Published: January 01, 2000
Change is a fact of life for corporate treasurers – and the source of many opportunities. In today’s market, globalisation, regulatory developments and technological advances are combining to present treasurers with a particularly dynamic landscape. Rather than regarding this landscape with trepidation, forward thinking treasurers are asking how they can harness the latest developments to drive value across their businesses.
At almost every turn, corporate treasurers face new challenges. New regulations, the evolving face of global commerce, the rise of mobile technology and the shifting dynamics of bank relationships are having a significant impact on the role of the treasurer. While these changes inevitably present certain hurdles, they also bring treasurers a wealth of opportunities to increase standardisation and efficiency throughout their operations – and drive more value across the business as a whole.
This is an exciting time for treasurers operating in EMEA, and I hope you will find the topics discussed in this supplement informative and insightful.
Where global commerce is concerned, the mega trends of globalisation, urbanisation and mobilisation have important and far-reaching implications for businesses operating in EMEA. On the one hand, we have seen a number of major US companies looking to acquire European companies in order to relocate their headquarters in the region for tax reasons. On the other hand, geopolitical factors, in countries such as Turkey and Russia, have led to a greater sense of uncertainty, as has the recent introduction of a negative deposit rate by the European Central Bank. Companies are operating in more countries, while the ubiquity of internet and mobile services is making even countries with limited infrastructures more accessible than in the past.
Regulatory change is also a major consideration: treasurers understandably want to know the full impact of the new regulations upon their businesses, as well as the wider implications on their banking relationships and on the industry as a whole.
Rather than reacting passively to these changes, savvy companies are taking a more proactive stance and embracing new opportunities as they arise. Developments in technology have given companies access to a wider range of tools, which they are using to harness data more effectively and gain more visibility over their balances and cash flows.
Against this backdrop, the role of the treasurer continues to develop. No longer regarded merely as the epicentre of a company’s financial activity, treasury is now seen as an enabler for business lines to serve their clients in a more actionable way. Instead of just handling cash flows, treasurers are also involved in the production of information, the analysis of data and more connected with the wider business.
As the treasurer’s role evolves, the fabric of the corporate banking relationship is also changing. Treasurers and even CFOs are being pulled into conversations on an ever wider range of topics with their banks. Banks, meanwhile, are taking a deeper look at the opportunities they have to collaborate with IT companies and alternative payment providers to meet their corporate clients’ changing needs with more innovative solutions.
This supplement delves into many of these topics, bringing together insight on the most pressing topics affecting treasurers in this region.
Focusing more keenly than ever before on the risks that their companies face, treasurers are accessing a wider range of tools and techniques to safeguard their businesses. In an article focusing on the big picture of risk management, Paul Taylor explains how companies are using technology to gain a clearer view of their cash positions and exposures, while a more collaborative climate is leading to greater sharing of information across the industry. Banks, meanwhile, are becoming increasingly proactive as they help treasurers navigate their risk exposures.
A major consideration for today’s treasurers is the raft of new regulation currently coming into effect. One of the most significant of these is Basel III: while it primarily targets financial institutions, the latest instalment of the Basel Accords is expected to have far reaching implications for businesses as well. Suzanne Janse van Rensburg explains how the liquidity coverage ratio (LCR) will prompt companies to reassess their investment policies and reconsider how risk is evaluated.
The most significant market change in the region for some years, Single Euro Payments Area (SEPA) is now in full force and companies are beginning to look, in more detail, at the opportunities these new payment instruments can bring. While centralisation efforts have tended to focus on payments, treasurers are increasingly asking how they can achieve a greater degree of centralisation within their receivables. Ad Van der Poel explores how SEPA can be used to engineer an intelligent receivables management solution, as well as discussing other innovations within receivables that can be used to improve visibility across the value chain going forward.
The arrival of SEPA has also contributed to a rise in treasury centralisation efforts as companies work to take advantage of greater harmonisation across the region. For corporations which are further along the centralisation journey, an in-house bank structure can offer some interesting opportunities. Bruce Meuli and Vincent Meier explain the benefits of in-house banking as well as outline common pitfalls and ways companies can get the most out of this structure by accessing managed services.[[[PAGE]]]
Meanwhile, the search for efficiency has led more companies to focus on solutions which can support payments to suppliers and streamline these processes. Melissa Gargagliano and Martin Knott explore opportunities within the areas of supply chain finance and cards, highlighting the benefits of working with a single provider to analyse current spend patterns and determine the most appropriate solution for paying suppliers.
With high levels of cash on their balance sheets, companies may look into expanding their businesses. Matthew Davies and Joanne Gill look at factors driving mergers and acquisitions (M&A) activity in the current market, and discuss how treasurers can add value to the process. All too often treasurers are brought into the conversation relatively late. By getting involved early on, treasurers may be better placed to engineer a smooth integration process. The article also describes how tools such as escrow and outsourcing services could facilitate the acquisition process and help companies integrate the businesses in a streamlined way.
Overseas expansion also brings additional currency risk – and many of the companies entering emerging markets in the last few years have underestimated the risks associated with these markets. But treasurers have learned their lessons and are now tackling foreign exchange (FX) risk more robustly than ever. In an article exploring current trends in FX, Andrew Chamberlain explains that the current low volatility conditions have not been enough to deter treasurers from seeking out the most sophisticated tools and structures as they protect their companies from currency movements.
Meanwhile, as companies enter new markets, inevitably there are times when their existing banks do not have a physical presence in those markets. Peter Jameson explains that the development of strategic alliances with selected local banks is allowing global banks to support their clients in markets without opening physical branches. This model provides access to local services, while enabling treasurers to access services in a consistent way via the global bank’s platform. As such, alliance banking could gain greater traction as banks work to support their clients’ expansion programmes against a backdrop of economic and commercial pressures.
The changing landscape may present numerous challenges, but treasurers have at their fingertips a wealth of opportunities and resources which can help them make their processes more efficient than ever before. Technology, in particular, is a great enabler which has allowed companies to set up business in new locations – while allowing banks to service them in those locations. With the amount of data available to treasury continuing to grow, attention has shifted from transaction processing to transaction information.
This is an exciting time for treasurers operating in EMEA, and I hope you will find the topics discussed in this supplement informative and insightful. As we support treasurers and corporations in their business growth, we remain committed to serving your needs.
For more information about Bank of America Merrill Lynch's capabilities in this area please visit www.bankofamerica.com/treasurymanagement
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