Corporate Treasury Ascends in Strategic Value
During Turbulent Economic Period

By David Conroy
Managing Director and the Americas Head of Trade Finance
and Cash Management Corporates
Deutsche Bank Global Transaction Banking
 

 
Today's finance innovators have overcome unprecedented challenges to succeed during the current economic times.

Corporate treasuries in the Americas and globally are more focused on ensuring that they have solutions in place to maintain access to day-to-day liquidity that will permit them to continue transacting when external funding is further restricted.

Back to Basics
Effective management of excess liquidity has resulted in greater focus on treasury processes, risk management and treasury policy procedures. Consequently, the treasurer's role within organizations has increased in profile and strategic importance.

One notable trend is the increase in the need for treasury to provide input on any financially noteworthy decisions that a company may encounter.

The treasury unit will continue to rise in strategic value to the organization. CFOs will work even closer with the treasurer, procurement, sales and logistics staff, as issues that were once handled within specific functions will be viewed holistically for their importance and impact on the company's overall health.

With liquidity so limited and core bank lending unavailable to many corporations, working capital optimization has risen in magnitude. Companies are required to find cash in the context of their payables, receivables and their inventory. Cash and liquidity are in great demand and that is why products such as accounts receivable financing have become more appealing. Supplier and distributor finance can lead to improved working capital and top-line revenue growth and provide an additional source of liquidity for a corporate and its trading partners.

On the Horizon
Corporate treasurers around the world are experiencing a "balance sheet recession." While the drying-up credit supply has reduced the growth of many corporates in the Americas, there remains a vast amount of opportunity in this region. At the same time, increased opportunities for top-line revenue growth exist in emerging markets such as Brazil, which represents more than one-third of the South American market and is developing at extraordinary rates.

Corporates continue to look more closely at the integrity and financial well-being of counterparties and banking partners. "Flight to quality," a well-publicized trend driving corporate behavior, has meant that many corporates have turned to those institutions — such as Deutsche Bank — that continue to maintain a strong brand and capital base.

At the same time, current market conditions have also raised corporations' awareness of the importance of not only their own financial situations, but also of the financial situations of key trading partners. The collapse of a key supplier or distributor at an ill-timed moment could be potentially catastrophic. For this reason, the interest in financial supply chain management has significantly increased over the past year.

Future achievements will be possible as corporate financial leaders continue to come up with innovative ways to unlock pockets of trapped cash, manage risk and implement efficiencies on a global scale during this turbulent period.

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