Cash & Liquidity Management

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Leveraging Cash Management Potential in Italy and Across Europe Cash management and payment practices are converging across Europe, yet Italy, like other countries, retains some specific features in its cash management and payments landscape. More than ever, companies are looking for support to address the strategic challenges of implementing consistent payments and cash management solutions across Europe.

Leveraging Cash Management Potential in Italy and Across Europe

by Julien Niwinski, Head of Cash Management, BNL Gruppo BNP Paribas

Cash management and payment practices are converging across Europe, particularly as a result of the Payment Services Directive (PSD) that creates greater standardisation. At the same time Italy, like other countries, retains some specific features in its cash management and payments landscape. Companies thus more than ever look for support to address the strategic challenges of implementing consistent payments and cash management solutions across Europe.

International expansion amongst Italian companies

In our discussions with clients we see that the main current challenge for Italian companies and foreign companies located in Italy is in achieving visibility and control over cash at a regional or global level. While these have been long-standing objectives for larger multinationals, the need to manage liquidity and risk on a global level is increasingly a requirement for mid-sized corporations that are expanding internationally. This is a particular issue in Italy, where a large proportion of the economy is comprised of mid-cap companies that generate a significant share of their revenues outside of Italy and have an extended international presence. One of the challenges for these companies is that while they have the same aspirations as their larger peers, budgets, technology and resources are typically more constrained, and access to financing may not be as easy.

Supporting corporate ambitions

To address the liquidity and risk management needs of these mid-sized companies, which typically have revenues from €0.5 – 1bn, as well as our larger corporate clients, we are focused on delivering cash and treasury management solutions that address their current and future requirements. We focus on optimised business processes, automation, and efficiency, so these companies can achieve their global objectives such as visibility and control on cash, liquidity optimisation and risk management- without the need to invest substantially in resources or technology.

The main current challenge for Italian companies and foreign companies located in Italy is in achieving visibility and control over cash at a regional or global level.

Visibility and control. The first priority for companies seeking to take greater control of liquidity and risk is to rationalise the repositories of cash across their business, so they can obtain greater visibility and control over cash. Often companies set up relationships with local banks when they expand into a new country, which leads to a multitude of accounts and banking relationships as their operations extend into a variety of countries. Consequently, by providing domestic and cross-border services across Italy, on a pan-European basis and beyond, with support through 150 local business centres in 23 European countries as well as dedicated expertise through our global cash management competence centre, we help companies to rationalise their account structures without losing the benefit of local support. This is the essence of One Bank for Corporates in Europe, a major initiative recently launched by BNP Paribas.

In Italy, companies engaging in a review of their account structure might typically maintain one or a few domestic banks, and one international bank as a result of this exercise, reducing from up to 20-30 banks in the past. Having rationalised banks and accounts, we help treasurers and finance managers to streamline their bank communication, either through our Group’s international electronic banking system Connexis or through a bank-independent channel such as SWIFTNet. This has the advantage that a company can leverage a single channel to access different bank accounts in different countries in a consistent way, and BNP Paribas is a leading bank in delivering services to our clients through SWIFTNet. BNP Paribas remains the Number One bank group worldwide in terms of number of SWIFTNet corporate customers. We are also represented on the SWIFT board, participate actively in working groups and we are pioneers in adopting new standards in financial messaging.

Since BNL became part of the BNP Paribas group in 2006, we have worked actively to achieve a harmonised offer by integrating the processes and solution sets of both organisations, including supporting consistent formats for corporate-to-bank integration, across both SWIFTNet and our proprietary platforms, as well as being a pioneer of ISO 20022 integration formats that form the basis of SEPA payment instruments. In doing so, we act as one bank, across Europe and beyond, with harmonised services, technology and approach to doing business. Our cash-pooling engine and SEPA direct debit platforms, for example, are common to all BNP Paribas entities, though we pay particular attention to adapting them to local needs. For this reason, many of our clients that previously had a relationship with BNL and/or BNP Paribas in one or more country, have found it both desirable and very straightforward to extend this relationship into new locations rather than appointing an additional bank. By doing so, these companies benefit from consistent products and services as well as being able to achieve their liquidity and risk management objectives.

Liquidity optimisation. The next key concern, having achieved visibility and control of cash across the group, is to optimise group liquidity. In the current environment, many companies are feeling the need to look for ways to reduce their dependency on bank financing by better managing group liquidity. At BNL and across the BNP Paribas group, we are supporting mid-cap and large corporations by providing liquidity optimisation solutions such as cash pooling, and facilitating centralised business functions such as global and regional treasury centres, and shared service centres. 

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