Strategies for Setting Up a Cash Pooling Structure Across Multiple Countries and Regions
This article is written by Palm In an increasingly globalized business environment, effective cash management has become a cornerstone of financial efficiency for multinational corporations. Cash pooling, a financial mechanism that consolidates the balances of multiple accounts into a single master account, has emerged as a vital tool for optimizing liquidity, reducing costs, and enhancing operational flexibility. However, implementing a cash pooling structure across multiple countries and regions presents unique challenges, including regulatory compliance, tax implications, and operational complexities. We’ll share the top strategies for establishing an efficient and compliant cash pooling structure, tailored to the needs of companies operating in diverse international markets. By leveraging advanced methodologies and understanding the nuances of different jurisdictions, businesses can unlock the full potential of cash pooling to streamline treasury operations and drive financial performance. The Importance of Cash Pooling in International Operations Cash pooling offers significant benefits for multinational companies by centralizing cash management. It enables businesses to reduce reliance on external financing, optimize interest income, and ensure better allocation of surplus funds. For example, hybrid cash pooling—a combination of physical and notional pooling—has gained traction as a flexible solution for companies with varying financial needs across subsidiaries. This model not only unlocks cash efficiency across multiple currencies and entities, but operationally allows companies to manage funding on dozens to hundreds of account while mostly managing one funding account. Challenges in Cross-Border Cash Pooling Despite its advantages, implementing cash pooling across multiple countries is far from straightforward. Each jurisdiction has distinct regulations governing fund transfers, exchange controls, and taxation. For instance, some countries impose restrictions on cross-border transfers or require specific approvals, which can complicate the pooling process. In China, recent enhancements to cross-border cash pooling policies by the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have streamlined processes and reduced costs, making it a more attractive option for MNCs (UDF Space). Moreover, legal and tax considerations, such as withholding taxes and thin-capitalization rules, must be carefully analyzed to ensure compliance. The choice of banking partners and technological platforms also plays a critical role in overcoming these challenges and achieving seamless integration of cash pooling systems (Euroaccounts). The Need for Strategic Planning To successfully implement a cash pooling structure, companies must adopt a strategic approach that aligns with their financial objectives and operational realities. This involves conducting a thorough analysis of liquidity needs, selecting the appropriate pooling model (physical, notional, or hybrid), and ensuring compliance with local regulations. Regular reviews and adjustments to the pooling strategy are essential to adapt to changing market conditions and regulatory landscapes This blog aims to provide actionable insights and best practices for setting up and optimizing cash pooling structures across diverse regions. By addressing the complexities of cross-border operations and leveraging innovative solutions, businesses can enhance their financial resilience and maintain a competitive edge in the global marketplace. Understanding Regulatory and Legal Considerations for Cash Pooling Across Regions 1. Navigating Country-Specific Cash Pooling Permissions Cash pooling is not a one-size-fits-all solution. Each country has its own set of rules, and understanding these is akin to solving a Rubik’s cube blindfolded—challenging but doable with the right strategy. In some regions, cash pooling is fully permitted, while in others, it’s partially allowed or outright restricted. Anecdotally, Europe is a relatively relaxed environment for cash pooling and cross border sweeps with most major banking hubs offering products to corporates. In contrast, pooling in LatAm in Asia can prove to be more challenging. Although things are evolving.For instance, countries like Thailand have recently relaxed regulations, enabling onshore FX conversion, which allows USD balances to be pooled offshore (Standard Chartered). This move unlocked significant liquidity that would have otherwise been trapped locally. In contrast, Vietnam is still deliberating the feasibility of intercompany loans, which are currently not permitted. Meanwhile, China continues to evolve its stance through pilot programs aimed at optimizing cross-border cash pooling for multinational corporations (Global Times). These pilot programs, rolled out in cities like Shanghai and Beijing, aim to streamline the pooling of both foreign and domestic currencies. The choice of banking partner also plays a pivotal role in navigating these permissions. Some banks may have the required special permits, while others may not. For instance, Singapore and Malaysia have embraced innovative banking networks, such as direct debit systems, to simplify cash pooling (Standard Chartered). 2. Tax Implications: The Elephant in the Room In cash pooling, tax authorities often view intercompany cash transfers as loans, which can trigger tax consequences. For instance, transfer pricing regulations may require that intercompany cash transfers be conducted at arm’s length, meaning you can’t just shuffle money around without proper documentation (Euroaccounts). In Europe, tax implications are particularly pronounced due to the EU’s Anti-Tax Avoidance Directive (ATAD), which scrutinizes intercompany financial arrangements. Non-compliance can lead to penalties and increased tax liabilities. Similarly, in Asia, countries like India and China impose strict documentation requirements to ensure that cash pooling does not lead to tax base erosion. Moreover, withholding taxes can complicate cross-border cash pooling. For example, if a subsidiary in Germany transfers funds to a parent company in the United States, withholding tax may apply unless a tax treaty provides relief. This makes it essential to consult tax advisors who specialize in international taxation (Tolley). 