Centralised treasury
Centralisation can combine cash forecasts, reduce duplicate borrowing and deposits, improve negotiating power and apply consistent controls. It can also coordinate currency exposures and internal funding. Benefits depend on timely subsidiary information, appropriate authority and systems. Legal restrictions, tax consequences, local banking needs and currency controls may limit transfers or pooling. Centralised oversight does not remove the need for segregation of duties and independent monitoring of transactions. Some businesses use a hybrid structure to retain local responsiveness while controlling major exposures centrally.
Worked example
Subsidiary A has a temporary $2 million surplus while B needs $1 million. Where legally and operationally permitted, treasury can arrange internal funding so B avoids expensive external borrowing while the group still maintains required local liquidity.
Common mistake
Assuming every group balance can be freely transferred across countries or that centralisation alone prevents treasury fraud.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Direct | September 2026–June 2027 |