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Treasury centralisation requires a phased approach, separating policy, information flow, and execution. For mid-sized groups, a shared service centre or payment factory is often the most practical near-term target. Standardising bank account governance and treasury policy must occur before centralising execution. Achieving a consolidated, real-time view of cash is the foundational step for any successful operating model.
The technology to consolidate Treasury views and banking portals exists. The business case to centralise treasury has been proven. Yet, according to Gartner, nearly 70% of finance transformation programmes still run slower than projected, and many fail to deliver their expected benefits. So why do so many treasury centralisation projects stall?
This guide walks through the main treasury structures, what to standardise first, the anticipated expenditure, and the visibility-first roadmap that works in practice.
What treasury centralisation means: three decisions, not one
Most finance teams treat "centralisation" as a single project. However, in practice, it is at least three distinct decisions, each with different costs, timescales, and business cases.
Decision one: where does policy live?
Even in a wholly decentralised cash structure, treasury policy can and is typically centralised at group level. FX risk appetite, counterparty limits and interest rate exposure thresholds cost almost nothing to harmonise and immediately reduce group-wide risk. Adhering to treasury best practices treats policy centralisation as the foundation, regardless of where execution sits.
Decision two: where does information flow?
Cash visibility and cash management are not the same project. Many groups centralise visibility years before they centralise execution. Getting real-time consolidated reporting requires bank connectivity and data infrastructure, but it doesn't mean a company needs to renegotiate intercompany agreements or obtain advance tax rulings.
Decision three: where does execution live?
Payment execution, cash pooling and FX hedging are the hardest to centralise because they demand structural change: intercompany loan frameworks, transfer pricing documentation and, at the advanced end, a payment factory or in-house banking infrastructure.
Understanding which specific decision is being made prevents a common failure mode: attempting to centralise everything at once and stalling at the execution layer.
Which treasury operating model fits a specific group?
There is no universal model. The right structure usually depends on an organisation's size, geographic spread and the degree of interdependence between subsidiaries.
| Operating model | Typical fit | Key characteristics |
|---|---|---|
| Decentralised treasury | Groups with fewer than 5 entities or diverse business lines | Each entity manages its own cash, banking and risk |
| Centralised policy, decentralised execution | Groups of 5 to 15 entities where execution centralisation is not yet cost-justified | Group sets policy; subsidiaries execute locally |
| Regional treasury centres | Large multinationals with 20+ entities across three or more regions | Hub-and-spoke model with regional hubs serving subsidiary clusters |
| Shared service centre for payments | Groups of 10 to 30 entities seeking efficiency without full infrastructure | Centralised processing unit for payment execution |
| Payment factory | Mid-to-large groups with high payment volumes | Central entity processes payments on behalf of subsidiaries |
| In-house bank | Large groups, typically with revenues exceeding $1 billion | Group treasury acts as internal bank: intercompany lending, pooling, FX netting |
For a group of 10 to 30 entities, the most common landing point usually is either the shared service centre or payment factory model. According to PwC's 2025 Global Treasury Survey, approximately 40% of respondents are still not leveraging an in-house bank or payment centralisation model at all. For large organisations with revenues exceeding $10 billion, adoption has accelerated: 67% have an in-house bank, whilst 60% use a payment factory.
For mid-sized groups, the payment factory or partial in-house bank is the realistic near-term target rather than the full end-state structure.
Shared service centres, payment factories and in-house banks
These three structures are not interchangeable, and groups can implement one without the others.
| Structure | What It Does | What It Does Not Do | Key Requirement |
|---|---|---|---|
| Shared Service Centre (SSC) | Consolidates the processing of financial operations (payments, reconciliation, reporting) into a single team; standardises processes and systems | Does not change who legally owns or initiates the transaction; entities still transact in their own name | Common ERP/TMS platform; process standardisation; governance model |
| Payment Factory | Centralises payment execution through a single channel; routes subsidiary payments through a central infrastructure; can operate as POBO (payment-on-behalf-of) or PINO (payment-in-name-of) | Does not provide internal lending, FX netting, or notional pooling | Banking infrastructure for multi-entity payments; intercompany settlement agreements; transfer pricing documentation |
| In-House Bank (IHB) | Provides the full range of internal banking services: intra-group loans, intercompany netting, notional/physical cash pooling, internal FX deals, payments on behalf of | Does not hold a banking licence; is not regulated as a bank; cannot take external deposits | Advance tax/transfer pricing ruling; intercompany loan agreements; IHB system within TMS; legal entity as IHB |
The OECD's Transfer Pricing Guidance on Financial Transactions provides the global framework for pricing intra-group treasury activities at arm's length; groups operating in the UK must also navigate HMRC's guidance on group finance companies and the reformed transfer pricing rules.