3. Legal Structures: The Foundation of Compliance The legal structure of your organization can make or break your cash pooling strategy. Imagine building a skyscraper on a shaky foundation—it’s bound to collapse. Similarly, a poorly designed legal structure can lead to compliance nightmares. For instance, undercapitalization of subsidiaries can raise red flags for regulators, as it may indicate that cash pooling is being used to siphon funds rather than optimize liquidity (Stahr Advisory). In China, the People’s Bank of China (PBC) and the State Administration of Foreign Exchange (SAFE) have specific requirements for cross-border cash pooling, including minimum capital thresholds and detailed reporting obligations (Global Times). Similarly, in the United States, the Dodd-Frank Act imposes stringent requirements on intercompany financial arrangements to prevent systemic risks. Choosing the right type of cash pool—physical or notional—also impacts legal compliance. Physical pools involve actual fund transfers, which are subject to…
Franklin
Treasury Contrarian View: Do We Focus Too Much on Finance Backgrounds in Treasury Hiring?
Traditionally, treasury professionals have been hired for their financial acumen—degrees in finance or economics, certifications, and prior banking experience. But in today’s digital-first treasury environment, here’s a bold question: Should we stop prioritizing finance backgrounds and start hiring more technologists, data analysts, and engineers into treasury teams? The Case for Rethinking Treasury Talent The Case for Keeping Finance at the Core The Way Forward: Cross-Functional Treasury Teams Rather than replacing one skillset with another, treasury functions can evolve by: Let’s Discuss We’ll feature insights from tech-forward treasurers and talent leaders who are reshaping how treasury teams are built—add your voice to the conversation! COMMENTS Patrick Kunz, Treasury Masterminds founder and board member, comments: “It is disheartening to see so many entry-level Treasury roles demanding multiple years of direct experience. How are junior professionals supposed to break into the field when the door is constantly slammed shut? It feels like companies have completely abandoned the idea of training and investing in new talent. This “experience only” mentality is creating a massive barrier for aspiring Treasury professionals. While experience is valuable, a lack of willingness from companies to provide structured training and mentorship is a significant hurdle“. This message I got from a junior in treasury who FINALLY landed an entry-level role. I blame the companies she applied to. They have to train for skill and should have hired for EAGERNESS and GRIT and she would have thrived in her role as she later complained that her role is very operational and didn’t even require a lot of skill. At Pecunia, I see a shift in both junior and medior roles on the skills. The TECH skills are becoming more critical to win roles. Understanding data and interdependencies and their sources and being able to extract them and get relevant information from them is key in some analyst or even some cash/treasury manager roles in smaller organisations. This doesn’t mean treasury talent shouldn’t have a finance background anymore. Dealing with data, you should still be able to interpret them and understand them. Finding the one that knows both would be perfect but is also hard to find. This means a company has to decide what skill is more important from the start. Though every skill can be taught. In my opinion, I would hire for the skills that are lacking in the rest of the team. This is also diversity. This can be a tech skill, but it can also be a (younger) mindset or cultural background. Anyway, don’t be too hard on the paper skills and university background or courses one has done. The rest of the treasury team already has that skill so why add another one with less practical experience in that skill? Adding NEW skills will grow the WHOLE team. Are you a junior unable to land that job because of missing experience in treasury? Don’t be sad and keep looking for a company that values the skills you DO have or might even be better in as the rest of the treasury team. A company that is willing to TEACH you those treasury skills but also appreciates what you DO know will also be a better company to work for, one where you can grow. Alexandar Ilkun, Treasury Masterminds board member, comments: It would be a sad day when a finance background stops to matter in Treasury. The good thing is that I don’t believe it’s anywhere on the cards, not now nor in the foreseeable future. No matter how automated the process is, it is important to understand what the outcome of the process should be. That can only be achieved if the person reviewing the results understands and knows what to expect based on their knowledge and experience. Such an expert is often able to say whether the numbers make sense or not. They also know where to look for potential issues and how to dig out the root cause of those issues. However, with the technological advancements, it has become crucial for Treasury professionals to also understand how the automations work. It helps to know what is happening under the hood technically. It has a couple of benefits. First, you know what the potential weak points are so know to look out for signs that something went wrong from an automation standpoint. Secondly, you also know the power and indeed the limitations of automations. As someone who built a sufficient number of them, I learned to appreciate that automations are great but require some degree of maintenance—the more complex the process, the more maintenance it may require, as there are more areas that can potentially go wrong. Finally, I’d also add that there