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Looking After Cash – On Both Sides of the Atlantic

by Robin Page, Chief Executive, TMI

There are many factors which have had an impact on cash management in the years since the onset of the financial crisis: increasing globalisation, an emphasis on risk and liquidity and the difficulty of finding a suitable balance between risk and efficiency. Investment decisions have become more complex and cash management, the very core of a treasurer’s responsibility, is more vital than ever. I am delighted to introduce in this issue of TMI three articles exploring very different aspects of cash management, each of which will have resonance for treasurers not only in American companies but in firms around the world.

Suzanne Barry, Regional Head of Liquidity and Investments, GTS EMEA at the Bank of America Merrill Lynch, provides a comprehensive assessment of just exactly what treasurers are looking for when managing liquidity. Visibility over the firm’s cash position is paramount, she says, and without adequate visibility and clear reporting the treasurer will have to keep more of the company’s liquidity as a buffer in order to protect it against any unforeseen shocks, which in turn will mean that the cash is not being invested as effectively as it could be. Technology has an important role to play in ensuring visibility, and Suzanne notes in this respect that a SWIFT connection can be valuable here, as can multi-bank platforms which collate account balances held by all the company’s banks. Regional differences and the ever-expanding amount of regulation must all be factored in, and she emphasises that there is no one-size-fits-all solution. The chosen cash management strategy must be flexible enough to support many variables, and she promotes the idea of appointing a global liquidity overlay bank to provide a single view over the company’s liquidity.

Two authors from Global Transaction Banking at Deutsche Bank, Arthur Brieske and Martin Runow, describe their bank’s latest development in the field of electronic banking. They point out that this has a long heritage, from the telex machines which were so revolutionary in the 1980s, via the dial-up systems of the ‘90s to today’s web-based systems, host-to-host connections and multi-bank connectivity. Now Deutsche Bank has taken another leap forward with the introduction of its Autobahn App Market, embodying the “speed, freedom and smooth efficiency “ of the German motorways, or autobahns. Autobahn apps, the authors explain, are device-agnostic, so you can use them on whatever device you choose, and there are already 150 of them. The concept behind the system is that they will ultimately replace traditional banking systems, bringing consistent business logic, security and user experience across all electronic interactions with the bank. And the App Market is only one example of Deutsche Bank’s commitment to leading the way to next generation treasury, as it pioneers new technology “ to create functional, powerful solutions”, four of which are outlined here in a series of mini case studies, that meet the specific needs of each client.

A longer case study is provided in the article ‘Optimising Cash & Liquidity Management in Europe’ by Lawrence Estrop, European Treasury Director of MeadWestvaco Corp. (MWV). MWV is an American company, based in Richmond, Virginia, a global leader in packaging used by leading brands in the sectors of healthcare, beauty, food, beverages and tobacco as well as home and garden industries. The company had mature cash management processes in Brazil and in the US, plus limited streamlined or centralised activities in a European treasury location, where many processes were conducted manually. They decided to optimise European cash management and put in place several complementary projects including the establishment of a European Headquarters “to improve business processes, work more effectively over all of our businesses and, as a result, make better and timelier decisions for MWV, our customers and our shareholders”. A key feature of the entire optimisation was to replace their existing banking partners with a single in-house bank with whom they would work in as many countries as possible. After careful examination of the various options ING was awarded with all MWV’s cash management business; the bank’s geographic footprint exactly matched that of MWV and ING’s subsidiary BMG (Bank Mendes Gans) provided various liquidity management solutions which MWV was keen to leverage. Bas Meuffels and Rajesh Dash of ING Commercial Banking provide the bank’s perspective on what has obviously proved a highly successful partnership.