In groups made up of a holding company, a sub-holding that runs finance centrally and a dozen operating companies, the Monday cash position is still, in many cases, rebuilt by hand. The starting point is a spreadsheet fed with statements from five or six banks. The total adds up, yet it does not show how much of that cash can actually be spent. It includes the accounts of recently acquired companies, kept open until the merger, and restricted accounts through which money collected on behalf of third parties passes. Group treasury starts here: separating the cash the group can use from the funds that pass through its accounts without being available.
Group treasury: consolidation is built company by company, not account by account
In a treasury platform consolidation aggregates whole companies: each entity brings its own accounts with it, and the scope is decided one company at a time.
The principle sounds technical, and its organisational consequences are immediate. Each company in the group becomes an entity with its own banks, its own categories and its own opening and closing balance for the month. The consolidated view acts as the parent: it adds up the chosen entities and allows the reader to drill down to a single company, account or bank. There can be more than one consolidation, for instance one per business line and one for the whole group, and in the platform we use in our projects they carry no additional subscription.
The decision that weighs most concerns the number of entities, even before the consolidations. A group that acquires and merges companies every year changes shape more often than its accounts change. If each newly acquired company becomes an entity of its own, the picture fragments, and every new entity has to be connected, authorised and then closed at the merger. Three routes are available: waiting for the merger for companies that are due to disappear, grouping several companies under a single entity per business line, or widening the scope as the group grows. The choice also has a contractual side, because each connected entity falls within the scope of the subscription.
Who sees what in the consolidated cash view
In group treasury access is granted per company. A user sees every account of an entity or none of them, and there is no filter on a single account. A consolidation remains visible only to the person who created it, until other users are invited. Payments allow finer control: each user can have individual limits, and an operational profile can be denied access to the treasury area altogether.
Access permissions are best defined during the analysis. In groups with family shareholders, or with different directors for each company, the question of who may read which balances always comes up, and it usually comes up late.
Group liquidity and money held for third parties
In groups that collect money on behalf of third parties, part of the balance visible on the accounts is not available: it has to be kept apart from operating cash and forecast separately.
“This money is there, but it isn’t ours.” With these words the finance director of a services group described the legally segregated accounts through which sums collected for other parties pass. Adding them to group cash produces a balance that invites payments with money that has to be passed on. Leaving them out produces the opposite mistake, because those accounts also have due dates, receipts and payments to forecast.
Balance consolidation adds up whole companies. The management of dedicated accounts, on the other hand, isolates the accounts that have a restricted purpose. Examples include a sub-account reserved for payments from public bodies for traceability, an account used to pay suppliers on behalf of clients, or a deposit held for third parties.
When the dedicated accounts belong to several companies in the group, the tested approach is an entity built only for them, with its own forecast. In the configuration adopted each account is linked to a single entity. Once moved into the dedicated one, it leaves the view of its original company and the operating consolidation, and remains readable in a separate consolidated view. Group treasury can then be read on two levels, available cash and funds in transit, each with its own thirteen weeks ahead. The method for building the two forecasts is the one described in the 13-week cash flow forecast.
A group that acquires companies every year
A holding company controls a sub-holding that runs finance centrally, and between ten and twenty operating companies rotate beneath it. There are three or four acquisitions a year, and as many mergers. Each acquired company stays independent for six to nine months before joining the parent, with its own online banking and its own users. Inherited accounts stay open for around a year, because customers keep paying to the bank details they know. Group treasury was run on a spreadsheet built to read bank codes and transaction descriptions.
Different people, with different logins, downloaded the transactions of the inherited accounts and forwarded them to head office: the client described the process as cumbersome, even with modest volumes. The more serious risk, however, lay in the restricted accounts, mixed with all the others in the same spreadsheet.
What the connection changed
The connection to the platform started with open banking, which the client activated independently for most banks. Smaller banks with no direct connection came in as passive banks under an active bank already enabled for the automatic data feed. During the project one connected account stopped updating. The finance director spotted the cause straight away: its company sat outside the contractual scope, so the problem was not technical. That led to the decision to redesign the entities, grouping companies by business line instead of connecting them one by one. In the same design the legally segregated accounts go into a dedicated entity. With this set-up the group’s operating balance excludes third-party money by design, while those sums remain visible, with their due dates, in the consolidation reserved for restricted accounts.
For payments, while the two-way link with the ERP is still pending, the group uploads the XML payment files produced by its ERP to the platform instead of to each online banking service. The first test transfer was sent from there to the bank. The client’s verdict was clear: having every bank in a single environment is worth it on its own, even with part of the work still manual.
Insight: the Monday spreadsheet was built around accounts, while the group changed company by company. With entities designed by business line, an acquisition brings the new company’s accounts into an existing entity, without opening a new scope every time.
