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EMEA’s Unique Corporate Treasury Climate

Treasury leaders at Bank of America Merrill Lynch mused on the development of treasury management across the Europe, Middle East and Africa (EMEA) region in its latest report of treasury landscape.

The “EMEA Perspectives” report, a collection of articles that discuss top treasury management issues in the area and opportunities for innovation, highlighted where corporate money managers need to be diligent in the face of changing regulations and economic fluctuations.

“Because macroeconomic developments continue to dominate press headlines and occupy corporate treasurers’ minds, treasury teams are demanding improved risk management tools and ways to enhance efficiency so they can help their businesses achieve their strategic objectives,” said BofA Merrill Lynch head of GTS, EMEA Jennifer Boussuge in a statement announcing the new report last week.

She added that the bank’s report looks to identify the industry’s most prominent, pressing issues unique to the EMEA region. “Our intention is to provide clarity and direction for corporate treasurers as they look to stay at the forefront of regional developments and further develop their businesses.”

PYMNTS poured over the report to pinpoint some of the key takeaways for today’s corporate treasurers.

EMEA’s Popularity Is Growing

Corporate treasuries across the EMEA region should know: the reputation of the region outside their walls is a good one. Lesley White, Bank of America Merrill Lynch’s Head of Global Commercial Banking International, along with Paul Taylor, Head of Sales EMEA, Global Transaction Services, said treasurers need to be mindful of the EMEA region’s reputation elsewhere.

“For many U.S. large and mid-market corporates EMEA…is an attractive growth opportunity,” the authors said. “While the Eurozone debt crisis continues to create uncertainty, it is important to remember that Western Europe remains one of the most prosperous and stable trading blocs in the world and most countries in the region continue to recover economically.”

But as businesses start to enter the EMEA region, EMEA corporates are looking to expand abroad, too – and that brings its own set of hurdles.

“The broader a company’s geographical footprint, the more challenging it is to manage liquidity effectively around the world,” wrote the bank’s Regional Head of Liquidity, Global Transaction Services EMEA Suzanne Janse van Rensburg.

As corporations across EMEA take wider steps outside their own borders, managing cash flow and liquidity will be a more complex process. This means treasurers are more often discussing risk management with their banks and the impact of incoming regulations, interest rate fluctuations, and foreign exchange changes compared against other currencies when it comes to how these factors will effect the flow of cash in and out of markets, van Rensburg said.

Political Unrest

Within EMEA’s own walls, there is a lot of activity that affects the way corporate treasurers have to do their job.

Political unrest – especially amid the economic earthquake in Greece – means a whole new set of challenges for EMEA treasurers. “Conflict in the Middle East and on Europe’s borders, combined with the near-miss of Greece’s refinancing and continuing uncertainty of the U.K.’s future in the European union have created a kaleidoscope of risks,” wrote BofA Merrill Lynch’s Head of Global Transaction Services Ather Williams III.

[bctt tweet=”Political unrest means a whole new set of challenges for EMEA treasurers”]

Boussuge added that EMEA is in the midst of an “existential crisis” that has corporate treasurers forecasting risk they are “eager to mitigate.”

Greece’s currency controls have created a new set of worries for some corporate treasurers, Boussuge stated, while overall economic uncertainty in the region, often leading to currency fluctuations, introduces a level of complication in foreign exchange processes for multinational corporations.

While money managers are attempting to stabilize themselves in renewed political and economic turmoil, Boussuge added that treasurers are also hoping to take the lessons learned today to ease risk of future destabilizations – and these efforts are coming in the form of fraud prevention, multi-level authentication for payment authorization, and data protection services.

The regulatory changes mean treasurers constantly have to stay on top of compliance efforts, said BofA Merrill Lynch’s Joanne Gill, Head of Global Custody and Agency Services within the bank’s Equities & Asset Management Services EMEA.

Key to staying on top of these changes is to strike partnerships with banks that are similarly prioritizing compliance and education of global regulations like Basel III and the EU’s Alternative Investment Fund Managers Directive.

The Anxiety Of Branching Out

With all of these impacts, both at home and abroad, EMEA corporate treasurers have to be flexible and reactive to the challenges they face. The role of the corporate treasurer is changing, and in many cases, expanding and becoming more important for the corporation as a whole. But as Bank of America Merrill Lynch’s Jonathan Traer-Clark and Bruce Meuli (Global Transaction Services EMEA Treasury Practitioner Executive and Global Business Solutions Engagement Executive, respectively), wrote in their contribution to the report, not every treasury team across the EMEA market will be ready to take on expanded roles.

[bctt tweet=”EMEA corporate treasurers have to be flexible and reactive to the challenges they face.”]

“In some cases a broader centralization of functions, implementation of global processes and policies and rationalization of banking partners (and associated technology) may be a necessary first step,” the authors said. “This does not mean treasury has to reach a specific maturity before taking on a more strategic role: the ‘tipping point’ will be different for each corporate.”

Treasury managers must take into consideration whether existing, separate finance departments are willing to give up some of their responsibilities to the treasury team, for example, said Traer-Clark and Meuli.

AP/AR Technology

It may not always be key that a corporate treasurer take on a greater role within the company, but within the treasury department, new tools are allowing money managers to approach their responsibilities in innovative ways.

[bctt tweet=”It may not always be key that a corporate treasurer take on a greater role within the company”]

EMEA-based corporate treasurers are now also tasked with sifting through the growing number of choices for accounts payable and accounts receivable technologies. While a flurry of new options can lead to complexity, these tools, wrote the banks’ Co-Head of EMEA Product Management, Global Transaction Services Matthew Davies, they can also help with the aforementioned challenges that stem from regulation, foreign exchange and other stresses in the economic climate.

Still, Davies urged caution: implementing the newest digital wallet, for example, can mean that AR stemming from these solutions are not always automatically transferred to a corporate bank account.

Technology is doing big things for corporate payments, though, the authors said. Greater payment options for batch processing mean less expensive payments, while real-time payment structures are emerging as a way for EMEA treasurers to more adequately time payments and optimize cash flow.


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