is certainly a place for Treasury Technology Teams to exist these days or for bringing such an expert in on a consulting/outsourcing basis. Not only do you have access to experts that are within the Treasury team and focus on its needs as opposed to a more generalist IT or Data Scinetist, whose time will be devoted to one of the competing priorities coming from all around the organization. Having access to this expertise alongside operational Treasury knowledge allows you to be able to develop solutions much more quickly and much more tailored to the needs of your individual team that alleviate specific pain points that are relevant to you and without the need to think about the competing projects that may be out there. In my practice, having access to Treasury Technology Talent allowed me to create solutions faster, better, and that are innovative—since doing something new is an art that often doesn’t survive the stage of business requirements documentation any IT person would require. Jessica Oku, Treasury Masterminds board member, comments: Treasury is becoming tech-driven As someone who has led treasury teams through digital transformations, I can confirm this evolution is not just coming; it’s already here. In fact, some of the most successful treasury turnarounds I’ve worked on were driven by using real-time data visibility, automation tools,…
You’re Doing Payments Wrong—And It’s Costing You Strategic Control
Why centralization alone isn’t enough—and how POBO and in-house banking change the game Here’s the thing most companies get wrong: they treat centralized payments like an efficiency play. Fewer bank accounts. Bulked payments. Lower admin burden. And while that’s not wrong, it’s barely scratching the surface. Because when you design centralized payments with strategy in mind—when you align structure, technology, and control—you unlock far more than savings. You create visibility, leverage, and agility across your entire global financial operation. And if you’re not aiming for that, you’re leaving value on the table. A lot of it. The False Comfort of “Centralization” Many organizations are proud to say they’ve built a payment factory. In practice, that often means they’ve centralized operational processing—moving payment execution into a shared service center, consolidating teams, and reducing cost per transaction. It’s a step in the right direction—but it’s not strategy. What they’re really doing is centralizing labor, not control. Most payment factory models continue to process payments from each entity’s accounts, on their behalf, under their name. The model is operationally efficient, but it stops short of transforming financial ownership or visibility. It’s about processing payments faster and cheaper—not smarter. This mindset tends to focus on cost reduction: using lower-cost labor, often offshore, to process more payments at a lower price point. And that’s fine—if the goal is operational efficiency. But that’s not where the real value is. The strategic leap happens when organizations move from shared processing to Payments on Behalf Of (POBO)—a structure that routes payments through a limited set of centralized accounts, executed legally and operationally by a central financing entity or designated shared-service structure. POBO doesn’t just centralize execution—it consolidates control. It reduces accounts, enhances oversight, simplifies FX, and becomes a foundation for broader financial integration. What Strategic Control Actually Looks Like Once organizations make the shift from centralized processing to POBO, the conversation moves from operations to control. POBO isn’t just a payment method—it’s a structure for establishing real-time financial visibility, reducing complexity, and driving better decision-making across treasury and finance. In my 25 years of experience driving treasury transformation projects for corporate leaders around the world—including Booking Holdings, Chevron, Estée Lauder, Microsoft, and Texas Instruments —I’ve seen what happens when POBO is done right. These companies have built some of the most advanced global treasury infrastructures in the world—leading-edge solutions designed to optimize payments, reduce risk, and increase agility. Treasury becomes predictive, not reactive. Working capital gets deployed more efficiently. And payments become an engine for visibility—not just execution. Strategic control means knowing where your cash is, where it’s going, and what it costs—in real time. It means consolidating power without sacrificing flexibility. It means enabling real-time, data-driven decisions around liquidity, FX exposure management, and audit readiness. This is the backbone of a treasury function that’s designed to lead. The Design Decisions That Make or Break POBO Strategic design is where most projects go off-track. Companies underestimate the number of decisions that must align across treasury, AP, tax, and IT. They rush implementation without building a framework that answers key questions like these—questions that matter even more when POBO is ultimately integrated into a broader treasury structure. Each of these isn’t just a technical preference—it’s a strategic lever. Done right, they enable flexibility and scale. Done wrong, they lock you into workarounds and inefficiencies that erode value and confidence. From Payment Factory to Strategic Infrastructure Centralized execution is a starting point. But without structural integration, it remains just that—a start. A payment factory reduces friction. An in-house bank (IHB) redefines control. At its core, an IHB is a centralized legal and operational entity—often a financing affiliate—that acts as the internal bank for a company’s subsidiaries. Rather than each entity maintaining its own external banking relationships, the IHB manages payments, collections, intercompany loans, and foreign exchange centrally. It moves beyond shared processing by consolidating financial ownership and liquidity management into a single, strategic structure. As Citibank notes in their article In-house Banks: As Relevant as Ever in