Centralisation via treasury transformation is still the most prevalent topic for the clients I speak to in Europe. Even big multinationals often feel that there is still scope for them to achieve a greater level of centralisation. We’re also seeing considerable focus on this topic from our large corporate and middle market customers, whether they are regional or have disparate business units within a particular country. These companies are now looking to centralise – whether that means putting in place a cash overlay solution to minimise idle cash, or setting up a full-blown in-house bank solution along the lines of the structures used by very large corporations.
The centralisation process allows companies to review their own internal systems and processes. They then look to the banks to complete this process, in some cases by achieving greater integration through their payments or receivables. The main objectives are really to enhance visibility, streamline processes and build efficiencies within the working capital cycle. That is really what the focus tends to be on this centralisation journey.
While it feels like this topic has been around for quite some time, the level of maturity within conversations with our clients is very striking. Some clients have carried out a lot of work over the last five years and have moved to a highly centralised regional or global treasury centre arrangement with an in-house bank.
These companies may have very sophisticated setups, but at the other end of the spectrum there are those that are just starting out on this journey. For these companies, there are plenty of challenges to consider – not least of all the need to get the whole company behind them for what really is quite a fundamental business change. This isn’t just a change to the treasury system, which might be contained to treasury, and perhaps the finance department. It is something that affects the whole company, including business heads, treasury, finance, procurement, operations, sales and distribution functions. So the topic is broad and there is a lot to consider – but there is also a lot of opportunity for companies to get started on that journey.