centralization

Figure 8: Centralization model

Figure 9: Criteria catalogue for an optimal corporate treasury

Figure 10: General criteria for an optimal corporate treasury

Figure 11: Criteria for optimal cash and liquidity management

Figure 12: Criteria for optimal governance and risk management

Figure 13: Criteria for optimal bank relationships management

Figure 14: Virtual accounts infographic

Figure 15: Application of virtual accounts in in-house bank stages

Figure 16: Relevance of new technologies for treasury

Figure 17: Leaders in shaping the change in corporate treasury

Introduction

New and emerging technologies promote disruption and decentralization of power and resources to increase security and transparency. This is not the case in the field of corporate treasury, where integration and centralization are seen as future goals to increase control and visibility over the whole activity chain. What are the factors that influence this development and what is the optimal level of corporate treasury centralization?

This thesis analyses different organizational types of corporate treasury in the view of digital transformation and new regulations and searches for the optimal centralization level of corporate treasury that can fully leverage the potential of new technologies like artificial intelligence, data analytics, robotic process automation, APIs and blockchain.

The main organizational types of treasury that are analysed and compared in this thesis include the fully decentralized treasury, hybrid forms of treasury organization, regional service centres and the fully centralized corporate treasury. Recent regulations that impact the work of corporate treasury are also discussed. A criteria catalogue, which puts together different criteria that impact treasuries’ performance closes the theoretical part of this thesis. The catalogue is based on theoretical explanations provided in this part and also on the practice of international corporations as different reports and reliable surveys show later in this thesis. The main part of the thesis (chapter three) describes the functionality of the main processes of corporate treasury. It is followed by the evaluation of the previously mentioned criteria for ‘cash and liquidity management’, ‘governance and risk management’ and ‘bank relationships management’ as a comparison between a centralized and a decentralized treasury. After a transparent evaluation of the criteria for each of the above-mentioned processes, the elaboration of the concept of ‘in-house bank’ as an enabler of treasury centralization and possibilities for its implementation close this chapter. The thesis concludes with the presentation of the idea of a digital corporate treasury, which leverages new technologies like artificial intelligence, robotic process automation, data analytics and blockchain. Possibilities and challenges that come with digital transformation of corporate treasury together with some tips for a transformation path close the analytical part. A short conclusion at the end summarizes the findings of this thesis.

1 Corporate treasury function and its management

There are many definitions and approaches about corporate treasury organization and the scope of its functions, from simple finance management department until strategic partner and consultant to the management on financial topics and realization of corporate goals. Involvement in financial markets, liquidity management and other forecasts about cash flows, economic and political risks in involved countries and choosing of the most appropriate banking partners are just a few generally accepted functions of corporate treasury. Some of the main contributors to the modern definition of corporate treasury, also concerning its organizational structure, include Polák, McMenamin, Bragg and Cooper.

According to Polák, the function of treasury management equals that of financial management about future financial balance and cash flows of corporations. Differently from accounting that is concerned about the past, treasury management deals with the present and future financial management of corporations.¹ As high-level responsibilities of the treasury, Polák identifies cash management, risk management and relationship management. However, as specific tasks of a typical treasury, he emphasises cash management, financial risk management and assets and liabilities management.

For McMenamin a treasury function is common for multinational corporations (MNCs) and may be centralized at corporate headquarters and staffed by treasury management specialists or left under the management of local business units.² He classifies funds management, risk management, foreign exchange management, pension fund management and tax management as responsibilities of a treasurer. McMenamin offers also a broad definition of treasury management as “…the corporate handling of all financial matters, the generation of external and internal funds for business, the management of currencies and cash flows, and the complex strategies, policies and procedures of corporate finance.”³

Bragg argues that the role of the treasury department is to ensure a company’s liquidity at all times to meet the needs of primary business operations.⁴ He suggests that this is a very narrow definition of the role of a treasury department. It includes also the following functions: cash forecasting, working capital management, cash management, bank relationships, investment management, fundraising, treasury management, management advice, credit rating agency relations, credit granting and other activities (e.g. consulting management on topics about M&A).

