Effective Cash Management

In light of current economic concerns, treasurers looking to manage their liquidity are focusing on risk more closely than ever. How is this risk-conscious approach to liquidity management affecting corporate deposit behaviour and what scope is there for treasurers to enhance yield on deposits in the low interest rate environment?

A risk-conscious approach

For corporate treasurers, risk is a greater concern than ever before. While the overriding goal of recent regulatory reforms, such as Basel III and the Vickers report, is to reduce risk in the banking system, the threats arising from the Eurozone crisis have meant the management of an organisation’s cashflow and liquidity is of even greater importance than in previous times. Given their concerns around counterparty risk, companies looking to balance security, liquidity and yield are therefore prioritising security.

This risk-conscious stance is affecting businesses’ investment behaviour and is leading many to update their treasury policies. Increasingly companies are also placing greater emphasis on their banking relationships, ensuring they have appropriate support in place. But while risk is a top concern, innovation in the world of bank deposits is offering companies some new opportunities – most notably the ability to improve yield by drawing on the more flexible products on offer. As the external backdrop continues to change, treasurers require products that have the ability to flex to their requirements on an ongoing basis.

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