Cash & Liquidity Management
Published  10 MIN READ

Pooling Power for Treasury Transformation

Building a Liquidity Backbone at Equinix

The turbulent business landscape in recent years and decidedly uncertain outlook underscore the imperative for companies to streamline liquidity management and bolster operational efficiency. In this case study, we speak to Equinix and Bank Mendes Gans to understand how pooling solutions can act as vital tools in addressing these challenges head-on. We also shed light on the transformative advantages of such set-ups and how any hurdles associated with their implementation can be easily overcome.

Fuelled by the need for real-time liquidity visibility, efficient capital allocation, and enhanced risk management capabilities, pooling has, in recent years, come to be seen as a vital transformational tool for treasurers, especially those operating in large multinationals. The case for pooling is being further strengthened by the powerful role it can play beyond traditional treasury functions, such as in capital structure optimisation and M&A financing.

Bertie Sanders, Managing Director Clients & Products USA, Bank Mendes Gans (BMG), says his bank is seeing many companies embark on treasury transformation in an effort to mitigate the impact of the challenging business environment. Many of these companies are engaging with the transformation process because they have a global footprint that exposes them to, in particular, doing business in complex countries, he says. Multinational enterprises (MNEs), for example, are currently seeing more and more challenges arise around the world, with mismatches of local cash needs, problems with accessing liquidity buffers, and increasing tax complexities just some of the challenges causing headaches.

Sanders adds: “A common theme for many corporates is the challenge liquidity management represents now in many areas of operation. Increasing transfer pricing requirements, for example, are forcing multinationals to look again at their set-up and implement efficiencies within the organisation. It can sometimes be a daunting task for corporates to be on top of all these issues and figure out the best options. They are recognising that an instrument such as intercompany loaning is actually very inflexible, as it cannot be adjusted swiftly in response to changing borrowing patterns. Corporates nowadays want to have as many tool options as possible to address challenges, not least when it comes to liquidity management.”