Today’s World, “In-house banks may not be a riveting topic, yet they remain a linchpin of top-performing corporate treasuries.” And while adoption is still growing, the trend is clear: This progression isn’t just about size—it’s about strategic maturity. The companies adopting in-house banks are the ones managing complexity at scale. And the fact that so many haven’t yet adopted one? That’s not a weakness of the model—it’s an opportunity. POBO embedded in an in-house bank doesn’t just streamline execution—it becomes the structural framework that supports FX management, intercompany lending, liquidity forecasting, and more. It’s not just a better way to pay—it’s a smarter way to operate. For a deeper understanding of in-house banking and its benefits, check out Serrala’s guide, In-House Banking: The Strategic Advantage for Treasury Professionals. Technology Enables the Shift—But Only If You Design for It For corporates leveraging SAP as their ERP system, technology like SAP’s Advanced Payment Management In-House Bank (APM-IHB) facilitates this transition—from a standalone payment factory to a fully integrated treasury platform. APM-IHB brings together centralized payment routing, virtual accounts, automated balance tracking, seamless end-to-end processing, and real-time intercompany postings into a single environment that connects POBO with the broader in-house banking ecosystem. When combined with SAP’s Multi-Bank Connectivity (MBC), this infrastructure extends all the way to external banks—enabling direct communication without file transfers. The result is a secure, real-time, fully traceable workflow from invoice to execution, with full audit trails and embedded compliance. This kind of design creates the foundation for strategic enablement: real-time visibility, stronger fraud controls, improved compliance, and actionable insight across the enterprise. That said, the tech can’t carry the strategy on its own. It’s the execution of the design—not just the platform—that determines whether you get a scalable, strategic outcome or just another centralized process. AI Is Coming—But Only If Your Data Is Ready Artificial intelligence isn’t optional anymore—it’s a differentiator. In treasury, it’s reshaping forecasting, risk modeling, anomaly detection, and exposure planning. But AI is only as effective as the…
PETER.WOLF@SERRALA.COM
Why New Treasury Tech Can Fail (Before It Even Starts): The Hidden Challenge Behind Every Implementation
Resistance to change trumps cost, integrations, and tool choice — here’s what that means for your treasury transformation. When it comes to implementing new treasury technology, we often focus on the big-ticket issues — budget approvals, ERP integrations, selecting the best vendor. But if our latest Treasury Masterminds poll is any indication, the real challenge is something more human: resistance to change. We asked the community, “What is the biggest challenge you face when adopting new treasury technology?” and here’s what they told us: The result? Nearly half of treasury professionals said that resistance to change is their top challenge — far above anything technical or financial. So why is change so hard? Let’s face it: treasury teams are often lean, busy, and already running mission-critical processes. Introducing new tech means a temporary dip in efficiency, a learning curve, and the fear that something might break. But beneath the surface, resistance often comes from: Real-World Lessons from Treasury Tech Implementations 1. FoxMeyer’s ERP Implementation: A Cautionary Tale In the mid-1990s, FoxMeyer, a pharmaceutical distributor, embarked on an ambitious ERP implementation aiming to automate its warehouse operations. However, the company adopted a “big bang” approach, rolling out the new system across all operations simultaneously. This rapid transition, coupled with inadequate training and unrealistic expectations, led to significant operational disruptions. The system couldn’t handle the volume of transactions, leading to order fulfillment issues. Ultimately, the failed implementation contributed to FoxMeyer’s bankruptcy. Lesson: Gradual implementation and thorough training are crucial. A phased approach allows for adjustments and reduces the risk of widespread disruption. 2. Resistance Masking Deeper Issues: A Case of Fraud A case study highlighted by The Global Treasurer discusses a company that sought to optimize its payables process by transitioning from manual checks to electronic payments. The accounts payable manager resisted the change, citing minimal time savings. However, after implementing a new ERP system, it was discovered that an employee had been manually writing checks and embezzling funds for over a decade. The resistance to change had masked fraudulent activities. Lesson: Resistance to change can sometimes conceal deeper issues. It’s essential to investigate the root causes of resistance to ensure transparency and integrity. 3. Siemens AG’s Successful Transition to Real-Time Treasury Siemens AG undertook a significant transformation to implement real-time treasury operations. This shift required integrating various systems and processes to enable instantaneous data flow and decision-making. The transition was complex, involving technological upgrades and cultural shifts within the organization. Despite the challenges, Siemens successfully enhanced its liquidity management and operational efficiency. Lesson: Comprehensive planning, stakeholder engagement, and a clear vision are vital for successful large-scale transformations. Strategies to Overcome Resistance Conclusion Adopting new treasury technology is not just a technical endeavor but a human one. Recognizing and addressing resistance to change is crucial for successful implementation. By learning from real-world examples and proactively engaging stakeholders, organizations can navigate the complexities of transformation and unlock the full potential of modern treasury solutions. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Competence vs. Culture: What Really Drives Better Decisions in Risk Management?
