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Strategies in a New Financial Climate

by Marcel Kellerhals, Group Treasurer, Panalpina

This article is based on a presentation that Marcel Kellerhals delivered at the BNP Paribas Cash Management University in October 2009.

Our treasury function is centred on three key areas: cash management, corporate finance and risk management. In each one of these, we have set long-term strategic objectives. Although Panalpina has a largely centralised business model, we have a separate accounts receivable function, with receivables representing the largest asset on our balance sheet.

Higher levels of FX volatility also created opportunities, particularly for a firm with expertise in FX management.

We have a global cash management model, organised regionally. In Europe, we have implemented a payments factory and centralised cash flow using physical cash pooling techniques. In Asia Pacific, we centralise our cash notionally, although not for all countries at this stage. We are now seeking to bring together cash management for North America and Latin America, although this is not easy to achieve in practice, which will also include cash centralisation. In Africa and the Middle East, it is also difficult to organise cash on a regional basis, so we are currently implementing solutions in the Black and Caspian Sea countries, and we are in the process of issuing or reviewing requests for proposal (RFP) for cash management in Sub-Saharan Africa and the Arabian belt.

In the eye of the storm

Much has been said during the crisis about the need to adopt a ‘back to basics’ approach in treasury, but this has different implications for each company. At Panalpina, we adjusted our treasury approach in the light of the market trends that we witnessed, as outlined below.