Cash management organisation decision-making: economics, strategy and operations

  • Wim Westerman University of Groningen, The Netherlands

Abstract

Abstract:

 

Aim: This article starts from the observations of two cash management experts, who witness varying company views on the almost-vanished issue of structuring the internal decision-making on the organisation of it. The aim of this article is to put the current challenging developments in a digitalizing world into a conceptual perspective.

 

Research design: The article singles out motives for either centralization or decentralization of cash management, models to organize cash management functions, as well as developments in the field over the last some thirty years. Various theoretical views are studied briefly in order to find a way out of the signalled paradox.

 

Findings: It can be concluded that multiple practices may coexist both within and between firms, whereby a refined understanding in terms of financial economics, strategic direction and operational flexibility is called for.

 

Originality: The present study is unique in that it is among the first to signal the return of the centralisation versus decentralisation issue in cash management in a rapidly evolving digital era and multi-legislation world.

 

Implications: The developments offer a unique opportunity for firms, further reducing their costs, to overthink their cash management system, including its relation to the external world. The study calls for follow-up research in terms of case studies at organisations with varying contingencies and survey questionnaires among representative samples.

 

 

Keywords: cash management organisation, (de-) centralisation, decision-making

 

JEL: B27, G30, L23

 

 

References

Bartsch C. (2019), Factors to consider when centralising cash management, The Global Treasurer, 10 September, https://www.theglobaltreasurer.com/2019/09/10/factors-to-consider-when-centralising-cash-management/ [24.04.2020].

Blenken Blijdenstein H., Westerman W. (2008), Optimising a global cash management structure at Philips Electronics, “Journal of Corporate Treasury Management”, vol. 1 no. 4, pp. 317-325.

Geyte J. (2017), Interne bank als dienstverlener, geen winstmotor, CM Web, 1 November, https://cmweb.nl/2017/11/interne-bank-als-dienstverlener-geen-winstmotor/ [25.04.2020].

Hallèn L. (1982), International industrial purchasing, University of Uppsala, Uppsala.

McMenemy L. (2019), The role of the head of treasury in entity governance, 19 July, https://insights.diligent.com/entity-governance/role-head-treasury-entity-governance/ [25.04.2020].

Nooteboom B. (1993), Networks and transactions: do they connect?, in: Dynamics of the firm. Strategies of pricing and organisation, Groenewegen J. (ed.), Edward Elgar, Aldershot, pp. 9-26.

Polák P., Klusáček I. (2010), Centralisation of treasury management, Business Perspectives, Sumy (Ukraine).

Polák P., Masquelier F, Michalski G. (2018), Towards treasury 4.0. The evolving role of corporate treasury management for 2020, “Management – Journal of Contemporary Management Issues”, vol. 23 no. 2, pp. 189-197.

Polák P., Nelischer C., Guo H., Robertson D.C. (2019), “Intelligent” finance and treasury management: what we can expect, “AI & Society”, vol. 2019, pp. 1-12.

Riggins N. (2019), Centralisation versus decentralisation, “The Global Treasurer”, 8 February.

Soenen L.A., Aggarwal R. (1989), Cash and foreign exchange management. Theory and corporate practice in three countries, “Journal of Business Finance & Accounting”, vol. 16 no. 5, pp. 599-616.

Treasury Today (2016), Taking a flexible approach to centralisation, http://treasurytoday.com/2016/09/taking-a-flexible-approach-to-centralisation-ttii [25.04.2020].

Westerman W. (2017), Ja toch weer! Cash management: centralisatie of decentralisatie?, CM Web, 12 December, http://cmweb.nl/2017/12/cash-management-centralisatie-decentralisatie/ [25.04.2020].

Westerman W., Von Eije J.H. (2005), Multinational cash management in Europe towards centralisation and disintermediation: the Philips case, “Managerial Finance”, vol. 31 no. 10, pp. 65-74.

Westerman W., Hessels J., Ritsema H.A. (1997), Treasury management in a Euro-Japanese firm, in: Proceedings 8ste NOBO Onderzoekdag Bedrijfskunde, 18 november, University of Twente, Enschede, pp. 105-115.

Westerman W., Ritsema H.A. (1999), Cash management in a changing European market, in: Financiering en Belegging 1999, Annaert J., Huisman R., Spronk J. (eds.), Erasmus University Rotterdam, Rotterdam, pp. 263-291.

Williamson O.E. (1975), Markets and hierarchies. Analysis and antitrust implications, Free Press, New York.

Williamson O.E. (1989), Transaction cost economics, in: Handbook of industrial organization, part 1, Schmalensee R., Willig R. (eds.), North Holland/Elsevier, Amsterdam, pp. 135-178.

Published
2020-06-21