This article is a contribution from one of our content partners, Avollone Competence eats culture for breakfast… Over the last few years, people have repeatedly cited culture as the big culprit behind various corporate scandals. After a scandal, new leadership quickly concludes that “the previous management and culture was the main reason behind XYZ, and now we are installing a brand new (and better) culture.” The argument that culture is the main root cause is easy to buy, and I think we have all heard the phrase “culture eats strategy for breakfast” too many times. But is it true? I am sure it’s true in some cases, but I dare to claim that in most cases, it’s a much more complex list of underlying reasons. Therefore, I urge executive teams to think more broadly when looking for root causes. Why? Because the only real value of identifying root causes is that it allows you to change things going forward and become more resilient. Other root causes to be considered: ➡️ IT infrastructure: Do we have an infrastructure that can give the right data at the right time? Are all of our customers and transactions being screened and monitored? ➡️ Resources: Do we have the right number of people to drive the desired risk management and compliance level, and can we retain them across all three lines of defense? Do we invest enough? ➡️ Competences: Do we have the right competencies at all levels of the organization? Are the people in critical positions across lines of defense competent enough to do their job? Do we do enough to educate the entire organization about current and future threats? How do we ensure that executive management and the board have the right competencies to understand the risk and make the right choices when allocating resources? Of all the above (including culture), lack of competence is the most important root cause. It is often the most ignored, lacking the most in organizations. I can’t prove this opinion with hard facts, so my rationale behind this thinking is purely based on experience (hard experience, I may add) and a somewhat optimistic assumption about my fellow beings. I assume that people around me will do the right thing. This means that most people you work with will avoid risks and non-compliance, especially avoiding doing something harmful or illegal. Therefore, disagreement is often due to a lack of understanding of the risk and its size more than bad culture. Lack of competence can be fixed by: ✅ Educating people. ✅ Bringing in external consultants. ✅ Hire people who have tried something similar before. The power of having people on the team who have seen a specific risk unfold in a comparable situation is priceless. The more competent the team, the more likely they will make the right choices, and the less of a factor culture is. You can easily find organizations with a healthy culture that make bad decisions simply because they lack a thorough understanding of the risks across all organizational layers. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
The Economics of Liquidity: Why CFOs Must Regularly Monitor and Coordinate with Their Treasurer
This article is a contribution from our content partner, Kyriba Economic factors influence corporate liquidity planning. Companies must remain vigilant to economic indicators and trends, adjusting their liquidity strategies to maintain financial flexibility and optimize resource use. By understanding and anticipating these economic impacts, firms can develop robust liquidity management practices that enhance their resilience and support long-term growth objectives. During economic growth, companies generally experience increased demand, higher revenues, and improved cash flows, allowing them to build up cash reserves and maintain healthier liquidity positions. Conversely, during economic downturns, firms may experience reduced sales, tighter profit margins, and cash flow constraints, necessitating more conservative liquidity management strategies. When navigating these challenges, it is essential to understand the key economic factors that influence liquidity planning, including examining interest rate fluctuations, access to credit markets, and the impact of market volatility. Economic Factors to Watch Interest Rate Fluctuations and Economic Cycles Interest rate fluctuations and economic cycles profoundly impact liquidity planning. Low interest rates encourage borrowing and investment, potentially reducing the need for large cash reserves, while high interest rates increase borrowing costs, making it more attractive to hold liquid assets. Changes in credit market conditions also affect liquidity strategies. For example, during credit crunches, companies may need higher cash reserves, whereas loose credit conditions allow for lower cash holdings. Market Volatility Increased market volatility often leads to more conservative liquidity management. Companies may increase cash reserves, diversify liquidity sources, and implement more frequent reviews of their liquidity positions. International Factors In today’s interconnected global economy, international factors are crucial in liquidity planning. Exchange rate fluctuations can impact the value of foreign cash holdings and international operations. Global trade policies, such as tariffs and trade agreements, can affect cash flows and liquidity needs. Additionally, geopolitical events may cause sudden shifts in market conditions, requiring robust liquidity buffers. Regulatory and Tax Changes Economic conditions often drive changes in regulatory frameworks, affecting liquidity planning. Financial regulations like Basel III have