Corporate Treasury - Roles and responsibilities

Roles and responsibilities of a Treasury department in a company should be clearly defined in order to implement efficient and optimized processes. Access to data and coordination between teams are key.

What are the main functions of the Corporate Treasury?

Responsibilities of the Treasury function can vary from one company to another. Generally, Treasury has the ownership or plays a key role in the following tasks:

• Manage company's liquidity to meet its operating or stategic cash needs and invest cash in excess
• Understand, assess and manage financial risks (interest rates, currency, commodities, credit, etc.)
• Manage company's external financing and internal financing of subsidiaries
• Optimize payment execution
• Manage banking relationships
• Manage accounting entries related to cashflows
• Consider accounting impacts (e.g., impacts on P&L) for each key decision
• Consider tax aspects

What is the governance associated with Treasury?

Treasury must contribute to achieving strategic objectives set by the Group's Management. In line with these objectives and priorities set by the Chief Financial Officer (CFO), the group treasurer defines a general framework in which the Treasury operates: these are group policies, which may be adjusted, in some cases, to consider local regulations and constraints. These policies define the objectives, roles and responsibilities of the Treasury team as well as a framework within which its tasks are performed. Policies should also include a description of an exception process, in case the general case cannot be applied.

As an example, an investment policy must list authorized instruments in which the company can invest, include limits related to counterparty risk, and define roles and responsibilities (e.g., only the CFO can approve an exception to the policy).

What is the typical structure and organization of Treasury?

Depending on the characteristics of the company, the Treasury function can be more or less centralized. Generally, the Group Treasurer is based at the company's headquarter.

The degree of centralization of a treasury depends particularly on the following parameters:

• Geographical locations of the Group
• Need for local presence
• Legal and regulatory constraints
• Fiscal aspects
• Human resources constraints (skills of personnel, etc.)
• Existing management tools (treasury management software, Excel, etc.)

For the reasons mentioned above, a common structure of the Treasury department is as follows:

• A Group Treasury, based at the headquarter, making strategic decisions in agreement with the Chief Financial Officer (CFO) and responsible for implementing them regionally or locally
• Regional hubs to better understand local legal and regulatory rules. They also help managing time zone differences.
• Dedicated person in certain countries, usually where regulatory constraints are particularly significant.