Strategic Treasury

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Cohesion and Collaboration for Financial Success What are the current priorities for corporate treasurers - and how can the right banking partner help to address them successfully?

Cohesion and Collaboration for Financial Success

by Kees Hoving, Head of Trade Finance and Cash Management Corporates, Germany, Deutsche Bank AG

Much has been discussed over recent years about the expanding role of treasury into areas such as working capital, trade and supply chain finance. The effect of this expansion is that liquidity and risk can be managed more cohesively within an organisation. To support them with their expanded remit, treasurers are increasingly demanding more from their banks.  In particular, they need a bank that can help them optimise their cash and liquidity management (combining both cash and trade techniques), leverage technology innovation and enhance the way risk is monitored and managed across their entire geographic footprint. This article considers some of the emerging priorities amongst corporate treasurers and offers some insight into the ways the right banking partner can help to address them successfully.

Aligning disciplines for cohesive solutions

Challenging market conditions have forced greater collaboration and cohesion across treasury and finance disciplines, such as cash, trade, foreign exchange (FX), financing and investment. As a result, the endemic thinking within banks in terms of ‘silos’ no longer meets the needs of many of their customers. At Deutsche Bank, we were amongst the first banks to introduce a more comprehensive, holistic approach to the way that we design and deliver solutions and services by bringing together multi-disciplinary teams across logical functional areas such as payments, collections, short-term lending, trade finance and FX. This set-up enables us to work with customers at a more strategic level and create flexible, bespoke solutions that are specifically designed to meet each customer’s unique priorities.

The SEPA catalyst

An example is SEPA migration, currently one of the key issues that customers with a presence in Europe are dealing with. Treasurers and finance managers are increasingly recognising both the obligation to migrate to SEPA instruments as the 2014 deadline approaches and, perhaps more importantly, the value of doing so.

By adopting a holistic approach to payments, collections and cash management, we are helping customers to rationalise their account structures, leverage lower cost locations for making payments, and simplify their cash management processes.  In Italy, for example, the interchange fee for today’s domestic direct debits is even higher than the current cross-border interchange fee for SEPA direct debits.  We have therefore helped an Italian customer to replace multiple euro accounts with a single payments and collections account for its pan-European business located in Germany, where interchange and transactions fees are much lower.

This solution to the problem of high charges, fragmented and complex cash, as well as liquidity and bank account management, would not have been possible in the past. The outcomes are not simply operational- there is also a significant impact on working capital by addressing payments, collections and cash management as part of a single conversation.

Leveraging the benefits of global network banking

Our cohesive approach to cash and treasury management does not only extend to the activities conducted by the head office. Through our global network banking concept, we aim to support greater co-operation and closer alignment on both the operational and strategic levels between the corporate headquarters and their subsidiaries. By establishing constructive dialogue and streamlining information flow, decisions will take account of the needs of both subsidiaries and the group as a whole.

To illustrate, in China, the significant growth trajectories of corporates mean that subsidiaries are growing considerably and, consequently, develop more complex financial needs. In many cases, they need investment, FX management, working capital and supply chain solutions.  Often we find that group treasuries, which may be based in Europe or the United States, may not have complete visibility or awareness of local issues, while their subsidiaries may lack a full understanding of the group financial constraints and objectives.  At Deutsche Bank, we leverage our extensive network to provide local support at both headquarters and subsidiary level as part of an integrated customer relationship approach. By doing so, we help to resolve disconnects, promote a more open dialogue and help to devise the solutions that will meet the needs and objectives of both parties.

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