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Financial markets and the treasury function

7.1 The international treasury function

Specific functions may include:

 setting transfer prices to reduce the overall tax bill (subject to local laws)

 deciding currency exposure policies and procedures

 transferring cash across international borders

 devising investment strategies for short-term funds from the range of
international money markets and international marketable securities

 netting and matching currency obligations

7.2 Centralising treasury management

 Centralised (each operating company holds minimum cash and transfers
surpluses to the centralised treasury department for overall management)

– avoids duplication of skills

– arrange funding in bulk – cheaper

– more effective foreign currency management

– netting off surpluses and deficits in same currency means less need for
overdraft and incidence of bank charges

 Decentralised (each operating company is responsible for its own treasury
operations)

– greater autonomy and motivation in operating companies

– better feel for local conditions and quicker response to developments

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