Plotting a Cash Management Course

The ongoing evolution of the treasurer’s role was under the spotlight on day two of the Fundtech Insights EMEA 2015 conference this week. Strategic initiatives aimed at gaining end-to-end visibility over cash and cash flows are top of mind in most treasury departments.

Fundtech’s global head of sales, Chris Zingo, gave the example of a client who believed they had good visibility into their cash until closer examination showed that there was an issue with intra-day visibility. The company had been filtering out what it deemed as ‘small’ transactions from its cash forecasts, although in some of its markets, such as Australia and Spain, these sizes of transactions collectively accounted for between 60% and 70% of its overall business. By not including smaller transactions, the accuracy of the company’s intraday forecast was skewed.

Michael Pechner, head of cash origination – global corporates at Barclays, highlighted that treasurers are core to risk management as well as cash management. While regulators have driven much of the change in this area, technology is empowering treasurers to identify and manage risk within their organisations. It was observed that treasury technology is receiving an increased level of capital spend within organisations.

Brendon Bouwer, head of global liquidity management and account services – CIB at Standard Bank added that banks also need to invest in technology, so they gain the ability to service a variety of client needs on one platform that is scalable and flexible. He pointed out that while treasury technology spend may be increasing for some corporates, there will be others that will be unable to include a new treasury management system (TMS) in their budget. In these cases banks need to step up and help, through the integration of data.

It is common for corporates to use cash management services from a group of banks rather than one specific provider. Pechner suggested that it is key for all parties in a banking group to provide the corporate with the data at the level they require across the board, rather than in individual bank silos. The competitive space in the banking group should be around value added services, rather than over access to data.

Bouwer agreed, saying that transaction banks need to promote open standards. He believes that the way forward is not for banks to lock in customers through their systems, but rather to do this by building loyalty based on value added services.

Cash Management Priorities

The final session of the conference examined current cash management priorities for treasurers. Providing insights from PwC’s
‘Global Treasury Survey 2014’
, the firm’s senior consultant, Sanjay Bibekar, explained that cost, complexity and structure, and bank facility headroom had emerged as the top three areas driving the cash management agenda. He also picked up a theme that regularly emerged during the conference, that of the use of data generated by payments for analytics. Bibekar noted that some corporates are using payments and statement information to assess business performance, using the data as a benchmark for measuring business unit profits.

One of the treasurers on the panel outlined that his department currently has four key areas of focus. The first of these is cash optimisation. Here they are reviewing the targets and polling opportunities to ensure the cash is working hard for the business. The second focus is around interest rate and investment enhancements. The organisation is monitoring its cash rates and actively looking to its banks for more long-term opportunities.

A third focus of the organisation is around regulatory changes and implementations. With regulatory initiatives such as Solvency II and the single euro payments area (SEPA) the speaker said that, while his organisation was already compliant, it now wants to get its processes working better in order to drive potential efficiencies.

The final focus named was the key issue for the organisation, namely achieving process standardisation in Europe, the Middle East and Africa (EMEA). The company is moving towards this by implementing common policies and technology, as well as pursuing a centralised treasury structure.

For a further report on this event, click here
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