What companies are looking for in cash management today, says Diane Reyes, global head of payments and cash management at HSBC, is to consolidate their cash. In the past, their focus was mainly on cash visibility. Now, multinational corporations (MNCs) and mid-sized companies alike have shifted their emphasis to controlling, accessing and using their cash. Whereas they might have drawn on a bank credit line in the past, they now want to gain access to and use of their cash as soon as possible, so they can use what they have first.
In managing their cash, Reyes says, companies have three priorities. First, is to get the structures right, being cognizant of local restrictions and requirements. Second is to educate the company’s subsidiaries and cash management teams, getting their buy-in despite losing some control and having them support the cash pool. Companies that don’t do that take longer to get pooling executed, Reyes said, even on smaller issues such as how to manage petty cash. Third, companies are looking at where their funds can best be used.
In this environment, according to Reyes, getting access to cash is critical. While one way to get access is to consolidate the cash in a single bank, corporates and mid-sized companies are concerned about counterparty risk. They’re monitoring risks more closely and looking at ways to minimise risk. They’re also working with their banks to ensure greater access to cash.
What corporates want from their bank, she says, is to get the same look and feel across the globe. Each bank should first focus on funds within its own footprint, so the corporate can set up a cash pooling structure and concentrate their cash. The bank should then look at where the corporate’s cash is, where they want to have their pool account, where money flows from and what similar corporates are doing. It’s very much a consultative process, Reyes adds.
Payments Move to Mobile
Along with using traditional payments, Reyes says that mobile is now a key emphasis. At HSBC, the electronic commerce (e-commerce) team has rolled out a mobile offering with easy set-up for every customer to use. Over the past year, the bank has had more than US$6bn authorised through the mobile channel. Customers are also using mobile devices to keep oversight on their funds and look at what’s coming in.
“It proves the point that these channels are really important for customers,” she says, for ease-of-use and for travelling. They benefit most from the day-to-day convenience of mobile and the information flow. And a lot of the companies are now looking at tablets, because customers can do more than the basics on the phone.
Meeting Customer Needs
For both cash management and payments, Reyes says that she has two priorities. One is core product enhancements, including the single euro payments area (SEPA). The other is using innovation to improve the customer experience.
While change is quicker than ever, both improving the existing platform and innovating for the future are critical for success.
The UK’s Prompt Payment Code will have a significant impact on the relationship between large businesses and their suppliers. What does the Code mean for your business? And how can you navigate this change effectively?
As anticipated, US organisations exited prime money market funds en masse following last year’s SEC reforms. AFP’s latest Liquidity Survey indicates what it will take to encourage them back.
Automated accounting promises to save business owners time and money and remove much of the tedium from routine tasks.
The business network held its latest three-day event this week in Prague, which highlighted how swiftly the process is being transformed.