With a growing remit and dwindling resources, the treasurer’s job continues to get tougher. We speak to Paul Simpson about overcoming the mounting pressure on the treasury department – from demands for better forecasting to the need to keep up with industry initiatives.

You joined Bank of America Merrill Lynch in May this year. What brought you to the bank?

There were a number of reasons for my move, but I’ll focus on three of the most compelling drivers here. The first was the success of the merger of Bank of America and Merrill Lynch and the strength of the resulting commercial banking proposition. The fact that Bank of America Merrill Lynch serves two in five middle market clients operating in the United States, and that no other bank covers this client set so extensively, was a significant factor in my decision.

That said, the strength of the company’s European operations should not be underestimated – we have branches throughout Europe, the Middle East and Africa, and our unique coverage provides enormous opportunities for growth in exciting markets, such as Asia and Latin America.

The second reason was that the role is structured in such a way that it really cuts across the entire bank – from large corporates and commercial banking clients to FIs and public sector clients. Having this good level of communication ensures that we are best placed to serve our clients holistically; something I feel strongly about in terms of service level. Bank of America Merrill Lynch is well-known for its focus on relationship and service. In fact, at my previous house, when I was competing against the company, it was well-known that winning business away from the bank was particularly hard. Now that I am on the other side, I am extremely proud of that reputation!

Thirdly, the Bank of America Merrill Lynch team was a huge draw for me. A number of my former colleagues had joined before me and looking at the grade of people making the move, I had to ask myself why. Aside from the impressive breadth and depth of the product offering, it was clear to me that the team the bank had in place would be able to tackle whatever came their way.

How have you spent the first couple of months at the company?

Although I am based in the US, I have actually spent about 90% of my time outside of the country. I have visited our offices in Hong Kong, Singapore, London and Turkey with the aim of meeting as many employees as possible, as well as spending time with our clients and listening to their needs and requirements.

The opportunities for us to serve our existing clients both in and outside the US are key priorities for me, so visiting these cities and regions is hugely important. Ultimately, I want to understand how we can best leverage our footprint and serve clients as a global firm. To do this, it’s absolutely essential to be on the ground and understand the key challenges in every region.

What are the main topics that you have been discussing with clients?

Of course every client is different, even within industry sectors, which is precisely why tailored cash management and trade solutions are so important. Nevertheless, common recurring priorities are payments, transparency and liquidity. These are themes that have certainly been on the treasurer’s agenda for a number of years, but they remain key issues.

There is still room for further efficiencies and optimisation around treasury processes. Concerns around forthcoming regulations, such as Basel III, have propelled liquidity back into the spotlight too. Elsewhere, we are working with clients on some very exciting and innovative projects, in the carbon space for example, and helping them to expand globally.

I firmly believe that corporates that are looking at diversifying their banking relationships will find that Bank of America Merrill Lynch is well-placed to assist them in enhancing their cash and trade operations, as well as supporting them in their growth aspirations.

Could you explain a little more around how Bank of America Merrill Lynch can do this?

Really, it’s about understanding each client’s business and the potential threats to and opportunities for that business. So it’s about us asking the right questions of the client. How are they expanding? Where are they investing? Where are their key markets headed in the future? Are their strategic plans sound? For those companies that are expanding outside their local and indigenous markets, one of the main ways we can provide support is by helping them to get to grips with industry specifics and regulations. On the FI side, we work hard to provide our clients with a good understanding of their position in their key markets and how they can improve on that.

Looking more specifically at Europe, we have also been conducting a significant amount of research among corporate treasurers, to better assess current and future priorities in the region.

What were the main trends that emerged from that research and what advice would you offer to treasurers on the back of that?

There has been a shift in risk management priorities over the last 12 months – operational, credit and market risk management were all considered to be high priorities and operational risk in fact ranked more highly than it had the previous year. Elsewhere, cash flow forecasting was highlighted as a key pressure. Treasurers have a tough job right now because, post-crisis, tighter control over forecasting is required, but treasury departments are also having their resources squeezed – not an easy position to be in.

Two additional issues that ranked very highly were disaster contingency planning and supply chain management. I have no doubt that the terrible earthquake and subsequent tsunami in Japan were drivers behind the refocus on these topics, and corporates are right to be taking these two areas very seriously.

Our research has also provided insight into industry initiatives across Europe. While SEPA remains an important priority, it is still evolving in relevance for most corporates. This has no doubt been driven in part by the discussion around end-dates and the introduction of SEPA direct debits, but corporates are also beginning to realise that SEPA offers the chance to bring the receivables process fully in-house, as well as to create operational risk efficiencies.

I mentioned before that each company is different and therefore requires a bespoke approach – the same goes for advice. However, there are a number of strategic questions that corporates looking to future-proof their treasuries can ask themselves, such as: ‘Are you positioned in the right way?’; ‘Is your cash management wallet appropriately diversified?’; ‘What is your approach to shared service centres?’; ‘How are you going to invest your money?’; ‘Is there scope for outsourcing certain treasury functions?’