Cooper identifies four broad approaches regarding the role of the treasury department: (1) hedge risks as soon as they arise, (2) add value through treasury department, (3) a quasi-profit centre treasury and (4) a profit centre treasury.⁵ In the first approach, the treasury department is the classic ‘cost centre’ and has the principal objective to minimize the financial consequences of an unfavourable movement in financial exposure. From this type of treasury department is only expected that accurately measurable financial risks are hedged as soon as they arise, but rather than that it is not expected that the treasury department can offer any added value to the company. The second approach considers the treasury department as an added value to the company, providing proactive services to operating business units, subsidiaries and other departments. These services include consulting of other units about financing possibilities, corporate tax optimization through tax-efficient financing structures and reduction of banking costs. The previous task of ‘hedging risks as soon as they arise’ remains the same. The third approach (treasury as a quasi-profit centre) allows treasury departments to choose the timing of hedges. It is expected that the treasury team, through its involvement in financial markets, can identify proper times to hedge to the company’s advantage. The fourth approach defines treasury as a profit centre and empowers the treasury department to take bets with the company’s money.⁶ This profit centre enjoys extended rights and is allowed to buy or sell financial assets depending on their view about the financial markets.

Higdon from the Association of Corporate Treasurers (ACT) has identified the following ten important treasury KPIs.⁷

Figure 1 : Corporate treasury key performance indicators

Abbildung in dieser Leseprobe nicht enthalten

Source: Higdon

Based on the previously discussed theories it is easy to conclude that treasury and its management is of highest importance for corporations to be able to realize their business strategies and ensure business continuity. Internal financial management and also external relations and partnerships aiming to ensure proper financing and optimal use of internal funds and surpluses are key tasks of the treasury department. The way how individual corporations organize their treasury is not regulated, but its functioning and operations are highly regulated (internally and externally). The most known types of corporate treasury organization are the fully decentralized treasury, hybrid (a mixed version) treasury and fully centralized treasury. Based on the organizational type, the work and activities of the treasury department are also adjusted and defined. In the following part, the main organizational types of corporate treasury are analysed together with their pros and cons for the overall corporate treasury performance.

1.1 Organizational types of corporate treasury

Treasury can be differently organized within corporations. Two extreme approaches regarding organizational types are fully decentralized and the fully centralized treasuries. A pure version of either of the options is difficult to find since most companies are somewhere in between. This thesis searches for the optimal degree of (de)centralization of the corporate treasury that offers the possibility for companies to leverage all benefits for the treasury internally and externally. The following figure shows an overview of the main organizational types of corporate treasury. Detailed explanations of each organizational type follow after this part.

Figure 2 : Main organizational types of corporate treasury

Abbildung in dieser Leseprobe nicht enthalten

Source: author

The figure above shows, in a very simplified version, the most common ways of corporate treasury organization. This is a very high-level overview since there are no predefined models that companies must follow.

1.1.1 Fully decentralized corporate treasury

In a fully decentralized corporate treasury subsidiaries enjoy the highest level of independence from the headquarters regarding bank account management, foreign exchange transactions, customer credits, payables, borrowings and investments.⁸ As Cooper argues, “…in a true decentralized treasury, all treasury activities are carried out at the business unit or subsidiary level in the case of a domestic company, and in the case of an international company at the country level.”⁹ He shares the opinion that truly decentralized treasuries exist very rarely since some activities such as financing or foreign exchange translation management must be carried out centrally. However, some activities like management of liquidity and foreign exchange are left under the management of local units and subsidiaries. As advantages of a decentralized treasury Cooper mentions the belief that local units can react more closely and quickly to local needs and treasury activities can be carried out by people with knowledge of the local business environment. Another advantage is the autonomy and sense of ownership over treasury activities at the business unit or subsidiary level.¹⁰

Figure 3 : Fully decentralized treasury model

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on KPMG’s report¹¹

In Woods view, an important challenge to maintaining a decentralized treasury for corporations is the difficulty in producing an overview of the company’s cash position and exposure to risk on a regular basis.¹² The cause of the problem is the usage of different systems and ways of recording and reporting information by different business units. As a consequence, it takes a lot of time and effort to produce accurate reports based on which strategic decisions can be made. These reports are sometimes produced monthly or even less frequently.

