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Cash & Liquidity Management
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From Obscurity to Competitive Advantage

by Dr Martin Thomas, Managing Director, Advisory Services, J.P. Morgan Treasury Services, EMEA

Liquidity became the watchword of treasurers following the global financial crisis. As liquidity became more constrained yet critical to business survival, the role of treasurers who take responsibility for liquidity management became more prominent. Similarly, while yield was for many, the top priority in their investment strategies, counterparty risk became a key issue as companies increasingly recognised that no counterparty is ’too big to fail’ and traditional means of measuring were proved to be inadequate.

Consequently, while objectives have not necessarily changed but merely increased in importance for the respective company since the crisis, treasury has taken on a more prominent role, and their status in the company increasingly recognised. This article looks at some of the factors that are influencing the breadth and complexity of treasury, and some of the ways in which treasurers are navigating through what is often unchartered territory.

A macroeconomic impact

In addition to the elevated role of treasury within many companies, macroeconomic changes continue to have a major impact on its activities. Increasing globalisation, for example, means that few companies, including small and medium enterprises, can afford to maintain a purely domestic focus, both for sourcing or consumer markets. This increases the complexity of treasury’s role, as liquidity, currency, counterparty and geopolitical risk become increasingly complex.