Driving Innovation to Mitigate Risk and Optimise Efficiency

by Paul Taylor, Regional Sales Head, EMEA, Global Transaction Services, Bank of America Merrill Lynch

With widespread confidence in economic growth in Germany and the knock-on effect across other parts of Europe, this is an exciting time for treasurers in the region. However, despite the return to growth and confidence, the economic and financial landscape is markedly different from the one we saw during the years leading up to the global financial crisis. No longer are risk management, working capital optimisation and operational efficiency seen as activities applicable only to leaner times: rather, they form the bedrock of sustainable, successful business growth.

From discussions we are having with our clients it is very apparent that regulatory, compliance and risk management issues are critical priorities for corporate treasurers. Treasurers are focused on many facets of risk, including liquidity, market, operational, counterparty, compliance, reputation, country and business risks, resulting in new demands on banks and service providers, and changing the dynamics in the relationship between treasurers and their banks.

Mitigating SEPA risk

A key compliance issue in recent months has been SEPA migration. Many corporations headquartered in Germany, or subsidiaries of foreign companies based in Germany, are in the latter stages of their SEPA migration, ahead of 1 August 2014 when the national legacy systems close. While the additional transition period could have resulted in a loss of momentum towards compliance, this has not been the case, and companies of all sizes are focused on timely project completion. While migration to SEPA Credit Transfers has been relatively straightforward, SEPA Direct Debit adoption is typically more challenging in Germany where a sophisticated, mature direct debit instrument was already in widespread use. Consequently, whereas treasurers and finance managers quickly understood the new instrument, it was a greater philosophical and operational change to adopt it compared to those countries where direct debits are less common.

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