A decentralized environment allows subsidiaries of a company to manage their payables and payment processes, where each location has its staff and infrastructure to operate independently. Even though this approach offers flexibility, it may cause poor visibility of cash and interest rate risks since there is no pooling mechanism in place and the view of cash is fragmented.¹³

Cooper, too, has identified some challenges in the decentralized treasury model such as the lack of overall control of risk in the sense that some risks may be mismanaged or totally ignored since there is no centre of expertise bringing in the ‘group-wide perspective’. The inability to take advantage of group-wide activities such as netting or intra-group funding is also seen as a disadvantage of e decentralized treasury since the cost of treasury activities and foreign exchange transactions may be higher.¹⁴

Summing up the discussed arguments, one can say that a fully decentralized treasury might have more advantages for the individual business units, but it is not as advantageous for a corporation as a whole due to possible redundancies in data formats and sequences of data gathering and provision. In this organizational type, it is not possible to have a central treasury department that controls the treasury activities of all business units and acts based on the centrally decided policies. However, even in a fully decentralized corporate treasury, the centre can provide guidelines for the treasury activities to subsidiaries or business units. A purely decentralized corporate treasury is hard to find, but different combinations are available for the corporations. The market trend is going towards more centralization, which is also made possible by new technologies (cloud solutions, treasury management systems, payment factories, real-time data analytics, etc.).

1.1.2 From decentralized towards the centralized treasury

‘Decentralized treasury – central responsibility’ is a concept elaborated by Cooper, in which most treasury activities are carried out on a decentralized basis, but there is a group treasury department which sets guidelines, policies and gives instructions to the local staff on the management of risks. The local treasury teams report to the group treasury department.¹⁵ The greatest advantage of this system is that some of the problems of a fully decentralized model are better managed while retaining flexibility. In this approach, an expert group takes a global view of the company’s financial exposures, while actions are still taken from the local staff. Yet there are also disadvantages of the central responsibility. The group treasury is responsible for the actions of local treasury teams and has to count on the full cooperation of the local staff and their reporting to identify exposures and take out appropriate hedges.¹⁶

Figure 4 : Global treasury centre with decentralized treasury activities

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on KPMG’s report

Bragg has identified 4 stages on the way from complete decentralization towards full treasury centralization:

1. complete decentralization – where each location manages its bank accounts, foreign exchange transactions, customer credits, payables, borrowings and investments;
2. centralized netting and hedging – where a central staff net the inter-subsidiary payments and hedges foreign exchange and interest rate risks. Individual locations still manage the rest on their own;
3. centralized investments – where in addition to the centralization in stage two, a central treasury staff manages all bank accounts, including pooling of funds and investment of these funds. Customer credits and payables are still managed locally;
4. centralized working capital management – where in addition to previous steps, the central treasury staff centralizes credit granting and uses a payment factory for centralized payables management.¹⁷

Polák et al. emphasize that centralizing treasury is not an easy action for corporations. On the one side, there are external factors that constrain centralization such as legal, tax and banking issues and internal factors such as political/personnel issues.¹⁸ On the other side, vested local interests that resist centralization efforts are a constrain in the centralization process, too. As a consequence, most companies have founded regional centres instead of single global centres to coordinate and perform international cash management activities.

In the beginning, cost reduction has been a driver for shared service centres, but later it has expanded towards strengthening compliance, managing risk in the financial supply chain and improving working capital¹⁹ by reducing operational cost, controlling the time of payments, ensuring better visibility over cash and faster collection of cash.