increased liquidity requirements for banks, indirectly affecting corporate credit access. Additionally, Changes in tax policies can impact cash flow and influence decisions on where to hold liquid assets. Structural Economic Changes Structural changes in the economy can have lasting effects on corporate liquidity planning. Technological advancements may alter business models and cash flow patterns. Demographic shifts can change consumer behavior and market dynamics. Additionally, environmental concerns may necessitate investments in sustainable technologies, affecting long-term liquidity needs. Looking Ahead Into 2025 Now is the time to ensure your liquidity plan is resilient against economic headwinds or tailwinds. The economic outlook for 2025 suggests moderate growth, with GDP forecasts ranging from 1.7% to 2.1% for the U.S. and around 3.2% globally. Inflation is expected to moderate, with core CPI projected to slow to 2.5% by year-end. The Federal Reserve may lower interest rates to 3.00-3.25%, supporting economic activity. The labor market is anticipated to remain stable, with unemployment around 4.0% and job gains at 120,000-130,000 per month. In the housing sector, single-family starts are expected to increase by 60,000 units, and multi-family starts are projected to reach 440,000 units annually. Despite these positive trends, this projection is subject to various factors such as inflation control, monetary policy adjustments, and global economic conditions. Companies should remain aware and adaptable to navigate these uncertainties, ensuring robust liquidity management in the year ahead. How Do You Manage? The answer lies in Liquidity Performance technology to enhance your financial strategy. The need for visibility into your organization’s entire liquidity ecosystem is more crucial than ever. This includes real-time visibility into cash positions, advanced analytics, and cash flow forecasting to optimize liquidity by analyzing upcoming inflows and outflows. Reliable and timely insights help manage working capital aspects like accounts payable (A/P) and accounts receivable (A/R), while informed risk positioning mitigates the impact of volatility. By integrating these technologies, companies can gain a competitive edge in times of uncertainty, ensuring they are well-prepared to meet financial challenges head-on. Read more from Kyriba Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Treasury Contrarian View: Real-Time Payments — Do We Really Need Them in Treasury?
Real-time payments (RTP) are being touted as the future of finance. Fintechs are building around them. Banks are promoting them. Regulators are encouraging them. But here’s the question treasury professionals need to ask: Are real-time payments really necessary—or even useful—for treasury operations, or are we chasing a trend that solves problems we don’t have? The Case for Real-Time Payments in Treasury The Case Against Real-Time Payments in Treasury A Practical View: Real-Time Where It Adds Value Rather than jumping on the RTP bandwagon for everything, treasury teams can: Let’s Discuss We’ll be gathering insights from treasury leaders and payments experts to hear where real-time fits—and where it doesn’t. Join the conversation and share your view! Comments Richardo Schuh, Treasury Masterminds board member, comments: I’ve seen firsthand how real-time payments have made a real difference—especially here in Brazil and across Latin America. Since the launch of PIX in 2020, treasury teams have gained a new level of speed and efficiency. The cost of an instant PIX transfer? A fraction of traditional methods (and way cheaper than some legacy wires that still feel like they’re being sent by carrier pigeon 🕊). From an operational perspective, instant payments have been a game changer, enabling order releases 24/7, improving cash flow agility, and solving edge cases (judicial or regulatory-related payments, for example) that used to be a nightmare under the old systems. Sure, not every treasury transaction needs to be real-time—but when speed does matter, having the rails makes all the difference. Let’s just say… we don’t miss the old banking hours. Royston Da Costa, Treasury Masterminds board member, comments: The role of real-time data in treasury decision-making Pros: 1. Better Risk Management Market Volatility: Real-time FX, interest rates, and commodity price data allow treasurers to react immediately to market fluctuations. Counterparty Risk: Continuous monitoring of counterparties’ credit ratings and financial health helps mitigate potential exposure. 2. Liquidity Optimization Cash Positioning: Instant visibility of global cash balances enables more efficient cash pooling, sweeping, and funding decisions. Intraday Liquidity Management: Banks charge based on intraday usage—real-time insights allow treasurers to optimize cash deployment. 3. Faster Decision-Making Automated Hedging: With real-time data, treasury teams can automate FX and interest rate hedging to lock in optimal rates. Dynamic Forecasting: Real-time cash flow and collections data improve the accuracy of short-term forecasts. 4. Fraud Prevention & Compliance Payment Monitoring: Real-time tracking of payments helps detect anomalies and prevent fraud. Regulatory Compliance: Many jurisdictions require real-time transaction reporting for transparency. 5. Cost Efficiency Optimized Borrowing & Investing: Real-time access to short-term borrowing rates or investment opportunities ensures the best return on idle cash. Reduced Operational Costs: Automated processes reduce manual interventions and errors. Cons: 1. Data Overload & Noise Too Much Information: Real-time data streams can create excessive noise, making it difficult to focus on critical risks. False Alarms: Frequent updates may lead to overreaction to minor fluctuations rather than strategic decision-making. 