Cash & Liquidity Management
Published  12 MIN READ
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Against the Odds: Removing Barriers to Optimising Liquidity

by Helen Sanders, Editor

At BNP Paribas’ recent Cash Management University (CMU), Vinci Finance International, Holcim Ltd and DFDS each described recent projects that they had undertaken to optimise liquidity, either regionally or globally. Companies of all sizes are very aware of the value of liquidity; however, implementing a regional or global liquidity management strategy can appear particularly challenging in companies with a decentralised organisational structure. As these three companies’ experiences illustrate, however, companies with differing degrees of centralisation have comparable opportunities to optimise liquidity, so long as treasurers seek to deliver value at both a group and subsidiary level.

Experiences of a decentralised treasury: Vinci

Jean-Michel Harlepin, Vinci Finance International, (Vinci), a 100% subsidiary of leading concessions and construction group VINCI SA, opened the workshop by outlining how treasury has sought to optimise liquidity management in a decentralised business organisation. Vinci was established in 2008 to facilitate intercompany financing and cross-border cash pooling; however, business units operate on a decentralised basis, so treasury needs to work with each one individually to demonstrate the benefits of a consolidated approach to group liquidity and encourage them to participate in liquidity management structures.

Strategic importance of liquidity management

Optimising and securing access to group liquidity is a major objective for Vinci’s treasury team. In particular, treasury aims to achieve greater visibility and accessibility of cash worldwide, to minimise the cost of borrowing and therefore improve group results, reduce counterparty risk, and increase shareholder and rating agency confidence. A vital means of achieving this is to centralise cash wherever possible. Over the past two years, therefore, treasury has implemented a number of cash pools across its global footprint, working with seven partner banks across 120 accounts. In most cases, zero-balancing cash pools have been set up, e.g., in the Eurozone, UK, Poland and Czech Republic, with Romania to follow shortly. Although zero-balancing remains the preferred means of optimising liquidity, Vinci has also set up notional pooling in Switzerland, North America and parts of Asia where it may not be feasible or desirable for group entities to use zero-balancing.