1.1.3 Regional treasury centres

There are two main options on how companies centralize their treasury: (1) building a central treasury function in one location from which all treasury activities are managed or (2) operate treasury as a single operation, but with locations in more places in the world.²⁰ Polák defends the opinion that these regional treasury centres are responsible for regional cash management and make it possible to always have access to financial markets independently from the time-zone. When a single system with the same database is used, companies can enjoy the benefits of centralization and at the same time retain more contact with business units and local markets than in the case of full centralization, but of course less contact than in a decentralized system.

Figure 5 : Regional treasury centres

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on KPMG’s report

When considering the setup of regional treasury centres, Polák argues that it is very important to define the role of these centres. If there is already a global treasury in place, then it is common that the centre is responsible for establishing a company’s strategy and policies. In this case, the regional treasury centre has an execution role and serves as a hub for the group treasury function.²¹ However, it remains a task for the regional treasury centres to make sure that the company maintains the right knowledge about the local markets and understands local issues appropriately. To increase control and have fewer integration issues, companies sometimes tend to create one global treasury centre, that is responsible for all treasury activities of the company.

1.1.4 Fully centralized corporate treasury

A treasury centre is defined as a “…centralized treasury management function which is legally structured as a separated group or as a branch and is normally located in a tax efficient environment.”²²

Figure 6 : Fully centralized treasury centre

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on KPMG’s report

There are three key drivers of treasury centralization: globalization, technology and regulation.²³ Due to the internationalization of companies also the complexity of processes increases. Companies have to manage payments across different currencies including different banking partners. By centralizing their treasury, they try to improve their understanding of their global cash positions and coordination of payment processes. Digitalization is another factor that has made treasury centralization possible through real-time data exchange between subsidiaries, banks and the treasury centre. However, it is not always easy to implement such projects, which fully leverage the power of new technologies. Also regulatory issues have pushed treasury centralization forward, especially after the global financial crisis in 2009. Centralization assists treasuries in gaining a greater control cross-border and thus comply with reporting and documentation standards.

The following figure shows in a very simplified way the centralization path towards a global treasury centre and a shared service centre.

Figure 7 : Benefits and complexity of centralization

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on the work of Masile, V.²⁴

Full centralization of treasury offers corporations the possibility for higher efficiency, greater transparency and better access to real-time information across multiple geographic areas, time-zones and entities.²⁵ It intends to solve problems of a decentralized treasury operation and aims to reduce the overall cost of treasury through activities like:

- efficient and effective international cash management structures,
- optimized groupwide liquidity through offsetting surpluses and shortages,
- netting intercompany flows, and
- managing financial risks on a group-wide basis.²⁶

The authors discussed at the beginning of this chapter (Cooper, McMenamin and Polák) have, among other things, analysed the fully centralized corporate treasury and have come up with advantages and disadvantages of this organisation form. The following pages discuss these topics and find common patterns, which are accepted by all authors.

Advantages of a fully centralized treasury according to Cooper:

- economies of scale realized by maximization of individual transaction volumes;
- higher rates for depositing cash surpluses to the central treasury than those available in local markets, where subsidiaries are located;
- lower borrowing rates for subsidiaries that need financing than in local markets;
- centre of expertise that manages group-wide exposures in the best interest of the group;
- better purchasing conditions for treasury products than in a decentralized structure.²⁷

Advantages of centralization based on McMenamin’s explanation of treasury consist of the following:

- strategic benefits – decision making and investment implementation together with financing policies and procedures are consistent with the overall strategy of the corporation;
- economies of scale – through fund pooling, large amounts of cash can be managed, and the centre can negotiate better conditions with banks. The modern technology makes it easier to manage cash centrally and thus achieve cost savings in administrative tasks;
- concentration of specialised knowledge and skills – through centralization there is no need to have multiple expensive treasury expert teams but only one at the centre, which has the knowledge to deal with treasury issues corporation-wide;
- foreign exchange (FX) management – central matching of currency receipts and payments makes FX more efficient through reducing currency risk and also avoiding the use of expensive hedging techniques;
- financial control – centralized treasury operations offer greater control of funds and reduce the risk of incurring substantial financial losses;
- smaller ‘idle’ cash balances – cash balances for safety motives tend to be less in the case of a centralized treasury.²⁸