2. Integration & System Complexity Compatibility Issues: Legacy systems may not support real-time data processing, requiring costly upgrades. Multiple Data Sources: Consolidating real-time data from banks, trading platforms, and internal ERPs can be challenging. 3. Cost Considerations Infrastructure Costs: Maintaining real-time treasury requires investment in technology, connectivity, and cybersecurity. Transaction Fees: Some banks charge for real-time payment and liquidity updates, increasing costs. 4. Operational Challenges Resource Dependency: Continuous monitoring requires skilled personnel to interpret data and take swift action. System Downtime & Latency: Even a minor delay in data feeds can impact decision-making in volatile markets. 5. Behavioral & Strategic Risks Short-Term Focus: Real-time visibility might push treasurers toward short-term fixes rather than strategic risk mitigation. Alexander Ilkun, Treasury Masterminds board member, comments: My take on Instant Payment is that these are solving a problem that doesn’t exist in the Treasury space for the most part. There are some very specific circumstances where instant payments may be useful and that are not connected to operational efficiency within Treasury – for example, M&A transactions. In these circumstances urgency is substantiated and is valid. However, so many of the other circumstances are either outside of the Treasury’s domain or are related to operational inefficiencies. A few examples. Treasury doesn’t play a part in vendor relationships for the most part – that is something Procurement and AP teams should handle and make sure the invoices are paid as they are due, not earlier, not later. If, as a Treasury Cash Manager, you’re about to miss your settlement, be it interest payment, principal, derivative, or spot settlement, you rarely find out about this kind of a transaction at the last minute. The list can go on, but the key consideration is that all of these occasions are known and should be planned for so as not to occur at the last minute. If they do, the process needs to be improved. Another nail in the coffin of instant payments would be their cost. Are Treasurers really prepared to pay the premium for the privilege of making an instant payment? I doubt so – when we can, we will select the most cost-efficient method of making a payment. The increased costs can come from multiple sources. One could be setting up and maintaining the infrastructure to make it all work. Another could be the increased costs of liquidity management by the banks that need to balance their books – with instant payment it becomes a more difficult task, so it’s not unreasonable to expect the bank to pass the bill. What Treasurers really need is clarity and transparency of cut-off times for making payments as well as certainty that when the payment is sent, it will actually arrive. On cutoffs, there is currently a spaghetti of times, depending on the bank, branch, currency, and method of delivery of instructions that may or may not be visible even on the bank portal, not to mention the other systems – ERP or TMS – that the payments can originate from. Payment confirmations could also be improved. Receiving ACKs means that the bank received…
The Role of Treasury: From Operational to Strategic Leadership
The role of treasury has transformed dramatically. Treasurers have emerged as strategic leaders, pivotal in steering the strategic direction of their organizations. In this article, I’d like to touch base on a few of the critical aspects of strategic treasury leadership and stakeholder management, offering a few insights into how treasurers can cope with their expanded roles. Strategic Treasury Vision and Roadmap I firmly believe that a compelling vision is the cornerstone of any successful treasury team. It aligns the team’s efforts with the broader business strategy, ensuring a unified pursuit of common goals. Developing a strategic vision involves a deep understanding of the current operating model, active engagement with team members, and a clear definition of long-term business and human priorities. This vision must be translated into a detailed roadmap, outlining key initiatives, required resources, and timelines for achieving the desired outcomes. Creating a strategic vision is an ongoing process, necessitating regular reviews and updates to remain relevant amidst changing market conditions and business needs. Engaging the team in this process fosters a sense of ownership and commitment, enhancing the likelihood of successful implementation. It is therefore advisable to involve all team members in building this vision together, for better engagement. Building Relationships Effective relationship management is at the heart of successful treasury leadership. Treasurers must cultivate strong relationships with internal and external stakeholders, including colleagues, management, and business partners. This involves regular communication, active listening, and a genuine interest in the professional and personal well-being of team members. Building trust with stakeholders ensures better collaboration and support for treasury initiatives. Treasurers should strive to comprehend the needs and concerns of their stakeholders and work collaboratively to address them. This might involve regular meetings, informal catch-ups, and participation in cross-functional