Get our free interactive demo and reduce unwanted FX Gains & Losses
Try it now
5 Benefits of Treasury Centralisation

Discover essential FX hedging strategies and currency management best practices from our foreign exchange experts.

5 Benefits of Treasury Centralisation

3 min

In the dynamic landscape of global finance, companies are constantly seeking ways to optimise their operations and enhance financial control. One key strategy to achieve this objective is treasury centralisation. This approach involves consolidating treasury functions to streamline financial processes and achieve a multitude of benefits.

In this blog post, we will explore the significant advantages that treasury centralisation brings, focusing on enhanced control of the FX workflow, complete visibility of the group's exposure, lower banking costs, consolidated FX policy, and more efficient treasury operations.

What are the 5 benefits of Treasury centralisation in FX management?

Implementing consolidated treasury operations has many benefits for multinational companies that need to manage their FX exposure across many subsidiaries around the world. The following benefits are the most important ones that organisations can realise:

  1. Enhanced Control of the FX Workflow:

Treasury centralisation empowers organisations with greater control over their foreign exchange (FX) workflows. By centralising treasury functions, companies can establish standardised processes and protocols for managing currency risks. This enhanced control allows for better monitoring and management of currency exposures, reducing the impact of market volatility on the organisation's financial performance. With a centralised FX workflow, companies can implement timely and strategic hedging strategies to mitigate risks effectively.

  1. Complete Visibility of the Group's Exposure:

One of the fundamental advantages of treasury centralisation is the achievement of complete visibility into the group's exposure. When treasury functions are consolidated, organisations can aggregate data from various business units and subsidiaries. This holistic view enables treasurers to identify and analyse the entirety of the group's financial exposure. Armed with comprehensive information, companies can make informed decisions, optimise cash management, and proactively address potential risks arising from currency fluctuations or other market uncertainties.

  1. Lower Banking Costs:

Treasury centralisation often leads to lower banking costs, a crucial aspect for organisations looking to optimise their financial operations. By consolidating banking relationships and centralising cash management, companies can negotiate better terms and fees with their banking partners. This not only reduces the overall cost of financial services but also enhances efficiency by streamlining banking relationships. Lower banking costs contribute directly to improved financial performance and increased profitability.

  1. Consolidated FX Policy:

Maintaining consistency in managing currency risks across diverse business units can be challenging. Treasury centralisation addresses this challenge by facilitating the development and implementation of a consolidated FX policy. A standardised policy ensures that all entities within the organisation adhere to the same risk management principles. This uniformity not only enhances risk control but also simplifies compliance and reporting processes. A consolidated FX policy is a key element in creating a resilient financial framework for the entire organisation.

  1. More Efficient Treasury Operations:

Efficiency is at the core of treasury centralisation. By consolidating treasury functions, organisations can streamline their operations, reduce duplication of efforts, and eliminate inefficiencies. Automated systems and centralised processes enable treasurers to focus on strategic decision-making rather than administrative tasks. This increased efficiency not only saves time but also enhances the overall agility of the organisation in responding to changing market conditions.

Should you implement a centralised Treasury function?

There’s no simple answer to this question, and it will always depend on the business model, the level of control that the CFO wants to have and the size of the Treasury function to handle this. But one thing is sure, it should be a strategic decision aligned with the organisation’s goals.

To identify whether the Treasury centralisation is the right solution for you, you should carefully evaluate your current processes: what is working and what could be improved? And think if some of the above-mentioned benefits make your operations more profitable by controlling the organisation’s cash centrally?

Of course, you may already have a good solution in place, but if you have business units and subsidiaries globally you may want to consider the option of implementing a centralised Treasury function in the near future. Moreover, with the help of automation solutions to support you in this complicated task, you could benefit from centralising your FX management process.

Achieving enhanced visibility and control

In conclusion, treasury centralisation emerges as a strategic approach to financial management, offering a myriad of benefits to organisations navigating the complexities of the global financial landscape.

From enhanced control of the FX workflow and complete visibility of the group's exposure to lower banking costs, consolidated FX policy, and more efficient treasury operations, the advantages are clear. As companies continue to seek ways to optimise their financial processes, automated treasury centralisation stands out as a powerful solution to achieve greater control, efficiency, and resilience in today's competitive business environment.

If you want to see for yourself how Treasury centralisation could improve your business, take a look at Kantox In-House FX and request a demo to understand how Kantox can help you.

Keep reading
Corporate Treasury
Corporate Treasury
Corporate Treasury
Corporate Treasury