What is global treasury?

Global treasury refers to the process of managing a company’s cash and financial assets on a global scale.

Global treasury is a must-have for companies with global operations, playing a crucial role in managing cashflows and mitigating risks associated with currency fluctuations.

It often involves managing companies’ investment portfolios, bank accounts, and cash balances in different currencies.

In terms of payments, proper global treasury boosts the efficiency and timeliness of payment processes – from payment request to receipt of funds by the beneficiary.

How global treasury works

A global treasury will be run by a team of financial professionals, including, among others, financial analysts and treasury managers.

Global treasury tends to consist of four main components, including cash management, payment management, risk management, and financial reporting. We dive into each one of these below:

• Cash management: Optimizing the use of financial resources and managing all things cash related, including bank accounts and cash balance investments.
• Payment management: Tracking and optimizing the global payment process from start to finish, including fee processing, performance monitoring, and selecting the best payment methods.
• Risk management: Financial risks like interest rate changes and currency fluctuations can lead to heavy consequences for businesses if they’re not handled properly. Global treasury comes into play here by implementing various strategies to overcome these risks.
• Financial reporting: Global treasury also means providing stakeholders and shareholders timely and relevant financial reports.

Common challenges with global treasury

There’s a number of challenges a whole lot that can go wrong in a day’s work, impacting things like financial stability and cashflow. Here are just a few of the challenges that can get in the way of proper global treasury:

Cash visibility

To constantly stay on top of their cash balances across countries and currencies, businesses need to have clear and timely visibility of all cash flow. Without such visibility, making informed decisions can be next to impossible.

Compliance and regulations

Compliance and regulations vary depending on country. For companies, this means keeping track of a lot of local laws and regulations. Failing to follow these can lead to a whole slew of problems, including legal issues, fines, and damage to reputation.

Cultural and language barriers

Cultural and language barriers are unavoidable for any multinational business. And these barriers can certainly come into play when it comes to global treasury. It’s important for companies to hire local financial experts and/or partner with service providers familiar with local customs and dialect.

Currency fluctuations

There’s nothing like currency fluctuations to ruin a perfectly good cashflow. That’s why businesses need to keep track of what’s happening in the foreign exchange markets and implement the right strategies to avoid negative consequences of currency change shifts.

Cybersecurity risks

Global treasury brings forth all sorts of sensitive information. Without proper cybersecurity and internal policies protecting this data, fraud and cyber threats are much more likely to occur.

Payment execution platforms & global treasury

While payment platforms may not be able to directly fulfil all your global treasury needs (you’ll need a human here and there) they can play a big role in speeding up the process. Offerings should include:

• Important insights and data on payment trends and patterns
• Varied payment methods and currencies, to decrease fees and bumps along the way
• Treasury management services (e.g., foreign exchange hedging)