A global treasury centre consolidates all cash and FX positions within a corporate worldwide. Nelischer explains his award-winning approach to defining the scope, evaluating the triggers for a global centre, assessing the advantages of citing a centre in the Netherlands, and then maximising the efficiency and contribution of the global corporate treasury centre.
1. Define the scope of your global corporate treasury centre:
- Identify what is feasible in your organization, based on legal and regulatory requirements. (Remember almost everything in corporate treasury can be managed in a central location.)
- Aim to maximise the scope for the global treasury centre without setting unrealistic targets
- Assess the need for internal treasury activities such as intercompany funding, centralised cash management, and netting centre
- Aim for the Global Treasury Centre to be a centre of excellence, and a showcase of the value treasury adds across the company
2. Review the triggers below for actually creating such a vehicle, and how they apply to your organisation:
- Will your central Treasury entity naturally develop into the single Global Treasury Centre by default as the company grows
- Have M&A deals resulted in several treasury entities in the organisation? Is a Global Treasury Centre now needed as part of the rationalisation?
- 3. Review whether these advantages of locating a global treasury centre in the Netherlands apply to your organisation: Is your UK-based corporate with a local treasury entity going to want to detach its Treasury activity from post-Brexit-impact?
3. Review whether these advantages of locating a global treasury centre in the Netherlands apply to your organisation:
- Well established base to do business, e.g. a rare AAA-rating of a sovereign; ranked 4th in the Global Competitiveness Report 2016/17 which is highest out of any EU country
- Business-friendly legislation, e.g. the one-tier board of a company works well for US corporations, English language statutory documents are largely acceptable
- Excellent infrastructure and a high-class workforce
- Tax treaties in the Netherlands generally reduce foreign withholding tax on interest
- Netherlands does not impose any withholding tax or stamp duty itself
- Verify whether Netherlands tax and corporate structure work with your corporate financial strategy.
4. Ensure maximisation of workflows, people and systems/technology in global treasury centre by:
- Exercising managerial authority within corporate policies and guidelines in your framework of corporate governance (The traditional approach of additional review and sign-off steps does not work; control needs to be built into the natural work-flow.)
- Avoiding duplication of administrative work to optimize the value-add in the back-office, settlement and control functions to maximize efficiency
- Using a high degree of system integration for efficient workflow, e.g. self-managing, automated process controls to help the treasury team to avoid the cumbersome and time-consuming box-ticking and red tape that often plagues treasury operations.
CTMfile take: Use this Checklist to decide whether a global treasury centre in Netherlands would benefit your company.
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