Treasury Organization

Treasury Organization

Although there is no straight forward answer to the question, how to best organize a treasury function, this article provides an generic view of the way large MNCs creates departments or sub-functions within the treasury function.

Centralization of treasury continues to be a clear trend and most organizations prefer a centralized treasury function.

Treasury is mainly organized as a cost or service center an acts as an center of excellence in corporate finance.

Some common sub-functions are-

Business Treasury

which often acts as a face to the different businesses/P&Ls within the enterprise.

  • Main responsibilities include Deal structuring & integration, Hedging & match funding and Cash consulting.
  • Sometimes responsible for Bank account management, disbursement facilitation, & cash management.
  • Helps in temporary investment of the company's excess cash.

Funding & Exposure Management

which acts as the face to the market.

  • Main responsibilities include raising debt – both short term as well as long term and Banking & securitization.
  • Manages external funding and debt and also helps manage internal funding requirements by various business units through intercompany loans and transfers.

Risk Management

  • Centralization is ongoing of especially risk and cash management with broadening of responsibilities – examples include group payments and collections, insurance and group credit risks
  • Main responsibilities of this department include risk management, asset/Liability management, Interest Rate and currency hedging
  • Asset Liability management by controlling interest rate and foreign exchange risks due to mismatches between assets and liabilities.

Capital & liquidity

  • Main responsibilities include management of rating agency & regulatory relationships
  • Along with Liquidity & capital management
  • Capital Management to ensure various legal entities can cover unexpected losses
  • Liquidity Management by monitoring and managing the liquidity profile of the enterprise

Investor & bank relations

Bank relationship strategies have become more sophisticated and a specialized department is generally responsible for managing enterprise communications.

  • Main responsibilities include Relation management, Credit allocation, exposure & procurement management
  • Most organizations also have an enabling arm that is responsible for day to day operations, information technology, quality, trade management etc.
Treasury Organization

Treasury

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