Trade Finance
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Breaking Down Boundaries in Financial Supply Chains

An Executive Interview with Ather Williams III, Managing Director, Head of Global Payments and Head of Global Strategy, Global Transactions Services, Bank of America Merrill Lynch 

In this month’s Executive Interview, we are delighted to introduce Ather Williams III, Managing Director, Head of Global Payments and Head of Global Strategy, Global Transactions Services at Bank of America Merrill Lynch. As globalisation, urbanisation and supply chain complexity continues to grow, Ather introduces the innovative concept of ‘borderless business’, emphasising the importance of harmonisation and simplification across countries and supply chains.

How would you define borderless business, and what are the drivers?

Ather Williams IIIBorderless business can take a variety of forms. Firstly, it refers to the breakdown of geographical barriers as companies in all industries expand their footprint. Secondly, the distinction between the physical and financial supply chain is also becoming blurred, leading to new business paradigms. Globalisation is a key driver in both respects: in particular, the ability to buy or sell products or services to or from anywhere in the world. Global trade continues to grow strongly with predictions that trade volumes could triple in the coming years, and largely from emerging markets. According to global consultancy firm McKinsey, 1.8 billion people will enter the global consuming class by 2025, with huge macroeconomic and supply chain implications.

Why is this so important for treasurers, and what are the implications?

While the implications will depend on the nature of the organisation and the specificities of the supply chain, borderless business has a profound impact on every treasury department. Global expansion inevitably involves new accounts, payment and collection mechanisms and liquidity structures.  This, in turn, requires compliance with a new set of regulatory requirements and impacts on risk management and banking relationships. Furthermore, changing trade patterns mean that business currently conducted in USD (or EUR, JPY or GBP for example) will be conducted in a wider range of currencies in the future, with considerable cash, liquidity and risk implications for treasurers. For example, RMB is now the second biggest currency for cross-border trade flows with China, and has the potential to be regionally dominant into the future.

Over the past few years, we have seen a gradual trend towards centralisation of cash and cash management processes, such as cash pooling, payment factories and collection factories. Changing trade patterns, and an emerging consumer class in new economies, are resulting in deeper and more complex supply chains. Consequently, treasurers need to focus more on local cash and treasury management needs as well as those at a regional or global level. This creates a variety of new challenges. For example, identifying and attracting people with the relevant knowledge of local regulations and operations may be difficult. Local teams need to be connected into the wider regional and global treasury management organisation for seamless information flows and consistent processing and security, which, therefore, has considerable implications for treasury policy, processes and technology.