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Treasury prioritiesTom Cools, PricewaterhouseCoopers provided some interesting

statistics on trends amongst corporate treasuries globally (figure 1).

These were derived from a survey that PricewaterhouseCoopers had

conducted during 2011, including 583 respondents. He illustrated

that while funding was the primary concern for treasurers (73%),

60% of treasurers indicated that cash and liquidity management

were priorities. Just over 30% of respondents also indicated that

treasury technology and automation was a key issue.

PricewaterhouseCoopers research, and the experiences of both

BNP Paribas and corporate participants, emphasised that it can be

very challenging to establish cohesive liquidity structures due to

the significant differences that exist between regions. With no

single bank covering every country, a co-ordinated approach is

Optimising LiquidityManagement

required, with strong regional banks that may also work with key

partner banks. There are also differences that need to be considered

from a regulatory perspective. For example, both notional and

physical (zero balancing) cash pools are achievable in Europe, with

a choice of locations for the header account, although there are

some countries that may not be included. In North America,

notional pooling opportunities are far more limited. In Asia Pacific,

while both notional and physical cash pooling are frequently

employed, the countries that can be included are limited.

A global approach to liquidity management atHeinekenNiels van Popta, Heineken outlined the approach Heineken hastaken to optimising liquidity. As a business with a truly global

footprint, and a strong presence and profile in every country in

which it operates, Heineken used to have a largely decentralised

approach to cash management. Daily treasury activities are

delegated to the local operating companies that have

relationships with several local banks. Financing, both short-term

and long-term is typically arranged centrally by Global Treasury.

In 2006, in an effort to centralise visibility and control of cash,

offset debit and credit balances, and manage risk more effectively,

a global notional cash pool was set up with Heinekens global cash

management bank, BNP Paribas. This has grown over the years and

now comprises 85 legal entities across 28 countries, in 18

currencies. This equates to approximately 75% of Heinekens total

revenues.

Niels concluded by explaining that during 2012, treasury will be

reviewing the total number of bank accounts and electronic

A BNP Paribas Cash Management University Panel Discussion

Effective liquidity management is an ambition for every treasurer globally.During the 5th Cash Management University hosted by BNP Paribasworkshop participants discussed some of the ways that they hadoptimised liquidity management with both a regional and global view. Thepanel comprised the following: Niels van Popta, Director Global Treasury, Heineken;

Sirkku Markula SVP, Corporate Treasurer, KONE Corporation;

Tom Cools, Director, Corporate Treasury Solutions, PricewaterhouseCoopers;

Jan Rottiers, Head of Liquidity Management Products, BNP Paribas

Helen Sanders, Editor, TMI (chair)

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insight

the group, accounting for a little less than

45% of group sales, so it made sense that

this was the first priority. KONE selected

BNP Paribas as its primary bank for

European liquidity management, as part of

a global relationship. KONE opted for a

physical cash concentration, rather than

notional cash pool. The header account,

located in Amsterdam, is managed by

treasury, and local accounts in 12 countries

zero balance into this account on a daily

basis (figure 2). Using BNP Paribas

Connexis, KONE has real-time visibility

over both local and header accounts.

Regional vs global cash poolsFollowing the case studies, the audience

engaged the panel in an interesting

discussion about the feasibility of globalas opposed to regional cash pools, and

where best to locate the header accounts.

Overall, the panel concluded that there are

a number of different factors that would

influence this decision. Some of these are

external, such as the tax conditions in

each country, and the currencies to be

included in the pool(s), but others are

internal issues including the treasury

organisation (e.g., global or regional

treasury centres) and its ability to take

maximum advantage of currency cut-off

times within different time zones. The

demand for a global approach to liquidity

management adds an extra dimension to

the way that treasurers evaluate banks

cash management services. Not only does

a bank need to provide the depth of

capability to support customers regional

requirements, but they also need the

cohesion of services and technology to

create real-time visibility and continuous

processing to support integrated, global

cash pooling capabilities.

banking platforms that it maintains. In

addition, Heineken is planning to

automate the sweep from local bank

accounts into its main accounts with BNP

Paribas.

From regional to global: KONECorporationThe audience then heard from Sirkku

Markalu of KONE Corporation, a global

leader in the elevator and escalator

industry with a $5bn annual turnover,

headquartered in Finland. With a presence

in more than 50 countries in every region,

an efficient, global approach to cash and

liquidity management is key. KONE

identified three key focus areas from a

liquidity management standpoint: North

America, Europe and China. Some oftreasurys key objectives included:

Establish a global approach to liquidity

and counterparty risk management

Develop a global USD cash pool

Optimise cash management in the

United States, such as incoming cheque

processing

Review and optimise cash pooling and

liquidity management in China

Build on the capabilities of the existing

shared service centre (SSC) including

incorporating a payments factory.

The first element on which KONE has

focused is to establish a EUR cash pool.

EUR is the biggest single currency within

Figure 1. Major areas of focus amongst treasurers

Source PricewaterhouseCoopers0 10 20 30 40 50 60 70 80

Global banking

Accounng

Cash flow forecasng

Reviewing/improving risk management policies

FX

Enterprise wide risk management

Liquidity

New technology/systems

Cash management

Funding

Checklist for regional pooling

Is pooling (in-country/ cross-border) permitted in the

countries in which we operate?

What tax issues may arise? (e.g., at arms length

intercompany interests, thin capitalisation rules, ) What is the best location for our regional cash pool?

What legal or regulatory issues do we need to consider?

Are there additional guarantees required (e.g., cross-

guarantees , set off clauses, etc.)

Will all operating accounts be included in the pool?

What will the value dating convention be?

Figure 2. Cash pool at KONE Corporation

LocalBank Account

BNP AmsterdamTop Account

(Notional Pooling)

Daily zero balancing

LocalBank Account

LocalBank Account

BNPAmsterdam

Bank Account

BNPAmsterdam

Bank Account

BNPAmsterdam

Bank Account

CorporateTreasury is

managing thetop balance...

...with real-time visibility to localaccounts through Connexis

+ Cash flow forecasts from

companies

Contact : Anne DugiedDeputy Head of Communication for Cash Managementanne.dugied@bnpparibas.com