What is the typical setup of a corporate treasury?

The Corporate Treasury department can cover a large area of responsibilities and arguably is becoming an important part of any organisation.

In current years, the Treasurer is gaining more recognition in the board rooms with Treasury advice being more sought after by senior management.

Treasury topics ranging from standard issues in Working Capital, FX risks, Funding costs to complex issues in Tax, Banking relationships, Fintech are now gaining notice from senior management.

Depending on the level of requirements and needs of each organization, the sophistication and size of the Treasury department can vary.

There are many articles written on the different stages of a Treasury setup in relation to its roles, organization, growth path, value. In our opinion, we can classify the stages as follows:

• Standard – Transactional focused with Basic Coverage in Products and Geography.
• Advanced – Strategic thinking with Regional Coverage staffed with Treasury specialists.
• Leader – Sophisticated management with Global Coverage and Well Developed Teams in different functions that can rival the Banks.

Below is a good summary that shows the different stages of the Treasury, and how corporate treasuries at different stages can add value to organizations.  

Stage 1: Shorten working capital cycle, optimizing cost of borrowing, ensuring liquidity across business value chain.

Stage 2: Improve business margins, risk management and mitigation through hedging

Stage 3: Unlock liquidity from idle cash, reduce cost of financing across value chain, i.e. channels and vendors, structuring M&A transactions

Stage 4: Enhance shareholder value through dividend and share buy backs, manage cost of capital through banking and credit rating relationships