A summary of the main advantages of a centralized treasury comes also from Polák et al. and includes:

- cost minimization – related to creating economies of scale. This includes areas like headcount, site-related expenditures and process-related improvements;
- competency – enablement of companies to focus on core competencies and apply best practices for continuous improvement;
- information access – standardisation and consolidation of information to improve access to key staff;
- flexibility – ability to outsource selected administrative processes;
- ‘Yield’ – better opportunities for the management of cash and liquidity and execution of foreign exchange and other trades in the financial market, including consolidation and netting of exposures across the firm.²⁹

However, there is a high probability that companies fail to retain key local specialists when they centralize treasury operations. This may be due to the lack of incentives of corporations for their key staff to move to the centre or due to the lack of motivation of the staff to move. In both cases, companies need to have a sound appreciation from the beginning about the impact of centralization on each employee.

Disadvantages of centralization according to McMenamin:

- less flexibility and responsiveness to local needs – centralization hinders local managers to respond quickly to local developments and might also contribute to a lack of motivation of local managers since cash management is not anymore under their control;
- increased bureaucracy – centralization is connected with an increase in internal rules, procedures and reporting requirements, which may also negatively influence the motivation of local managers;
- performance evaluation – centralization brings implications with it regarding performance evaluation of subsidiary managers. They can’t be held responsible for the actions of the centre and also vice versa.³⁰

Disadvantages of a fully centralized corporate treasury according to Cooper:

- with the reduction of local involvement in treasury activities also the interest of local engagement in treasury activities is reduced;
- the centre still requires local units to provide forecasts, identify exposures and comply with the instructions of the centre. As a result of reduced interest and responsibility of the local units, the information supplied may lack accuracy and timeliness of delivery.³¹

Other factors that affect the centralization of corporate treasury functions (literature review) include among others: tax implications, legal implications, central banking requirements/reporting, accounting implications, business requirements, access to financial markets, compliance implications, technological infrastructure, banking (infra)structure and relationships, company culture, staffing (costs and qualifications), staff training, staff motivation and cost-saving.³²

A few possible implications should be considered even if the decision to centralize treasury is made and steps are taken. These include:

- existing bank relationships – subsidiaries may think they have already good terms and conditions from their current banks,
- lack of control over funds – local managers may be concerned that if they transfer the funds to the treasury centre, they may not be returned as and when required,
- the required to track inter-company loans,
- culture – companies from different regions may be used to having multiple banking relationships. The cultural change may take some time for them to get used to working only with one bank system,
- requirements of the treasury management upgrade and the integration with the ERP system.³³

A few other obstacles to a successful treasury centralization were identified by KPMG and include among others: cultural diversity, lack of unity (because businesses are not the same and therefore it’s almost impossible to find a one-for-all solution), technological limitation (most systems do not offer proper integration of all business units and processes and the ones that offer such systems are too expensive) and local knowledge expertise (sometimes there is a need for local experts to be able to manage treasury efficiently).³⁴

Figure 8 : Centralization model

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on KPMG’s report

In summary, most authors have more advantages for the full centralization of corporate treasury than disadvantages. For many corporations, a combination of a centralized treasury with some decentralized activities (e.g. local units are tasked to identify exposures related to the line of business and then ask the head office to execute hedges) seems to be the best version for corporate treasury management. Globalization, digitalization and regulations are generally seen as key drivers of the centralization trend. New technologies like artificial intelligence, data analytics, robotic process automation and integrated business processes, combined with data-driven business models, make theoretical advantages of centralization a reality. However, as it is shown later in this thesis, it is not easy to achieve such a level of integration of business processes in an international context to be able to fully leverage the possibilities offered by technologies. Other aspects that often impact the centralization decision are the willingness of management to implement treasury digitalization projects and the availability of resources (human and money) for such projects.

