It is vital that treasurers at multinational corporations have visibility not only into their baseline treasury function, but also into taxation and end-to-end strategic business support functions.
Even better, more companies should consider coordinating all three aspects in the hands of one manager.
That’s according to Newell Brands treasury executive Robert Westreich. And he should know how to integrate the trio of functions. Westreich’s title at Newell Brands is “Senior Vice President, Treasurer & Chief Tax Officer & GBS.” That arrangement optimises his company’s due diligence and oversight and minimises the risk of something falling through the cracks as money is moved around the globe.
“In a US-based multinational, corporate treasury, corporate tax and global business services (GBS) are tightly interdependent—even if they sit in different reporting lines,” says Westreich. “The intersection points usually revolve around cash, legal entity structure and compliance.”
Westreich urges treasurers to envision three dual relationships within the trio of overlapping pairs:
1. Treasury and Tax
Westreich characterises this relationship as “where the money meets the rules.”
“This is the most critical intersection because nearly every treasury decision has tax consequences when cash is transferred between entities,” he contends.
A broad view of both aspects is particularly helpful in cash repatriation and distribution strategy. Taxation expertise helps determine the best means of minimising withholding taxes and understanding exposure regarding anti-deferral rules for foreign earnings.
While the treasurer designs the structure of loans, pooling and in-house banking, the tax expertise ensures arm’s-length interest rates, assesses interest deductibility, and keeps track of the tax impact of gains and losses.
“The treasury group should work in concert with the tax function,” Westreich emphasises. Otherwise, there is too much potential to “make expensive mistakes,” he adds. “The treasury group does not have intimate knowledge there, so you don’t know what you don’t know.”
An example of a risky area is the repatriation of overseas profits. The tax incentives offered by the US government on one hand may be cancelled out on the other hand by the loss of advantageous hedge account benefits on a company’s own cross currency swaps when equity is transferred.
“Bringing cash from a foreign subsidiary to the US could trigger withholding tax unless structured via loans or treaty-optimised dividends,” Westreich warns.
2. Treasury and GBS
Interaction with GBS is “where strategy meets execution,” according to Westreich.
“GBS typically handles high-volume, transactional finance processes,” he notes. “Treasury sets banking strategy, signatories, and controls [and] relies on GBS for accurate, timely cash visibility.”
One important area to coordinate is working capital and cash flow management, including payment collection. Examine how formulas for days sales outstanding (DSO) and days payable outstanding (DPO) are applied.
“Treasury drives metrics like DSO, DPO, inventory turns to enhance cash positions,” Westreich notes. “GBS executes the underlying processes [including] collections, invoicing, vendor payments to facilitate that.”
A treasurer’s vital role in liquidity forecasting highly depends on GBS information including cash flow forecasting.
3. Tax and GBS
Westreich sees this combination as “where compliance meets data.”
Vital tax-reporting functions related to setting provisions, local filings, transfer pricing documentation – plus value-added and sales taxes – depend on a grasp of GBS information such as trial balances, journal entries and intercompany transactions.
Once the trio of bilateral relationships is understood, Westreich suggests conceptualising the “three-way intersection where all three collide” in complex and high-value areas.
An example is in-house banking and cash pooling, where treasury designs the structure, the tax staff ensures compliance and GBS executes postings, settlements and reconciliations. A similar three-legged stool emerges in intercompany netting and enterprise resource planning.
“In well-run multinationals, a centralised in-house bank integrates treasury with GBS execution [and] tax is embedded early in treasury decisions,” Westreich states.
Shared systems ensure a “single source of truth,” he adds. Clear governance emerges, with treasury owning cash and banking policy. Tax owns tax positions. GBS owns execution and data integrity.
Ultimately, Westreich says final, unified decisions should be based on the question: “What’s the best thing for the organisation?” The three-way view enhances confidence that all bases are covered.