Centralisation is not standardisation
Organisations can centralise execution without standardising underlying processes, and they can standardise without centralising.
Centralising without standardising means routing all subsidiary payments through a single hub whilst each subsidiary still uses a different chart of accounts, payment file format and approval workflow. The hub becomes a bottleneck, not a centre of excellence.
Standardising without centralising means all subsidiaries follow the same processes but continue to manage their own cash and banking relationships. This is defensible for groups with strong local regulatory constraints, but it typically does not deliver the liquidity or risk benefits of true centralisation.
Industry best practices consistently indicate that data consolidation and process standardisation are prerequisites for successful centralisation, not consequences of it.
What to standardise first, and who owns it
If centralisation is a multi-year programme, standardisation is the enabling infrastructure. The following priority order generally proves effective for most groups of 10 to 30 entities:
1. Bank account governance: Know every account the group holds, in every jurisdiction. Without a master bank account list, forecasting, pooling, and netting are impossible.
2. Treasury policy: Define and document a group treasury policy covering FX exposure management, counterparty limits, liquidity thresholds and intercompany lending terms. This is the most cost-effective step with the fastest payback.
3. Cash reporting and forecasting formats: Standardise the cash forecast template and collection cadence before attempting to optimise group liquidity.
4. Payment processes and approval workflows: Standardise payment origination, approval and release across entities. This is the prerequisite for a payment factory. Payment approval workflows should be uniform across the group before centralising execution.
5. Intercompany agreements and transfer pricing: Only once operational plumbing is standardised does it make sense to invest in intercompany loan frameworks and transfer pricing documentation.
Ownership of the standardisation programme typically sits with the group treasurer, with a named project sponsor at CFO or board level.
What centralisation buys, and what it costs
What it buys
According to Deloitte's 2024 Global Corporate Treasury Survey, creating a scalable corporate treasury has become a critical focus for 49% of respondents, up from 39% in 2022. The tangible benefits include:
1. Improved cash visibility: A consolidated, real-time view of cash across all entities and currencies. This forms the foundation for everything else.
2. Cost reduction: Better pricing from banks and reduced treasury headcount across the group. Centralised negotiation yields superior terms compared to fragmented regional efforts.
3. Exposure netting: FX exposures that were individually hedged at the subsidiary level can be netted centrally, reducing gross hedging volume. Natural offsets become visible.
4. Economies of scale: Centralising volume provides access to investment-grade borrowing rates and bulk FX pricing.
5. Control and compliance: Cleaner audit trails and better regulatory compliance at the group level. One version of the truth.
What it costs
Centralisation is not free. The principal costs are:
1. Technology: Investment is required in a treasury management platform that can handle multi-entity consolidation.
2. Legal and tax structuring for intercompany agreements. Transfer pricing opinions represent a significant expense.
3. Change management to address resistance from local finance teams. This is usually the hardest part.
4. Operational disruption during transition. Processes may initially slow down before efficiency gains are realised.
5. Ongoing governance to adequately resource the central treasury function. A centralised team needs experienced people.
Sequence the programme: visibility first, cash last
A consistent theme across practitioners' views is that successful treasury centralisation programmes follow a visibility-first sequence.
Phase one: foundations
Complete a bank account audit, establish group treasury policy, implement bank connectivity to achieve consolidated cash reporting and define a common cash forecast template.
Phase two: standardisation
Standardise payment workflows, rationalise banking relationships, implement a treasury management system and begin transfer pricing documentation for intercompany arrangements.
Phase three: execution centralisation
Implement cash pooling, establish a payment factory for high-volume corridors, centralise FX execution and evaluate the in-house bank business case.
Phase four: optimisation
Implement intercompany netting, expand in-house bank services if justified, automate reconciliation and integrate treasury with working capital programmes.
Rushing to phase three without completing phases one and two is why many programmes stall.
The single view every model depends on
Regardless of which operating model an organisation selects, there is one precondition every structure shares: a consolidated, real-time view of where the group's cash sits.
Without this single view, netting is impossible because positions that remain invisible cannot be offset. Pooling is inefficient because funds cannot be swept if they cannot be located. Forecasting is guesswork because it relies on extrapolating from incomplete data.
For a group of 10 to 30 entities, this means in practice that before debating whether to implement a payment factory or a full in-house bank, the organisation must build the data infrastructure that would make either one coherent. Connect every bank account to a single reporting layer. Treasury must know its cash position across every entity, in real time, every morning.
