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Cash & Liquidity Management
Published  6 MIN READ
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Enhancing the Corporate Connectivity Experience

by Lesley White, Head of Market Management, International Cash Management, RBS

Treasurers globally are constantly striving to improve the way they manage their activities and enhance the value that their department brings to the organisation. While the financial crisis was a catalyst for treasurers’ optimisation efforts, increased efficiency, reduced costs and improved control are long-standing objectives that are constantly evolving as new opportunities through technology arise. An area of particular focus both during and subsequent to the financial crisis has been an emphasis on working capital management, with liquidity elevated to a critical priority for every treasurer. Enhancing operational efficiency and optimising working capital requires an effective means of communicating accurate, timely and complete information with banking partners, to provide a consolidated cash position, and facilitate straight-through processing. In this article, we look at trends and opportunities in bank connectivity, and how the right partner can contribute to an effective bank communication strategy.

Moving on since the crisis

RBS is partnering with IdenTrust to incorporate digital certification into the information transmission process.

Many companies have invested significantly in their technical infrastructure and business processes in the past, in order to enhance their access to information and the efficiency of their payments and collections. However, the financial crisis hampered many treasurers’ efforts to leverage the latest standardisation and connectivity opportunities, and it is only now, with economic stability returning, that we are seeing a renewed interest in acting on the technology plans that were put in place pre-crisis, and formulating new technology strategies.

Supporting multiple bank relationship models

One of the priorities for treasurers before the crisis was to rationalise their banking relationships, with many seeking to appoint a global cash management bank. As counterparty risk became a more prominent issue, a global banking model was increasingly seen as being too high risk, with companies preferring a regional or multi-banking model. This has certain advantages, such as having access to best-in-class banking services in each country in which a company operates. However, the more diverse a company’s banking relationships, the more potential there is for incomplete, inconsistent or fragmented information, the need to maintain multiple systems and interfaces, and the problem of trapped cash. Therefore, treasurers have to strike a careful balance between managing their counterparty risk and maintaining an efficient liquidity management strategy. With recent innovations in bank-agnostic connectivity and standardisation, this balance becomes easier to achieve, with the opportunity to retain banking relationships that add value to the business whilst benefiting from a consistent approach to bank communication and standardised formats.