BNP Paribas Cash Management University, Day 1: Cash Management – More Valuable than Ever

Ferszstand explained that financial professionals are living in a very exciting for cash management, as liquidity sits at the centre of organisational strategy today. On top of this, cash management is becoming increasingly global. To support this growth, innovation is vital. For example, Europe’s treasurers are now largely living in a post-SEPA (single euro payments area) world, and it is time for them to capitalise on the opportunities for standardisation and subsequent efficiencies. At the same time, Asia is experiencing the revolution of the renminbi (RMB).

Fersztand pointed to the new capabilities of cash pooling in Shanghai’s Free Trade Zone (FTZ) as an important development for global cash pooling. He also cited the investment and evolution of capabilities in India as further evidence of the global development of cash management.

He concluded by outlining the bank’s service capabilities around the world. He noted that cash management is not a commoditised business, rather  it is a business of innovation and service.


To find out more information about how operating in a global environment effects the role of the treasurer, two corporates joined event moderator Lorraine Dauleux on stage in the main plenary room for an interactive discussion. The video that introduced this session highlighted that over 50% of the world’s gross domestic product (GDP) is international. This is an area that both of the two corporates on stage, Pedro Jimenez, group treasurer at Schneider Electric, and Scott Hunter, assistant treasurer with animal health company Zoetis are operating in.

Jimenez said that treasurers have to make the best of globalisation. While challenges exist in this world – currency management for one – the opportunities presented by global cash management are too good to pass up. Jimenez made it clear that he believes the treasurer has to be the banker of their organisation. At Schneider Electric, he runs an in-house bank (IHB) and manages cash pooling and netting processes. He described how he manages the ‘Schneider currency’ – internal currency that never leaves the business – much as any banker would do. Jimenez pointed out that his banks understand that they are partners in this kind of business, and that tools such as ISO 20022 have really helped support the global nature of cash management and bank relationships.

At Zoetis, Hunter explained that his company had spun off from a larger parent (Pfizer) and had the challenge of having largely the same global footprint of the bigger group but needing to operate on a smaller scale. The company created a new global treasury that replicated the support function of the previous business, but also took the opportunity while starting anew to address challenges they had previously identified. Hunter said that the Zoetis treasury is moving towards having greater control over the company’s financial assets. In terms of running an IHB, Hunter explained that Pfizer had been moving in this direction anyway, and so the decision to pursue a centralised treasury model had been an easy one to make at Zoetis.

Ask the Audience

The interactivity of the Cash Management University went up another notch in a morning session where all delegates were able to vote via iPad on a selection of questions regarding treasury management. Treasury Management International’s editor, Helen Sanders, and Filipe Simao, head of client advisory at BNP Paribas Cash Management, then discussed the results on stage.

The first question put to the audience was what their key growth regions are for their business. Rather uniquely, the result of this question was presented as a word cloud, and the most dominant word was ‘Europe’. Sanders made the point that there is a tendency to think of emerging markets (EMs) when talking about growth regions for business. However, it is important to remember the role that core markets can also play in corporate growth. Simao also noted that while Asia and China in particular can offer good gross domestic product (GDP) growth numbers, Asia is not on a par with Europe when it comes to exchange controls. He noted that Shanghai’s FTZ was one step in the right direction here.

When asked if the number of cash management banks they use has changed over the past two years, the audience was split. One in three said that there had been no change, 28% had increased the number, while 39% had reduced it. Sanders compared these statistics with a similar poll at the 6th Cash Management University from December 2012, and noted that both the ‘no change’ and ‘increased’ options received more share of the vote this time around. Sanders noted that counterparty risk continues to be a focus, and that to some extent there has been a breaking up of global banking models in favour of a more regional focus. There has also been some treasury decentralisation in certain markets. Simao commented that banks are globalising in a deeper way, which in theory means that it is easier for corporates to decrease their number of cash management banks. He encouraged treasurers in the audience to challenge their global banks to rationalise their relationships to a greater degree.

A question about the primary cash pooling technique used by the attendees found that 54% carry out cross-border physical pooling, while a further 26% selected multi-currency notional pooling as their primary technique. This again emphasises the international flavour of cash management that is a theme of the event. Some 16% said that domestic pooling is their primary technique, while just 4% of the audience don’t do cash pooling.

When asked if they have an SSC for accounts payable (A/P), the votes from the delegates fell as follows:

  •  No, no plans: 22%
  •  Under review: 17%
  •  Regional – 1 region: 20%
  •  Regional – multiple regions: 24%
  •  Global: 18%

Simao noted that having an SSC for A/P is a trend that is on the rise, in line with globalisation and efficiency. Sanders commented that she would expect the ‘Regional – 1 region’ option to increase over the next 12 months. Now that SEPA is live, Sanders said that she expects this to drive the centralisation of payments.

The final question of this session asked whether payments for multiple entities are issued from a single account (aka payments on behalf). While 40% said that they are not doing this and have no plans to do so, a further 30% have this under review. Of those that are doing this already, 23% said that they are doing it regionally in multiple currencies, while just 8% voted for ‘Regional – 1 currency.’ Simao noted that there are some concerns with payments on behalf, but that advances in technology and the economy are among the drivers that are encouraging this technique. Sanders made the point that collections on behalf (COBO) are also possible, while for payments on behalf the ability to do this in some of the emerging markets – such as China – means that process alignment is possible for treasurers on a wider basis.

The morning’s discussions identified the globalisation of cash management, both for corporates and banks, as a major trend for our industry. These topics will be drilled down into greater detail in a series of afternoon workshops across a variety of treasury topics.


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