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Multinational Treasury And Cash Management



Multinational Treasury and Cash ManagementThe financial management of the non-financial firm is traditionally divided between treasury activities and controller activities. Simplistically, this is a distinction between cash flow (treasury) and financial reporting (controller). Controller activities such as end-of-month closings, internal reporting and forecasting, and external financial reporting have become increasingly automated. Continuing advances in the field of information technology, combined with the increasing focus by management on the future rather than the historical details of the accounting past, have led to a larger role for treasury within financial management.

As firms have expanded the global scope of their operations, and as global financial markets have increased their pace and volatility, the complexity of international treasury has expanded exponentially. Globalization, combined with the expanding scope of business reengineering, including the financial functions of the firm, have placed new demands on treasury to add value to the business.


Many working in the field of treasury management today might argue that it is an area of significantly underdeveloped potential; the treasury function in many firms today is often understaffed and underinvested. To use the business parlance of the day, the treasury which is not keeping pace with the best practices of the day may be leaving a lot of money on the table.

As domestic and international treasury operations evolve, reducing redundancy and focusing increasingly on efficiencies which are cross-border, cross-currency, and cross-function, the role of treasury expands as a source of value to the company as a whole. But there are many managerial challenges ahead, as many treasuries today are as yet unprepared for true global treasury effectiveness, requiring rethinking and restructuring treasury operations. Redundancy between domestic and international treasury functions, the need to add staff prepared for the expanding complexity of risk management activities and instruments, as well as the continuing impact of global telecommunications and technological support are continuing items on the treasury to-do list.

This week-end I posted treasury and cash management post series that provide a detailed overview of the principle purpose and practices of international treasury management. Although it is increasingly difficult to differentiate international from domestic treasury, understanding the unique responsibilities and challenges presented by multinational operations for treasury management is my primary goal.

After explaining the basic dimensions of treasury in practice, I will be focus on the two areas of most general application: multinational cash management and multinational currency management [will be on my next post as an integral part of this serie].

Throughout this post series I suggest maintaining a classical financial focus: Cash flow is king!.


Go and read them post—by—post  here:


Traditional and Multinational Treasury Management

This post provides treasury management in detail overview, from traditional to modern treasury management, from domestic to multinational treasury manaegement. This post also outlines the followings: Treasury implementation, organization and drivers. [Read: Traditional and Multinational Treasury Management in detail here].


Multinational Cash Management

This post overview how a multinational firm possesses cash flow between the parent and its subsidiaries, the subsidiaries and their suppliers and customers, and subsidiaries and the other subsidiaries. The discussion breakdown into the following sub-headings: International Cash Management Goals, Mechanics of International Cash Management, Techniques for Effective Deployment of Funds [Cash Concentration or Pooling], Barriers to Effective International Cash Management. [Read: Multinational Cash Management in more detail here].

Foreign Exchange Management

This post closes the post series by expanding the function of treasuries to foreign exchanges management: establishing risk management guidelines, separation of front- and back-office roles, position mentoring and performance measurement. [Read: Foreign Exchange Management the closing serie here]

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