Corporates should also ensure they are receiving good advice around the regulatory environment and that they are getting this advice on an ongoing basis, because it’s a constantly evolving situation.

Looking ahead, what are your priorities for Global Treasury Solutions at Bank of America Merrill Lynch?

Being new to the company, my priorities are to get to know the organisation as well as I can and as quickly as I can – this includes the broader Bank of America franchise. As I mentioned, I’ve already been out meeting as many clients as possible and will continue to do so.

I think it’s important for me to do that before settling on the strategy for the business, but I also believe from everything I’ve heard – even before I arrived – that Bank of America Merrill Lynch has a sound GTS strategy in place. So my intention is to hone in on the areas of the business that I think will really propel our clients forward, and propel us forward.

There are some clear priorities for continued investment and focus, such as developing our global footprint further in the emerging markets. In addition to growing our geographical coverage, we will also be increasing our product capabilities and investing further in our access platforms in those markets.

We want to provide clients with treasury and trade solutions wherever they do business, and I shall continue the work that’s been done over the last 18 months, adding resources to our existing teams in Asia, EMEA and Latin America. I truly believe that it’s critical to provide clients with local support, and serve them in their local language.

Finally, I also want to see continued investment in our trade capabilities, commercial card programme and our e-commerce platform. Another big area for us will be looking at how we leverage our custody business for our corporate and FI clients.

Focusing specifically on commercial cards, how are you looking to grow that programme and why do you feel that cards are a key product area?

We have recently added Brazil, Chile, South Korea and the Philippines to our commercial cards programme, and we have plans to increase the number of countries throughout 2011 and into 2012 to meet client demand. However, it’s not just a question of coverage, it’s also important for the programme to be the best in the market. The feedback I have been getting has been very positive.

It’s interesting that you ask why cards are important. Perhaps cards haven’t received as much attention as they really deserve – they can bring huge benefits to corporates and form part of a robust cash management solution set. As our clients are increasingly conducting business in multiple countries and looking to grow their franchise globally, we see a growing trend for companies to adopt a global approach towards managing their purchasing and corporate travel activities.

Our strategy is therefore to provide card solutions wherever our clients do business. For example, for European corporates that are expanding, that may include coverage in markets such as Asia, Latin America and Africa.

The banking landscape is extremely competitive. How does Bank of America Merrill Lynch differentiate itself from its competitors?

Innovation is part of Bank of America Merrill Lynch’s DNA and a real differentiator. We are continuously innovating in response to industry drivers, such as increased regulation, greater demand for cash efficiency and deeper awareness of risk. The complimentary consulting services provided by our Global Business Solutions team are an excellent example of how we at Bank of America Merrill Lynch go that extra mile for our clients – we are not simply selling them a product. The team – which provides advice, expertise and process improvement solutions for select, strategic clients to address key priorities or solve significant pain points – consists of former corporate treasurers, shared service/outsourcing and process re-engineering experts.

Working with clients to provide holistic, integrated solutions, the team enables clients to improve their operating model and achieve increased efficiencies. For example, the Global Business Solutions team has helped clients to free up millions of dollars of trapped cash and increased productivity by 45% in certain cash application processes.

Our e-commerce platform is another demonstration of innovation. CashPro® Online is our flagship product in this space and currently caters for the needs of nearly 400,000 users. The application aims to cut down the bureaucracy that takes up so much corporate time and is recognised as an industry leader, based upon the variety of its offerings, website design and functionality, its ability to attract new online customers and its service features.

Moving from solutions to challenges, what do you see as the main hurdles on the horizon for your clients and what can they do to overcome them?

We mentioned Basel III earlier, and the regulatory landscape remains a key challenge for corporate treasurers. Part of the issue with Basel III is the uncertainty around what the final rules will look like because the framework is still evolving, and no-one likes uncertainty.

It is important therefore for corporates to keep in regular contact with their bank and discuss the potential impact of forthcoming regulations. Clients could also engage in shaping the rules by lobbying alongside banks. The hope is that banks can work closely with regulators to illustrate the vital nature of cash within the treasury environment and demonstrate how the current provisions may alter buying behaviour in a way that was not intended.

Turning to the practicalities, treasurers will also need to look further down the line in terms of their funding options. With the introduction of Basel III, organisations may have fewer options from a credit perspective and should continue to review their cash position, so that they are able to weather stressed events. They should also look at improving their cash flow forecasting and reviewing their investment policies, processes and procedures.

As a final point, I would also encourage treasurers to concentrate on their supply chains and to engage with their procurement departments. It is important to know where products are being sourced and what the risks are around those sourcing practices. Is the company relying too heavily on one supplier? If a back-up supplier is put in place, are there different tax implications in the jurisdiction where they are based? In summary, it’s no longer a question of just in time; it’s a question of just in case.