TCM: Risks And Rewards

By Anita Hawser

Having survived one of the worst recessions on record, companies understand better than ever that treasury management is important for improved efficiency, whether through tightening their accounts-receivable or accounts-payable processes to unlock working capital or limiting the impact of FX, interest rate and other risks on their balance sheet. Now more than ever treasurers have the ear of the CEO, but in a number of companies they are still required to do more with less. Most corporate treasury management teams comprise a small number of people who have responsibility for optimizing cash and liquidity across a number of subsidiaries. Centralizing treasury operations is not a new theme, but what was once the preserve of large multinationals is now filtering down to tier-two and -three companies. These smaller firms are looking for greater levels of transparency and visibility over their own cash and liquidity as well as their subsidiaries’ operations and local bank accounts—without compromising or challenging the hegemony enjoyed by those staff running operations in outer reaches of the company.

As part of that centralization initiative, corporate treasury is also moving away from proprietary banking interfaces and wanting to manage relationships with its banks globally via a single platform so they can have a single view of their bank accounts across multiple providers without having to log on to different banking systems. To achieve this aim, Swift Corporate Connectivity is becoming an increasingly popular choice among a broader range of companies.

Risk management is uppermost in the minds of most treasurers these days, with events of the past 24 months having tested systems, policies and procedures that were put in place to preserve working capital. FX volatility is on the increase, with the sovereign debt crisis still weighing heavily on currencies and companies that did not have policies or frameworks in place for managing their FX exposures. As currencies remain fragile and more companies get to grips with the challenges of doing business in an increasingly globalized world that exposes them to more exotic currencies, more companies are putting frameworks in place quantifying the maximum exposure they are able to withstand without doing too much damage to the balance sheet. They are also trying to move away from spreadsheets and proactively manage their FX exposures using the latest software solutions.

Anita Hawser
Europe Editor

alt Read more – TCM Guide 2010 – Treasury and Cash Management:


TCM: Shared Services Centers

TCM: Data Analyctics

TCM: FX Exposure Management

TCM: Who’s Who