Centralization of Treasury Management in a Globalized World

International Research Journal of Finance and Economics, No. 6, 2010

8 Pages Posted: 5 Nov 2010

See all articles by Petr Polak

Petr Polak

University of Brunei Darussalam

Date Written: November 3, 2010

Abstract

Centralization of treasury activities offers companies the ability to achieve higher efficiencies, greater transparency and access to real time information across a broad geographic area, multiple time zones, and many entities. There are different phases in the centralization of treasury management from the decentralized treasury towards fully centralized cash and treasury management. Many firms start with the centralization of foreign exchange and interest rate risk management as the first step towards centralization of treasury activities, and then proceed through cash and liquidity management up to fully centralized treasury.

The location of the treasury centre of an international grouping is a very strategic and hence important matter. The decision depends on numerous factors, such as the corporate tax treatment in the hands of the treasury centre itself, the applicable withholding tax rates and corresponding eligibility to foreign tax credits.

Keywords: Centralization of treasury management, payment factories, shared service centres, outsourcing, regional treasury centres

JEL Classification: G15

Suggested Citation

Polak, Petr, Centralization of Treasury Management in a Globalized World (November 3, 2010). International Research Journal of Finance and Economics, No. 6, 2010, Available at SSRN: https://ssrn.com/abstract=1702687

Petr Polak (Contact Author)

University of Brunei Darussalam ( email )

Jalan Tungku Link
Gadong
Bandar Seri Begawan, BE1410
Brunei

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