Cash & Liquidity Management
Published  5 MIN READ
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Bringing Foreign Currency Closer to Home

by Matthew Richardson, Director of FX4Cash, Global Transaction Banking, Deutsche Bank

Traditionally, companies have been obliged to hold bank accounts in every currency in which they paid or received cash. This has frequently resulted in a proliferation of accounts, with disseminated cash balances, additional administration for reconciliation, and compromised controls as authorities need to be maintained. FX4Cash, a global cross-currency and cash management platform offered by Deutsche Bank, represents a major departure from traditional methods of supporting a company’s foreign currency activities. Instead of making payments and receiving collections into foreign currency accounts, our corporate and financial institution customers are able to transact business in more than 120 currencies (including essential emerging currencies such as RMB, INR and BRL) through a single window and from a single account, as an integral part of their normal cash management routine. Furthermore, FX4Cash is available to any corporation, irrespective of whether they work with Deutsche Bank as their cash management bank. This article looks at some of the ways in which our corporate customers are making use of FX4Cash today, and how they are leveraging the platform to improve efficiencies, enhance controls and reduce costs.

Addressing corporate priorities

Rationalising bank accounts
FX4Cash is a platform with a diverse value proposition according to the needs of each organisation. For example, by integrating FX and cash flow processes, companies can reduce their foreign currency accounts considerably, particularly in peripheral currencies in which they have relatively few transactions. On average, we see about a 30% reduction in accounts by users of FX4Cash, both corporates and financial institutions. This in turn can reduce the number of banks that a company needs to work with, creating a more streamlined cash management infrastructure.

Transparency and control
For some, achieving transparency over FX pricing is a priority, resulting in enhanced control and reduced costs, even in decentralised treasury environments. For example, business units of a multinational corporation, located in different countries, may historically have sent cash through the external banking system to the group’s headquarters. Although the cost of doing so may not be immediately visible, the real costs may be substantial when considered in aggregate, with cross-border transaction fees on numerous transactions, and no control over the FX rates that are applied. FX4Cash automates the allocation of FX rates in a transparent and auditable way, as well as enabling cash to be exchanged via intercompany transfers, reducing costs significantly and accelerating the transfer of cash between entities.

Automation, efficiency and operational risk management 
Other companies may seek to automate manual processing of international payments, and in particular, to integrate external payment processing with internal systems to deliver improved levels of straight-through processing. Indeed, enhancing efficiency and reducing operational risk has never been higher on treasurer’s list of priorities in order to improve operational controls, reduce manual intervention and therefore the risk of error or delay, and enable resources to be applied to more value-added tasks. This was a key driver in the original development of FX4Cash, and our clients of all sizes and profiles derive considerable benefit from greater process automation and control.