1.2 Important regulatory aspects for the corporate treasury

Ensuring that corporations comply with regulations regarding activities related to corporate finance is one of the key tasks of the treasury department. Especially after the global financial crisis of 2007/2008, there have been different regulations aiming to prevent such situations in the future. One of the most important issues for treasury on the regulatory front are the new rules that come with Basel III, which was supposed to be completely implemented by the end of 2019 but received a new extension until January 2022.³⁵ Basel III intends to strengthen regulation, supervision and risk management of the banking sector with the aim to reduce market liquidity risk and improve the ability of banks to handle market stress situations.³⁶ The impact of Basel III regulations is not restricted only to banks since their clients are also affected by changes in banks’ operating model and capital and liquidity requirements. Treasury is no exception to this. The potential effects on the corporates can include pricing changes for operational cash, increased importance of counterparty risk, more expensive funding and revolving credit and liquidity facilities.³⁷ For example, deposits classified as operating cash have become more attractive to banks compared to deposits classified as non-operating cash because of the cost to hold this cash on deposit. In this way, bank balance sheets become less available to many cash investors.³⁸ The reason for this is mainly the so-called liquidity coverage ratio, which intends to make sure that banks hold sufficient assets that can be converted to cash within a day without a decrease in value. This should be able to meet the liquidity needs of a bank for a 30-day stress scenario. The Basel III regulations in combination with low-interest rates have been some of the factors that have ‘pushed’ banks towards introducing negative interest rates to corporations holding a large cash surplus. In Polák’s view Basel III creates also challenges for cash management since services like notional cash pooling may not be offered to corporations anymore,³⁹ which pushes corporate treasury to be creative in finding new solutions. As a result, banks may price notional pooling higher and impose thresholds with periodic cash settlements.⁴⁰ This might lead companies to refrain from using notional pooling.

Other regulatory issues impacting compliance, reporting, exchange rates and KYC in 2020 include the phase-out of London Interbank Offered Rate (LIBOR), the introduction of the EU’s Securities Financing Transactions Regulation (SFTR) technical standards, the introduction of the EU’s fifth Anti Money Laundering Directive (5MLD) and the second Payment Services Directive (PSD2). Due to the scope of this thesis, it is not further elaborated on these regulations.

In conclusion, a corporate treasury is constantly faced with new challenges in the regulatory front and also on the business innovation front. The next part brings together some criteria for an optimally functioning corporate treasury, based on which the main corporate treasury functions (cash and liquidity management, risk management and banking relationship management) in decentralized and centralized variants will be compared.

1.3 Criteria catalogue for an optimal corporate treasury

The following criteria catalogue identifies key aspects that are prerequisites of a well-functioning corporate treasury nowadays. The criteria catalogue is divided into four categories, respectively into general criteria (aiming to represent the general overview of a treasury) and specific criteria related to the treasury functions that are analysed in this thesis, namely cash and liquidity management, risk management and banking relationships management. A detailed analysis of the criteria follows in the next chapter, where the abovementioned categories are separately analysed. The main treasury functions are discussed and the fulfilment of criteria that belong to each function is tested against the background of decentralization and centralization of treasury.

Figure 9 : Criteria catalogue for an optimal corporate treasury

Abbildung in dieser Leseprobe nicht enthalten

Source: author, based on the previous literature review and other reports.

There are also other factors that determine the optimal level of centralization. Polák et al. mention also scale dynamics, homogeneity of requirements across jurisdictions and regions, labour market considerations, intensity and nature of local collaboration, and importance of hard controls⁴¹ as important aspects for corporations if they want to centralize their treasury.

From the view of one treasury management system (TMS) provider, there are three main aspects, where treasuries need to be fit in the near future:

1. more transparency (enterprise-wide liquidity development, risk management of FX and interest rate risk, overview of all financial transactions internal/external);
2. more efficiency through automation (automated creation of booking instructions, payment instructions, bank confirmations, EMIR reporting);
3. more data quality and improved auditing acceptability (4-eyes principle, integrated audit trial reporting, rule-based alerts, archive and knowledge management).⁴²

In summary, this chapter has shown some definitions of corporate treasury and its key functions, which have served as a basis to describe different organizational models of corporate treasury. Advantages and disadvantages of each model have been discussed in detail. The regulations part has given some broad information about recent regulations that impact the work of corporate treasury. A criteria catalogue summarizes the facts provided in this chapter, based on which three main corporate treasury functions are analysed in the next chapter: cash and liquidity management, risk management and banking relationships management. For each function, there is a general description part, a part where the decentralized and centralized model are described for each process and a closing part where the criteria fulfilment is evaluated.

