As real-time cash management shapes the consumer experience and negative interest rates attack passive deposits, corporate treasurers are employing API-enabled analytics in determining what cash needs to move where and to optimise their FX positions, reports Elizabeth Pfeuti
As the world enters an era that thrives on low latency, it is up to treasurers – and their banking partners – to bring their liquidity management up to speed. Failure to do so would lead to falling behind both competitors and the demands of customers and regulators, while missing out on the biggest opportunity yet to embrace business efficiency.
Among the key changes treasurers need to tackle is the switch from the London Interbank Offered Rate (Libor), the Euro Interbank Offered Rate (Euribor) and the Euro Overnight Index Average (EONIA) to other UK, European and global overnight rates. Contracts drawn up using rates that will soon become obsolete need to be rolled over or renewed, to be in place for when the updated indexes take over.
An additional task for companies operating in euros is to adapt to running two rates: the Euro Short-Term Rate and the new Euribor from 2022. But as market participants feel their way in this new landscape, liquidity might initially be less than they are used to. In this case, contingency plans – which treasurers should be comfortable with – should be crafted and put in place early on.
Changing regulation has added to workloads, but, along with the other challenges, it has also created an opportunity to seek out new and more efficient ways of finding the right balance of company liquidity. That upside is not lost on enterprise resource planning and treasury management systems vendors as they deploy cloud technology to bring dashboard/flight-deck visibility to corporate treasury teams – SAP being one example of this.1
flow magazine is published twice per year and can be read online and delivered to your door in print
Find out more about products and services