What treasury means in a family office
In a corporate group, treasury is a department with a clear mandate: manage liquidity, fund operations, control risk. In a family office the same functions exist, but they are spread across a looser collection of entities with different owners, different legal duties and different people entitled to give instructions.
A typical single family office might look after two or three discretionary trusts, a foundation, several holding companies, a property company in each country where the family owns real estate, an operating business, and the personal accounts of family members. Some of those entities are controlled by independent trustees, some by the family directly, and some by both. Cash moves between them for investments, distributions, loans, expenses and taxes.
Treasury in this setting means four things in practice: knowing where the money is, keeping enough of it in the right place and currency, making sure every payment is authorised by the right people, and being able to report on all of it accurately.
Start by mapping the entities
Before any process can work, the office needs an accurate map. For every entity it should record the legal name, the jurisdiction, who controls it, who may sign for it, which accounts it holds and with which institutions, its base currency for accounting, and any constraints on its money. That last point matters most. Trust money can only be used in accordance with the trust deed. A company's money belongs to the company and cannot simply be treated as the family's.
The map often reveals problems that have built up over years: dormant accounts nobody monitors, signatories who left long ago, entities with no clear purpose, and accounts held in the wrong name. Clearing these up reduces both cost and risk. It also makes onboarding with any new provider much faster, because the information they need is already assembled.
A simple structure chart, kept current and shared with providers, is one of the most useful documents a family office can maintain.
Getting a single view of cash
Visibility is the first goal. A treasurer who has to log in to eight banking portals and assemble a spreadsheet each morning will always be working from slightly stale information, and will miss things. The aim is a daily position for every entity and every currency, available in one place.
There are several ways to get there. Some offices use a treasury management system fed by bank statement files. Others concentrate day-to-day activity with fewer providers, so that most balances sit on one or two platforms that show multiple entities under a single login. Many use a mix. Whatever the method, the daily position should distinguish between cash that is freely available and cash that is committed, such as funds set aside for a property completion or a capital call.
Consolidated views should never blur ownership. A report showing the family's total euro position is helpful for planning, but it must be possible to break it down by entity, because each entity's money can only be used for that entity's purposes.
Liquidity planning
Family offices rarely run short of wealth, but they do run short of cash in the right place at the right time. A capital call arrives while funds are tied up in a term deposit. A distribution is approved in Canadian dollars while the trust holds euros. A property tax bill falls due in a company whose account was emptied for an investment.
A rolling cash forecast prevents most of these. For each entity, list known outflows for the next three to twelve months: distributions, capital calls, loan repayments, property costs, taxes, professional fees and staff costs. List known inflows: dividends, rent, maturities, loan repayments due. The gaps show where cash must be moved or currency bought, and when.
Forecasting also supports better FX decisions. Knowing that a large US dollar payment is due in four months gives the treasurer time to consider timing, rather than buying at whatever rate is available on the day.
Currency management
Families with members and assets in several countries carry currency exposure whether they intend to or not. A trust with a euro base currency that funds a beneficiary's life in Vancouver, holds property in London and receives dividends in US dollars has exposure to three currency pairs.
A sensible approach starts by identifying the base currency of each entity and the currencies of its regular commitments. From there, the office can decide on simple rules. Examples include holding a few months of known spending in each currency where it will be spent, converting large known payments in stages over a period, and converting surplus income back to the base currency at regular intervals. These rules reduce the number of ad hoc decisions and make it easier to explain outcomes to trustees and family members.
Whether to hedge investment exposures is an investment question for the family's advisers. Treasury's job is the operational side: executing conversions efficiently, recording the rate achieved and allocating each conversion to the correct entity. For background on how spot conversions work, see our foreign exchange page.
Moving money between entities
Transfers between entities in the same family structure are routine, and they are also where records most often go wrong. A trust funding its holding company, a holding company lending to a property company, or a company paying a dividend up to the trust: each is a legal transaction with its own character and paperwork.
Before moving money between entities, the office should be able to say what the transfer is. A capital contribution, a loan, a dividend, a repayment and a distribution all have different accounting and often different tax consequences. Loans should have written agreements, even simple ones, and the office should keep a register of balances owed between entities. Dividends need a board resolution of the paying company. Payments out of a trust need trustee approval under the relevant power.
It is tempting to route money through whichever account has a balance, paying a family member's expense from a company because the trust account is short. That shortcut blurs ownership and can create problems for trust protection and tax reporting. When cash is in the wrong entity, the right fix is a properly documented transfer to the entity that should bear the cost, followed by the payment from that entity.
Approvals and authority
Every payment should be traceable to someone entitled to authorise it. For trusts, that is the trustees or their authorised signatories. For companies, the directors or those they have authorised. For foundations, the council. For individuals, the account holder or an attorney with a valid power.
The family office often sits between these parties, preparing payments for others to approve. That arrangement works well if the office's role is clearly defined and documented. A common model is for office staff to prepare and input payments, and for the entity's signatories to approve them, with two approvers required above a set amount. A platform with user roles, limits and dual authorisation can enforce these rules for each entity separately.
Delegated authority should be written down. A board resolution or trustee resolution naming who can approve what, up to what amount, is far better than an informal understanding that the chief financial officer handles payments. When people leave the office, their access should be removed the same day.
Controls against fraud
Family offices are attractive targets for payment fraud. They move large sums, often to individuals, and their staff may be small in number and used to acting on requests from family members. The most common attack is an email that appears to come from a family member, a trustee or a supplier, asking for an urgent payment or a change of bank details.
A few controls stop most of it:
- Verify any new payee, or any change to payee details, by telephone on a number already held, never one supplied in the request.
- Require dual authorisation for new payees and for payments above a threshold.
- Treat urgency and secrecy in a request as warning signs.
- Restrict who can add or change payee records on the payment platform.
- Review the platform's audit trail regularly for unusual access or changes.
Reporting to the family and trustees
Good reporting serves several audiences. Trustees need entity-level statements to prepare trust accounts and to evidence their decisions. Family members want a clear picture of their overall position. Accountants and auditors need complete records of every movement, with supporting documents. Tax advisers need data organised by entity and by country.
Monthly reporting usually includes, for each entity, opening and closing balances by currency, a list of payments and receipts with their purpose, FX conversions with rates, and any outstanding commitments. Exportable statements in a consistent format save a great deal of reconciliation time. A consolidated summary can sit on top, provided it is clear that consolidation is for information only.
Working with providers
Few family offices want to rely on a single bank for everything, and few can manage a dozen relationships well. Most settle on a core group: one or two custodian banks for investments, and one or two providers for day-to-day payments and currency conversion.
When choosing payment and FX providers, a family office will usually look at:
- Whether the provider understands trusts, foundations and private trust companies, and can onboard them without repeated confusion.
- Whether one login can cover many entities while keeping each one separate.
- The quality of approval controls, user permissions and audit records.
- Access to a named contact who knows the structure, as opposed to a general queue.
- Regulatory status and how client funds are held.
- The currencies and countries the office regularly deals with.
Onboarding with any provider will require documents for each entity and its controllers. Preparing a standard pack for the whole structure, updated annually, makes this much less painful.
General information only
This article is general information about treasury practices in family offices. It is not investment, legal or tax advice. Each family's arrangements depend on its structures, residences and objectives, and decisions on hedging or investment should be taken with qualified advisers.
CCYFX provides FX and international payments to family offices and the entities they administer, through a platform built for multi-entity access, dual authorisation and full reporting. Read more about our work with family offices.
