Cash & Liquidity Management

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Moving Treasury into the Digital Era Digital processes such as e-billing and virtual accounts are the key to achieving the scalability and risk management required to meet the near-future’s challenges and opportunities.

Moving Treasury into the Digital Era

by Markus Straussfeld, Head of Cash Management International Sales and Alfredo Bresciani, Head of Trade Finance International Sales, UniCredit

Treasury departments stand on the brink of a transformative year. Markus Straussfeld, Head of Cash Management International Sales, and Alfredo Bresciani, Head of Trade Finance International Sales, at UniCredit, discuss how new digital processes are the key to achieving the scalability and risk management required to meet the near-future’s challenges and opportunities.

Western economies finally look set to enjoy a period of sustained growth, and access to emerging markets such as those in Central and Eastern Europe (CEE) will soon be markedly improved as they integrate into the Single Euro Payments Area (SEPA). Slovenia and Slovakia, for example, are already SEPA-compliant, and Croatia is soon to follow. Meanwhile, liberalisation in Asia is turning cash pool structures that optimise liquidity positions across continents – once considered a pipe dream – into reality.

According to Markus Straussfeld, expanding into new markets is the key for companies looking to exploit these opportunities while remaining competitive.

“Certainly, the time is ripe for expansion,” he says. “Developing economies are contributing more and more to global trade, raising their share in global output from 39% in 2000 to 52% in 2012, according to the World Trade Organisation – a phenomenon due in no small part to the increase in trade flows between Europe and the emerging markets.”

Of course, corporates looking to move their operations into new markets will inevitably face challenges. And to meet these, they will need to be strong in a number of areas, says Straussfeld.

“Scalability and risk management are crucial,” he says. “Fortunately, treasurers will be helped here by two trends. The first is that treasury departments are starting to enjoy an increasing role in the strategic direction of their companies. The second is that they now also have the benefit of technological advances that greatly simplify previously-arduous manual processes.”

Indeed, digitalisation has ushered in a new range of tools to help treasurers ease the transition into new markets. New payment methods such as e-Billing CBILL and MyBank, as well as new cash management solutions such as Virtual Accounts, all improve risk management, transparency and efficiency.

However, according to Alfredo Bresciani, firms will also be looking to optimise their working capital – a process that will free cash for investment elsewhere. “Investing in short-term financing programmes will naturally turn corporates toward new markets,” he says.

“Corporates are starting to utilise new financing techniques, and these are bringing a raft of advantages, including stronger risk management, greater bargaining power, and more-durable supply chains.”

However, he stresses, “These techniques will require strong communication between firms’ finance, sales, procurement and treasury departments, if they are to be carried out effectively.”

Of course, treasury departments will be right at the heart of this movement, and cash management processes will have to be highly efficient for these techniques to be executed successfully. “Even from a trade finance perspective, digitalising cash management operations is an important step,” says Bresciani. “Treasury departments are taking on extra responsibility, and shouldering extra work as a result. When you factor in dealing with increasing regulatory requirements, treasurers will have a challenge simply keeping on top of the workload. Digitalising their cash management processes will be vital in helping them relieve some of the burden.”

Moving towards harmonisation

These new digital platforms have been facilitated in large part by the implementation of the Single European Payments Area (SEPA).

“At this stage, Eurozone corporates should be finished with SEPA implementation,” says Straussfeld. “However, the question remains whether similar measures will be brought in to harmonise payments in other formats. Where SEPA predominantly affected large multinational companies, regulation for other formats will reach right through to SMEs.”

Non-euro EU corporates such as those in Central and Eastern Europe, meanwhile, still have until October 2016 to make the transition.

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