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¹ Polák,P. & Klusáček, I. (2010) Centralization of Treasury Management, Business Perspectives , Ukraine, p. 13.

² McMenamin, J. (1999) Financial Management: An Introduction. Routledge, London, p. 45-46.

³ Ibid

⁴ Bragg, S. (2010) Treasury management – The Practitioner’s Guide, Wiley, New Jersey, p. 3.

⁵ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 352-353.

⁶ Ibid

⁷ Higdon, P. “How to set treasury KPIs?” www.treasurers.org (retrieved: 22.06.2020).

⁸ Bragg, S. (2010 ) Treasury management – The Practitioner’s Guide, Wiley, New Jersey, p. 9.

⁹ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 360.

¹⁰ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 360.

¹¹ KPMG (2016) The Structure, Role and Location of Financial Treasury Centres: A Process of Evolution, KPMG Consulting Pte. Ltd. Singapore, p. 5.

¹² Woods, A. (2017) Treasury centralization – an essential guide for corporate treasurers, The Southern African Treasurer – Risk Management, TMI Special report, p. 24.

¹³ Polak, P., Robertson, D. & Lind, M. (2011) The new role of the Corporate Treasurer: Emerging Trends in Response to the Financial Crisis, International Research Journal of Finance and Economics, Issue 78, p. 59.

¹⁴ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 360.

¹⁵ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 360.

¹⁶ Ibid 361.

¹⁷ Bragg, S. (2010) Treasury management – The Practitioner’s Guide, Wiley, New Jersey, p. 9.

¹⁸ Polák, P., Robertson, D. & Lind, M. (2011) The new role of the Corporate Treasurer: Emerging Trends in Response to the Financial Crisis, International Research Journal of Finance and Economics, Issue 78 (2011), p. 58.

¹⁹ Ibid 59.

²⁰ Polák, P. (2010) Centralization of Treasury Management in a Globalized World, International Research Journal of Finance and Economics, Issue 56, p. 89.

²¹ Polák, P., Robertson, D. & Lind, M. (2011) The new role of the Corporate Treasurer: Emerging Trends in Response to the Financial Crisis, International Research Journal of Finance and Economics, Issue 78 (2011), p. 61.

²² Polak, P., Robertson, D. & Lind, M. (2011) The new role of the Corporate Treasurer: Emerging Trends in Response to the Financial Crisis, International Research Journal of Finance and Economics, Issue 78 (2011), p. 60.

²³ Šarkanová, B. & Krištofík, P. (2018) Innovation through treasury centralization: The potential of the Visegrad countries for establishment of corporate treasury centres, ResearchGate, p. 2.

²⁴ Masile, V. (2014) Across the pond – what approach do US companies take to cash and liquidity management, The Treasurer (March 2014) www.treasurers.org/thetreasurer (retrieved on 29.05.2020).

²⁵ Polák, P., Robertson, D. & Lind, M. (2011) The new role of the Corporate Treasurer: Emerging Trends in Response to the Financial Crisis, International Research Journal of Finance and Economics, Issue 78 (2011), p. 58.

²⁶ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 361.

²⁷ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 361.

²⁸ McMenamin, J. (1999) Financial Management: An Introduction. Routledge, London, p. 50.

²⁹ Polák, P., Robertson, D. & Lind, M. (2011) The new role of the Corporate Treasurer: Emerging Trends in Response to the Financial Crisis, International Research Journal of Finance and Economics, Issue 78 (2011), p. 59.

³⁰ McMenamin, J. (1999) Financial Management: An Introduction. Routledge, London, p. 51.

³¹ Cooper, R. (2004) Corporate Treasury and Cash Management, Palgrave Macmillan, New York, p. 361.

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