Unless one works specifically in the field of corporate finance or corporate/business banking, cash management can be sort of an amorphous phrase that leads to an inexact understanding of its scope. In this piece, found at PaymentsSource, the author (a corporate banker) provides some insight into that space, and the increasing pressure of high expectations thrust upon FPs as we move further into Industry 4.0.
‘Fast-forward 10 years, and the bar has been raised. In 2020, multinational corporation (MNC) CFOs and treasurers must strike the perfect balance of sustaining optimum cash levels and maximizing returns on operational cash while simultaneously reducing currency and tax risk. This is not an easy task in an environment where both currency fluctuation and negative interest rates across markets are on the rise.’
One does not need to look too far to find survey data around the higher expectations among corporate FPs (especially those in larger enterprises) for digital services, information, speed, and so forth, suggesting that non-banks will be grabbing higher share of these services in the next 2-5 years. Banks have surely gotten the message.
One of our themes in the 2020 Outlook is that of ‘globalization’, which, among other things, involves the complexities of moving money around the globe. This may include multiple banks, access to data for understanding local market cash needs, initiating funds transfers, FX, knowing the inbound market (rules and regs), visibility into the transaction, and attempting to forecast when the stuff hits the account(s).
The author points out that much of the last part is still done on spreadsheets. There are, however, solutions out there to make this all faster, easier, and more accurate, so the banks that have such a service delivery vision will have an advantage.
‘More than ever before, MNC CFOs and treasurers can positively impact financial performance and balance sheet strength. As a result, MNCs across all industries should capitalize on these solutions to maintain their global advantage across the markets in which they operate.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group