Intermediate Tips
July 14, 2009 – 3:23 amTake it in stages. Work from the local level first. Start by making cash management as efficient as possible in the local environment before tackling regional efficiencies.
Realize that managing liquidity on a global scale may not be optimal. Most companies find that managing on a regional basis provides the most efficient solution.
Review banking structures, services, and costs often and carefully. Companies may be reluctant to institute change unless momentous events have occurred, especially as implementations are frequently painful. But as the company or the environment changes, cash management needs should be reviewed.
Reexamine European banking arrangements in light of the opportunities afforded by the EMU and euro. Centralize functions, consolidate banks, and manage eurowide liquidity.
Negotiate pricing for all euro transfers, both local and cross-border. Many companies are insisting that all euro transfers be priced at domestic or near-domestic levels.
Expand the use of procurement cards to international retail payments. Cross-border, low-value payments can be particularly expensive. Using procurement cards for these disbursements can realize significant savings and efficiencies.
Advanced Tips
Use direct debits wherever possible. In many countries, direct debits are used as a routine and efficient domestic collection mechanism. This mechanism can also be used for cross-border collections.
Recognize that international ACH is coming. A number of proprietary services already link the U.S.’s domestic ACH with similar systems overseas. However, the latest initiatives will offer open access to cross-border, low-value mass payment systems.
Outsource noncore functions. International business is complex and requires high levels of expertise, knowledge, and investment in systems and technology. The costs can be high if borne internally.
Put shared cash management functions on the Web. Balance reporting, bill paying, transfers, letters of credit, and netting are all standard ASP applications available over the Internet.
Get rid of the paper. Take advantage of the new services that offer electronic letters of credit and documentary collections.
Be tax-aware, not tax-foolish. Tax rules and regulations are complex, varied, and subject to change without notice. Minimizing taxes paid on a worldwide basis is a worthy goal, but not the only goal.
In conclusion, ask questions, lots of them. Many companies have faced the same issues. Banks are a logical first contact for more information. Local treasury associations or user groups are a good source of knowledge. The Internet can also provide access to the experience of companies that would normally be difficult to reach. The AFP’s Standardized RFPs for Global Treasury Services (see Chapter 9 for a summary of contents) is an excellent starting point when preparing an RFP for international services.
Taken From : Essentials of Managing Corporate Cash
