Treasury Today Country Profiles in association with Citi

Best Practice Handbook

European Cash Management 2012

Contents

Section 1: Drivers of change and development
Section 2: Back to basics
Section 3: European clearing and payments
Section 4: Banking
Section 5: Organising treasury
Section 6: Liquidity structures
Section 7: Liquidity management: short-term investing
Section 8: Funding the business
Section 9: The technology to assist cash management
Section 10: Tax and legal

Lead sponsor:

Citi

Preface

“The risks surrounding the economic outlook for the euro area continue to be on the downside,” says the August 2012 bulletin from The European Central Bank (ECB). “They relate, in particular, to the tensions in several euro area financial markets and their potential spill-over to the euro area real economy. Downside risks also relate to possible renewed increases in energy prices over the medium term.” As if this weren’t enough to contend with, the ECB has also cut its 2013 growth forecast for the single currency area from 1% to 0.6%.

Compounding matters for the treasurer are the bank and sovereign downgrades that have dogged the Eurozone recently. Cash is no longer deemed ‘safe’ in certain jurisdictions. And the pool of banks that companies can work with, while complying with all their internal policies and thresholds, is dwindling. Treasurers must therefore leverage internal efficiencies, together with opportunities such as SEPA, to make sure their company is able to react as quickly as possible to whatever happens next.

In this comprehensive Handbook, we outline all the latest developments in European cash management and provide practical advice for setting up cash management structures in the region. We also speak to treasurers operating in a variety of European locations, looking at how they are positioning themselves for growth in this challenging environment.

In Section One, we look at the drivers of change and development in cash management today, such as visibility, connectivity, regulation and technology. Working capital management is covered in depth in Section Two, together with a checklist for releasing trapped working capital, useful for those looking to improve internal efficiencies or self-fund.

Section Three provides a comprehensive overview of the latest developments in the payments and clearing landscape, including a complete SEPA update now that the migration deadline is in place. The number of banking relationships that corporates are actively maintaining against this backdrop is examined in Section Four. Here we also look at reviewing bank relationships on a regular basis, including the use of scorecards.

The basics of treasury organisation, looking at the pros and cons of centralisation, shared service centres, payment factories and outsourcing are examined in Section Five. Then the various options for setting up a liquidity structure are presented in Section Six, which discusses the ways pooling and netting can help companies to improve cash visibility – a major treasury priority since the financial crisis. Having achieved visibility of the company’s cash, Section Seven looks at the options for investing any surplus. For treasurers looking to access additional funding, Section Eight outlines the options – from overdrafts to bank loans and bonds.

Section Nine then covers the new and growing technologies available to today’s treasurer – whether that be a TMS, ERP, FX portal or MMF portal. We also look at the process for securing IT investment, as well as issuing an RFP. Finally, tax and regulatory considerations are summarised in Section Ten.

We hope that you will find this Handbook interesting and informative. As always, we welcome any comments or suggestions to editorial@treasurytoday.com

European Cash Management 2013 will be published in September 2013.