Active and passive banks in group treasury
Through the CBI service, the active bank collects every day the transactions of the group’s other banks, which become passive and reach the platform in a single feed.
Companies that already have a CBI service with their main bank know the mechanism, and to bring it into the platform they duplicate the existing feed. On the active bank the data are those of the same day, on the passive banks those of the previous day. A bank that has just been made passive appears in the platform from the following day. It is also the channel that makes automatic reconciliation and accounting entries possible, as explained in the article on automated bank reconciliation. Payments are not concentrated on the active bank: they continue to leave from each company’s own banks.
When open banking is enough
The alternative is the open banking introduced by the European Payment Services Directive, PSD2. The connection is read-only, credentials are entered on the bank’s portal and not in the platform, and activation takes about ten minutes per bank. On the other hand, the connection has to be renewed periodically, descriptions sometimes arrive incomplete and bundled payment batches do not show the detail. With many accounts a direct bank connection is the better choice.
Opening an account with a new active bank makes sense when none of the banks in use offers an adequate CBI service. The choice comes from comparing network coverage, because not every circuit offers the same service in the active bank role.
| Channel | Data refresh | When it fits |
|---|---|---|
| PSD2 open banking | At least daily, activated in minutes per bank | Few banks, quick start, read-only access |
| Active bank with CBI service | Same-day data on the active bank, previous-day data on passive banks | Many accounts, automatic reconciliation and entries |
| Direct connection for payments | One connection for each bank and company pair | Payment batches signed from the platform with several approval levels |
| CSV or Excel file import | Periodic, with import templates | Newly acquired companies, ERPs being retired |
Foreign currency accounts and payment batches across companies
Group treasury handles foreign currency accounts in the same view as euro accounts, while payments require a connection for each pair of bank and company.
Accounts in dollars or other currencies sit alongside euro accounts in the consolidated view. Coverage has to be checked bank by bank, because outside the SEPA area transfers travel on networks such as SWIFT. For payments the rule is stricter. Each company has its own SIA code, and each pair of bank and company requires a dedicated connection. Signatories work with two-factor authentication and a certificate, with one or more approval levels.
The link with the ERP determines how much work remains manual. Until the exchange is two-way, the payment batch leaves from the platform but the invoice stays open in the ERP, and someone has to close it. Aesir is a Gold Partner of NTS Informatica for Business Experience, and with other ERPs the available connectors are used or new ones are built. Newly acquired companies change system within the year. For them a shared folder and a CSV import template are enough to bring their transactions into the group picture, without integrating software that is due to be retired.
Six group treasury questions before connecting the first bank
- Which companies fall within the scope today, and which will join or leave over the next twelve months.
- Which accounts carry third-party money, and who needs to see it separately from available cash.
- Who needs to see which companies, bearing in mind that visibility is granted per entity.
- Which bank can act as the active bank, and which accounts remain outside the CBI service.
- Which system payment batches leave from today, and who signs them company by company.
- How the transactions of acquired companies arrive while they still use their own ERP.
Aesir Srl runs treasury projects across Italy and, on specific request, in Switzerland, the United Kingdom and the United States, with expertise covering banks, ERP and administrative processes. The platforms we select process data in EU data centres, with certifications from the ISO/IEC 27001 family and requirements in line with NIS2: the same standards we apply to our own infrastructure.
Questions from group finance directors
Can several companies be grouped to limit the number of entities?
Yes. Several companies can be merged into a single entity per business line, and consolidations are built on top of the entities with no additional subscription. The choice should be made during the analysis, because visibility is granted per entity.
Are balance consolidation and dedicated accounts the same function?
They are two distinct functions. Consolidation adds up whole companies, while dedicated accounts isolate funds with a restricted purpose. When they belong to several companies, they are gathered in an entity built only for them.
Does group treasury also handle foreign currency accounts?
Foreign currency accounts appear in the same view as euro accounts and are read together in the consolidation. Coverage is checked bank by bank, and transfers outside the SEPA area use international networks such as SWIFT.
Is a new bank needed to have an active bank?
Companies that already have a CBI service with their main bank duplicate the existing feed towards the platform. A new bank is opened when none of the banks in use offers the service adequately.
Let’s talk
The first sign of group treasury in good order is a consolidated balance in which every account has a clear owner. If the Monday spreadsheet mixes available cash, accounts awaiting a merger and third-party money, connecting more banks is not enough. The useful work starts with the design of the entities, because permissions, consolidations and the forecast of restricted accounts all depend on it.
If you would like to explore the subject or assess the situation in your own company, you can fill in the form at the bottom of this page or write to support@aesir-tech.it: we will arrange a free consultation and start from your numbers.