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There's power in global cash management

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“Cash is King” became more than just an expression for corporate treasurers guiding U.S.-based companies with multinational operations through the challenges of the Great Recession. As a result of the tumultuous times, C-level finance officers frequently found cash-flow optimizations tied to their compensation packages.

Fast-forward 10 years, and the bar has been raised. In 2020, multinational corporation (MNC) CFOs and treasurers must strike the perfect balance of sustaining optimum cash levels and maximizing returns on operational cash while simultaneously reducing currency and tax risk. This is not an easy task in an environment where both currency fluctuation and negative interest rates across markets are on the rise.

The journey starts with gaining near real-time payment transparency across borders, all while enforcing global controls – a catalyst that has expanded the influence of global shared service centers, and the increased investment to consolidate disparate ERP systems. The payoff for this effort is both substantial and multifaceted. When successful, benefits include reducing costs, maximizing payments in the preferred local payment method, and gaining access to better – and more actionable – real-time data to manage global processing. Beyond achieving more efficient payment processing, MNCs benefit by reducing the cost associated with excess borrowing to cover cash flow inefficiencies.

Achieving these benefits, however, is easier said than done, as global standards can conflict with local laws, rules, regulations and organizational culture. Adding to the complexity is that MNCs use multiple banks across the globe. Not surprisingly, achieving global cash positioning in an efficient, straight-through processing manner remains a work-in-process and time-consuming task.

According to recent studies from Smart Payments and Aite Group, while 75% of treasurers cite improving cash flow forecasting as a priority, 80% of executives employ Excel spreadsheets as a forecasting tool. If the most crucial information still lives in spreadsheets, how can a company achieve a timely, comprehensive global cash position view to effectively manage their business?

Fortunately, global banks and fintechs have invested to bring practical solutions to both the Global 2000 and to mid-corporates operating in multiple markets. To help treasurers sort through marketplace options, it is essential to keep the following “price of entry” capabilities front and center:

Preferred global/local payment types. These enable both traditional and emerging payment types while taking advantage of attractive local payment methods such as virtual cards in North America.

Robust payment initiation. When and how desired, achieving straight-through processing where possible, but also accommodating one-off payments.

On-demand information. Essential to achieve global cash positions, reporting on cash positions (MT94X) from all banks in the MNC’s preferred currency, with one-click drill-downs to specific accounts and transactions, and real-time API calls to provide the most timely views.

Beyond the technology. The provider should have local market experts to deliver on the global/local service, solutions and support requirements. This attribute is commonly overlooked or undervalued, but equally important to deliver the intended results.

More than ever before, MNC CFOs and treasurers can positively impact financial performance and balance sheet strength. As a result, MNCs across all industries should capitalize on these solutions to maintain their global advantage across the markets in which they operate.

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