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Cash & Liquidity Management
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Navigating Latin America’s Liquidity Landscape

by Marcelo Moussalli, Latin America Corporate Sales Executive, Bank of America Merrill Lynch

Treasurers around the world are focusing attention on liquidity management, with the objective of maximising internal liquidity sources – and those managing entities within Latin America are no exception. Techniques, such as cash pooling (where possible) or utilising zero balance accounts (ZBA), allow companies to centralise liquidity within the organisation, thereby reducing its reliance on external debt, or enabling more efficient investment of excess cash. In the last few years, the reduced availability of external credit and higher costs of funding have made the benefits associated with optimising internal liquidity particularly attractive.

However, when embarking on a liquidity optimisation project, it is important to first understand what can and cannot be achieved before getting started. Latin America is a diverse region consisting of a number of different countries, currencies and regulatory environments. As such, the task of managing liquidity across the region will need to accommodate these variations, in order to establish the most effective structure.

Regulatory variations

While some regions support the use of liquidity management structures that can be applied in the same way across a number of different countries, companies looking to manage their liquidity in Latin America need to employ a more flexible approach. Each country has its own set of rules regarding the types of accounts that can be held, and the way in which liquidity can be pooled or optimised.