The recent chestnut about never letting a crisis go to waste has not been lost on US corporate treasuries. Long after the financial crisis, they continue working under the mandate of “do more with less,” which although wasn’t birthed from the crisis – DMWL goes back further – it was etched deep into corporate consciousness in the midst of crunch.
This was just one of the takeaways from the May meeting of The NeuGroup’s Global Cash and Banking Group (GCBG). Many members lamented that they were still feeling the pinch of DMWL, and as a result were forced to rationalize their global treasury structures and eliminate expenses where possible. This included the number of bank accounts that are needed to manage global cash, the number of unique bank relationships required to maintain their global structure, and the number of headcount needed to perform treasury related duties.
GCBG members also discussed the ongoing challenges with getting treasury-related projects the necessary IT support within their own organizations. Larger corporate-wide initiatives are often times taking priority, which is causing pressure on treasury timelines for things like treasury management systems and SWIFT implementations. This was a consistent problem for most members in attendance. And it also comes as TMS implementations have become high priority projects across many treasury organizations. The goal is to add further automation and efficiency to tactical treasury processes (to make up for DMWL). Many have experienced delayed timelines and have been disappointed with system functionality. Because of the continued IT pressure, many are choosing SaaS solutions over hosted alternatives to help alleviate the problem
Meanwhile, members showed a strong incentive to embrace RMB. Given the rapid pace of renminbi regulatory changes, and the uptick in global MNC adoption of these new measures, there has been a significant improvement in the ease of making RMB payments on and offshore in China. The RMB can now be integrated as a part of a corporation’s overall liquidity management strategies with pooling of RMB and cross-border RMB lending becoming common place.
And finally, pay-on-behalf-of (POBO) structures are becoming more popular as a part of next-generation globalization projects to further enhance the consolidation of account structures and system processing. With many members having implemented an In-House Bank structure across their organization, a PoBo structure can add even more efficiency to the management of global cash. Although the initial set up of such a structure requires close coordination with legal and tax, the ongoing benefits thereafter are well worth the initial legwork.