projects. By being approachable and responsive, treasurers can build a network of allies who support their initiatives and help drive the treasury function forward. It can be daunting sometimes, with this feeling of being in endless meetings constantly. Whenever you have that feeling, remember that it is part of the job: being present (actively, not multi-tasking on your phone or answering Emails on your computer) and listening to others, being in that moment, is a big part of a treasurer’s assignments. This is maybe why sometimes, you have this impression of never stopping for a minute during the day, while you come back home wondering what you actually achieved. You achieved more than you think! Mastering Change Management in Treasury Change is an inevitable aspect of any organization, and treasurers must be adept at managing it. Successful change management involves clear communication, stakeholder involvement, and addressing the human aspects of change. Treasurers should focus on the three main phases of change management: ending the old era, navigating the transition phase, and establishing the new era. By acknowledging the challenges and providing support, treasurers can facilitate smoother transitions and ensure the successful implementation of new processes and systems. Make sure you understand the feeling of the people who have to say goodbye to their current operating model. It can be hard for them and whoever is in charge of a change management phase must ensure it is being discussed openly with them. They must see that you are aware of that and of the current model, of what they are letting go. Change management is not just about implementing new systems or processes; it’s about managing the impact of these changes on people. Treasurers should be empathetic and supportive, helping their teams navigate the uncertainty and stress that often accompany change. This might involve providing training, offering reassurance, and being available to answer questions and address concerns. If you find that you are repeating yourself a lot, it is normal! Continuous Evaluation Treasury teams must continuously evaluate their processes and seek innovative solutions to stay ahead. This involves leveraging technology, exploring new tools and systems, and fostering a culture of continuous improvement. By staying proactive and open to change, treasurers can drive efficiency, enhance decision-making, and contribute to the overall growth and success of the organization. Innovation in treasury is not just about adopting the latest technology; it’s about finding new ways to add value to the business. This might involve automating routine tasks to free up time for more strategic activities, using data analytics to gain insights into cash flow and risk, or exploring new financial instruments to optimize liquidity and manage risk. Treasurers should be curious and forward-thinking, always looking for opportunities to improve and innovate. In short, strategic treasury leadership and stakeholder management are critical components of modern treasury functions. By developing a clear vision, building strong relationships, effectively managing change, and continuously seeking innovation, treasurers can elevate their roles and make significant contributions to their organizations. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Benjamin Defays
Do You Have a Right to a Bank Account? Here’s How It Works for Individuals and Businesses
Opening a bank account is essential — whether you’re an individual managing day-to-day life or a business trying to operate and grow. But is it actually a legal right to get a bank account? And what happens if a bank says “no”? Let’s break it down — covering individuals and businesses and what the rules look like in the EU, UK, and US. For Individuals: A Basic Right in the EU (But with Limits) In the European Union, individuals have a legal right to open a basic payment account, thanks to the EU Payment Accounts Directive (2014/92/EU). What Is a Basic Payment Account? A no-frills bank account that lets you: There’s no credit or overdraft, and some limits may apply. Who Can Get One? You qualify if you: You can apply even if you: Why Can Banks Refuse You? Only for specific reasons: The bank must give a written explanation for the refusal, and you have the right to complain. What to Do If You’re Refused in the EU EU Country Examples 🇫🇷 France 🇩🇪 Germany 🇳🇱 Netherlands 🇮🇹 Italy 🇬🇧 UK Perspective (Individuals) In the UK, you don’t have a “right” to a bank account, but banks must offer a “basic bank account” if: Banks can still refuse you if you don’t meet ID requirements. 🇺🇸 US Perspective (Individuals) There is no federal law requiring banks to open accounts for individuals. Banks can refuse based on: Some states encourage access, but there is no guaranteed right to a bank account. For Businesses: No Guaranteed Right Anywhere Unlike individuals, businesses do not have a legal right to a bank account in the EU, UK, or US. Banks Can Refuse Without Explaining Why Banks are free to decline a business account based on: They are not required to justify the refusal in most cases — especially for corporate clients. What Can Businesses Do? Prepare a complete application: Choose the right bank: Try alternatives: EU Country Hints for Businesses 🇬🇧 UK & 🇺🇸 US: Also No Legal Right for Businesses In both the UK and US: Final Word If you’re struggling to get an account — either as a person or a business — there are routes, remedies, and alternatives. Just knowing your rights can be half the battle. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.