Corporate Treasury – The New Reality

July 12, 2010
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Has there ever been a better time to be a bean counter? Those who count the cash have seen their status in the organization soar to new heights as liquidity has become as important as the latest expansion strategy or marketing initiative. With credit lines constricted, cash isn’t just king – it’s God! So what should treasurers do about it?

I think treasurers need to operationalise the heroics of the past two years with new tools and capabilities that improve liquidity management and bring far greater efficiencies to internal workflow processes. Due to a confluence of forces including new technologies, expanded use of standards, and the maturing of electronic banking, there has never been a better time for them to implement these strategies.

On corporate treasurers’ agendas right now I’d expect to see initiatives in areas such as improved cash and liquidity management, electronic invoice presentment, SWIFT connectivity and SEPA (once banks get their act together to actively market the benefits that corporates can expect!).

Electronic invoice presentment is part of a cutting-edge liquidity management strategy that corporates must actively explore. Going electronic can sync-up the financial supply chain with the physical supply chain, as transaction data is automatically reconciled with inventories. For those sending electronic invoices there is a proven improvement in cash flow predictability and lower day sales outstanding (DSOs). And of course there is the green benefit of saving all those trees by not printing thousands of invoices.

The corporate use of SWIFT is another initiative worth considering because it can streamline the interconnection with multiple banking relationships, improving the efficiency of workflow processes. There have been great strides in making SWIFT for corporates easier to implement and more cost-effective, especially with availability through a service bureau. A SWIFT connection is no longer just for very large corporations, mid-size companies can also realize significant benefits at an affordable cost. Indeed, we’ve seen much greater interest in SWIFT among smaller corporates following the financial crisis, since they are less able to sustain the expensive and costly process of establishing and maintaining multiple proprietary connections with their banks, and they can also gain from value-added services offered by service bureaus such as transaction filtering.

There is no doubt: now is the time not only for corporate treasurers to bask in the spotlight, but also take advantage of the new reality to make sure they pursue areas of opportunity that deliver value to the organization, lest their power withers when the economy is in better shape.

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