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Cash & Liquidity Management
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Guardians of the Corporate Cash

by Robin Page, Chief Executive, TMI

“Job number one for the corporate Treasurer is to serve as custodian of the company’s cash.” So says David Robertson of Treasury Strategies in this Guide to US Cash Management, and few would be likely to disagree with him as the teeth of the credit crunch bite deeper and banks whose names just the other day were household words on both sides of the Atlantic are nationalised, broken up or taken over. The Treasurer is on the front line when it comes to keeping the company solvent, and for all the recent expansion of Treasury horizons and a range of new functions enthusiastically embraced, when push comes to shove it is liquidity which must be at the forefront of his mind. This Guide describes some of the coping strategies that American corporates are using.

Robertson, a Partner in the Financial Institutions Practice of Treasury Strategies, sums up what he calls the ‘New Look’ of liquidity management in the U.S. in a succinct phrase: ‘Chastened by Risk, Shaped by Globalization, Enabled by Technology’. His article, based on the findings of Treasury Strategies’ 2008 Global Corporate Treasury Research Program, provides an excellent overview of just how the current market turbulence is affecting Treasurers as the creditworthiness of many commercial banks and brokerages is called into question, often resulting in a major scrutiny of the underlying instruments of a company’s investments and a flight to quality. “Firms are revisiting their investment policies in an effort to ‘bulletproof’ their Treasury operations and safeguard every dollar,” notes Robertson.

The introduction of the Single Euro Payments Area (SEPA) was the catalyst for Canada-based Bombardier’s major overhaul of its cash management business in Europe, spearheaded by the Treasury Center which the transportation company established in Zurich nine years ago. It was the Zurich back office which was most affected by SEPA, and the company began a search for a more efficient way to operate its cash management business in Europe. The article by Debra Hinds, Global Cash Management, Bombardier Inc. and Ali Agha, Corporate Cash Management Sales Manager and Americas Head of Asia Desk, Global Transaction Banking, Deutsche Bank, shows how this was achieved by a partnership between company and bank which created an ‘end-to-end scalable solution’ not only for Europe but also for the seven countries in Asia where Bombardier’s transportation franchise has legal entities - China, India, Korea, Malaysia, Singapore, Thailand and Taiwan.