Cash & Liquidity Management
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Emerging from the Crisis

How have large corporates managed their treasury and cash management activities in response to the crisis and how have their attitudes changed towards the banks?

The crisis has forced treasurers to seek greater efficiency across a range of their activities. Liquidity has become a rarer commodity and commands a higher price. Many treasurers can no longer access the capital markets easily, and bank financing may be prohibitively expensive. Consequently, treasurers are seeking liquidity from internal sources. This requires greater visibility of cash across the business, and then the ability to use this cash by having the right liquidity management structures in place. To achieve this, treasurers have reviewed their cash pools and degree of centralisation to ensure that these are optimal, and sought enhancements to cash flow forecasting processes.

In addition to financial efficiency, treasurers have also been seeking greater cost efficiency in a variety of areas. For example, there has been a greater focus on centralising financial functions such as payments and collections. Automation of internal processes, internal and external interfaces and transactional capability has become a priority to reduce error, leverage resources more effectively and reduce costs, as well as reducing paper flows. Finally, standardisation has moved from concept to action, including increased adoption of XML-based formats such as ISO 20022 to enable information to be exchanged in a consistent way with multiple banks. Related to this, there is greater interest in communicating with banks through a single channel, such as SWIFT Corporate Access. Finally, as SEPA becomes a reality, particularly since the Payment Services Directive came into force in November 2009, the European payments and cash management landscape is becoming harmonised, leading to greater opportunities for cohesion in corporates’ approach to their domestic and cross-border cash and treasury management in the Eurozone.

It is perhaps surprising that the crisis has accelerated these trends, as projects in financial and process optimisation, technology and banking structures require investment. During constrained economic conditions, the expectation was that companies would reduce expenditure in these areas; in reality, innovative corporate treasurers and CFOs have recognised the cost benefits, and continued to focus on enhanced efficiencies.

We have used the crisis as an opportunity to de-leverage our balance sheet, without reducing our commitment to clients.