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Cash & Liquidity Management
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Leveraging Technical Solutions for Strategic Advantage

by Emmanuel de Rességuier, Head of Global Transaction Banking France, Deutsche Bank

Corporate treasury management in France is something of a paradox. On the one hand, we have witnessed a high degree of centralisation in multinational corporations’ domestic cash and treasury management organisation in recent years, with the treasury department taking control over policy, liquidity, cash and risk management, and payables/ receivables in France. Outside France, however, the situation has typically been rather different, with a more decentralised approach to treasury management. Local CFOs manage the needs of the business in each country according to local specificities. In the past, this dual treasury organisation has often been the result of a lack of technology; however, although technology has matured, it has become more entrenched organisationally. Following the financial crisis, when liquidity and risk became higher priorities, and inspired by new industry opportunities, we are now seeing a shift towards greater convergence in multinational corporations’ domestic and international treasury management and recognition of the benefits of centralisation.

Opportunities for change

EBICS and SWIFTNet
There is no coincidence in the timing of treasurers’ efforts to harmonise and centralise their cash and treasury management activities. Not only has the financial crisis raised the profile of treasury and the importance of its activities, but there are also a variety of catalyst events that are presenting opportunities for change. One of the most significant is the termination of ETEBAC, the protocol that has been a mainstay of corporate-to-bank communication in France for many years, and which will be mourned by many organisations. By September 2011, corporates will be obliged to implement an alternative connectivity method, typically either SWIFTNet or the French adaptation of EBICS. There are advantages and disadvantages of either method, but we are already seeing a number of international, multi-banked corporations adopting SWIFTNet, although the implementation effort is higher.

Corporates in France have typically been less inclined to single banking relationships than those in other parts of the world, and until three or four years ago, companies typically issued requests for proposal (RFPs) to potential banking partners in each country. This is now changing, and as part of an effort to rationalise and harmonise cash and treasury management activities globally, treasurers are now seeking to consolidate banking relationships at a regional level. However, these companies remain committed to a multi-bank model, even though each bank may deliver a wider range of services and in more countries. Consequently, just as we saw ETEBAC, which is bank independent, gaining widespread adoption in France, French companies have also been amongst the first to adopt SWIFTNet.

Looking towards SEPA
A second catalyst for change is the Single Euro Payments Area (SEPA). Although the new SEPA payment instruments, SEPA Credit Transfers (SCT) and SEPA Direct Debits (SDD), had a slow start initially, we are now seeing a steady increase in volume, with SCT now representing more than 2% of total payment volumes, demonstrating that SCT is now starting to be used domestically in some European countries. The instrument is proving a viable alternative to domestic credit transfers in France, so we anticipate volumes continuing to grow, particularly once a final end date for migration from domestic payment schemes to SEPA is announced. Perhaps more important than SCT is the SDD, and although this was introduced more recently than SCT, we are already seeing substantial volumes from major collectors of retail payments, such as insurance, telecoms and utilities firms. Firstly, the new SDD scheme offers the opportunity to perform direct debits more efficiently, and secondly, cross-border and business-to-business direct debits can be undertaken.