Treasury Design

The World of
Corporate Treasury
Rounaq qaiser
Jan 2022
CONCEPT
Organize the Treasury function, its people and processes,
working toward efficiency, elegance, and utility.

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 Treasury Design
Treasury Design is a study of KPIs, The
three Treasury themes or functions are
the foundation for these KPIs:
• The management of transactions,
• Balance sheet
• liquidity, and risk

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TREASURY
DESIGN
To achieve goals some other
considerations come into play in
designing an appropriately organized
Treasury for the organization. These
considerations are:
• Lower cost
• Lower turnaround times for decision making and
resolution
• Higher degrees of control and wider net for control
• Lower cost of capital and increased availability and
diversity of capital
• Legal environment of various locations
• A counting practices followed by the firm and
accounting environment of the geographies in which
the business is being done.
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 KEY ELEMENTS OF TREASURY DESIGN
Let’s run through the key elements of Treasury Design
System Design
• The importance of systems and technology and
their role in Treasury was introduced earlier.
Systems must be designed with various aspects
and considerations in mind.
People and Organizational Structure Design
• It entails identifying the right people, equipping them
with the right skills, and putting them in the right
jobs with the right reporting line. It is also linked to
the decision of the degree of centralization and
outsourcing.
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Process Design
• Based on creating watertight processes with
controlled and measurable handoffs, the process
design forms the bulwark of the Treasury function.
Control Design
• A strong control element is a safeguard against
potential hazards and situations around implementation
and execution. Even if the rest of the Treasury Design
elements are put in place, a weak control design
element will not help sustain the strength of the
implemented Treasury Design and processes..
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 KEY ELEMENTS OF TREASURY DESIGN
Let’s run through the key elements of Treasury Design
Account Structure Design
• Designing the right account structure is an often-
underrated element. Ad hoc account creation can
result in increased cost, lower control, and poor
visibility and utilization of cash. In some countries,
regulatory conditions could also force the decision
on which account structure to go with.
Risk Architecture
• It provide corporate treasuries with clear guidance
and support around commodity trading and price
risk management, currency and interest rate risk
management, decision support, and quantitative
analysis.
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Cash Flow Design
• Cash flows can occur across locations, in various
forms and currencies at different times. Consolidating
and concentrating these flows creates greater
efficiencies through reduced cost, increased control,
and better visibility of flows.
Capital Structure
• One of the Treasurer ’s key areas of delivery is ensuring
that the firm is adequately capitalized and that the price
the firm pays for the capital is the lowest in the
circumstances. Capital structure also has a bearing on
the firm ’s credit rating and financial perception and
performance, making it one of the critical areas
evaluated by potential investors and lenders..
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 CENTRALIZATI
ON
Centralization involves concentrating aspects into
one physical location. The factors going into the
choice of these locations vary by company and
situation. The aspects that can be centralized may
be broadly classified into the following:

Accounts and financial activity

Systems and infrastructure

People (processing, execution, and

decision making)
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CENTRALISATION THEME

The idea is to move from multiple

systems, non-uniform processes,
different legal entities, service
providers, bank accounts, and
varied support, toward an
operation; the end result is close
to having uniform systems and
processes to support various
entities from one location, with a
rationed set of service providers.
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 EVOLUTION OF TREASURY MODELS

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Companies follow different models of implementation and achieve success 9
from these models. Some companies do not follow a progressive, stage-by-
stage route but prefer to implement entire structures at one go.
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The value added across various stages of centralization. 10
Centralized

Decentralized Decentralised Treasury

The decentralized Treasury is the basic model,
where many companies start off. Decision making
across various criteria is decentralized at a
subsidiary or country level, with headquarters
only consolidating the numbers and framing the
overall group policy.
The benefits of this model are increased flexibility and
speed of operations. Control, economies of scale,
and lack of synergy could contribute to increased
costs, potential losses, and larger degrees of
exposure and risk to the firm ’s financials.

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Shared Service Centre

It utilizes the concept of centralized processing of high-volume & low-

complexity activities, achieving economies of scale by 12

concentrating activities & control in one location through the use of

systems, & communication with banking & service provider technology.
Basic Treasury Centre

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Division of activities between Treasury Centre &
Shared Service Centre

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Value-Added Treasury Centre

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In-House Bank

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Outsourced Model

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Detailed Processes Across Various Sample Models

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THANK YOU!
Growing companies may not always have
the management bandwidth to implement
centralized operations right away, but
smooth process management and
integrating policies and systems when
acquisitions are being done helps to
reduce the effort to centralize considerably,
when the time comes.