Cash & Liquidity Management

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Maximising Opportunities in the Americas by David Conroy, Americas Head of Trade Finance and Cash Management Corporates, Global Transaction Banking Corporates in the Americas, like their counterparts globally, are challenged to optimise liquidity, improve working capital and manage risk to succeed in today’s turbulent economic times. The weakening of the US financial services sector has created a multitude of uncertainties in the Americas and globally, says David Conroy, Americas Head of Trade Finance and Cash Management Corporates, Global Transaction Banking, Deutsche Bank.

Corporates in the Americas, like their counterparts globally, are challenged to optimise liquidity, improve working capital and manage risk to succeed in today’s turbulent economic times. The weakening of the US financial services sector has created a multitude of uncertainties in the Americas and globally, says David Conroy, Americas Head of Trade Finance and Cash Management Corporates, Global Transaction Banking, Deutsche Bank.

What are some of the key trends that will impact Americas-based corporate treasurers?

Corporate treasurers in the Americas and in the world at large are experiencing today a “balance sheet recession”. The drying up credit supply has slowed the growth of many corporates in the Americas, but there is still an extraordinary amount of opportunity in this region. At the same time, increased opportunities for top line revenue growth are now in emerging markets such as Brazil, a region that is growing at tremendous rates with this country representing more than one-third of the market size for South America. Economic turmoil has led corporates across all industry sectors to alter their cash management strategy.

“Back to basics” has become a fundamental theme. More than ever, treasurers are seeking to re-focus on their core role of maintaining day-to-day liquidity and ensuring that the company is prepared to conduct business. Also, this has resulted in greater emphasis on squeezing efficiencies out of the financial supply chain and increased centralisation as well as automation of the treasury function. An additional outcome has been that the treasurer’s role has taken on larger importance in many organisations. The treasury unit will continue to rise in strategic value to the organisation. CFOs will work even closer with the treasurer, procurement, sales and logistics staff, as issues, that were once looked upon as mundane, are now valued for their importance to the company’s overall financial health.

With liquidity so limited and core bank lending unavailable to many corporations, working capital optimisation has come to the fore.

Why has financial supply chain management risen in importance?

With liquidity so limited and core bank lending unavailable to many corporations, working capital optimisation has come to the fore. Companies are required to find cash in the context of their payables, receivables and their inventory. The only economic asset in a supply chain is cash. Cash and liquidity are at a premium and that is why products like accounts receivable financing have become more enticing. In addition, there is more of an interest in timed and conditional payments and other ways to have greater control over liquidity that is trapped in the supply chain. Supplier and distributor finance can lead to improved working capital, top-line revenue growth and provide an additional source of liquidity for a corporate and its trading partners. These programmes will continue to emerge as a core strategy going forward.

Where does Deutsche Bank stand on global payment channels?

As an acknowledged market leader, Deutsche Bank is strategically focused on supporting the global payment needs of its large multinational corporate clients in the Americas and around the world. These clients, by the nature of their business, must deal with the complexities of moving money around the globe to pay suppliers, employees, shareholders, and others. Many companies have implemented solutions such as payment factories or shared service centres to achieve economies of scale into the payments process. At Deutsche Bank, we are proponents of global standards such as the ISO 20022 format, but we have also invested in supporting most industry standard or proprietary formats, such as SWIFT, EDIFACT, iDoc, ANSI and others. Our payment channels can receive instructions from clients in any of these formats and handle the conversion to local payment formats in more than 35 countries.  We recently supplemented this channel with the addition of seamless foreign exchange payment capabilities in 80+ currencies and we continue to invest in simplifying the handshake between our systems and major treasury or payment systems such as SAP and Oracle to make the implementation of a global payments solution even easier.

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