Responding to demands to optimize cash

The pandemic amplified the need for strategic cash and liquidity management. It’s no surprise to see cash management remaining first priority for treasurers, yet it’s also a top priority for CFOs, confirming that the broader business (not just treasury) is dialed in on the value of strategic cash management. We expect the focus on cash optimization and working capital to remain. Treasurers can lead the way by expanding their treasury lens beyond cash management to becoming true stewards of cash flow for their companies.

This can result in changes to specific processes related to cash, liquidity and working capital as well as extending automation and/or controls throughout the cash management process. A rebalancing of relationships for banking services is also on the agenda, the findings show.

Implications: Delivering advanced cash management techniques will require collaboration with the broader enterprise

Respondents in larger corporations (annual revenue over $5 billion) are continuing to utilize more advanced cash and liquidity management solutions such as in-house banks (IHB), payment and collection on behalf of models (POBO/COBO), purchasing cards (P-cards), payment factories, and virtual accounts. In general, these solutions can allow treasury to support centralization, embed process efficiency and thus gain more control over cash and working capital management activities, as well as more efficiencies in performing reconciliations.

Top cash and banking initiatives in practice

Q: Which of the following initiatives are you already using for banking and cash management operations? Select all that apply.

In-house banking
Payment factor
Real-time payments
On-line payments (WeChat, Alipay, PayPal)
Virtual accounts for reconciliation

Source: PwC Global Treasury Survey, August 16, 2021: Base 243

Most respondents (65%) say they’ve considered bank rationalization in the past three years — highlighting the pressure and steep competition on banks to secure market share. They’re also increasing the frequency of relationship reviews. In our 2019 survey, 47% said they reviewed their banking relationships on an ad hoc basis. This year, just 32% say the same, while 39% say they review relationships annually, a rise from 30% in 2019.

Bank rationalization and advanced liquidity techniques offer treasurers more options to streamline cash management processes. Such improvements have the potential to not only improve the treasury team’s experience, but the customer experience as well through the easier facilitation of payments.

Five priorities for corporate treasury

Delivering on the promise of business partnering

Expect the on-the-spot relationships developed during the crisis to continue and significantly expand as companies focus more on cash flow optimization and those in business development, capital management, operations, finance, tax and other functions tackle new challenges.

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Raising digital acumen to accelerate technology adoption

The cloud foundation required to make greater use of automation and artificial intelligence (AI) — and deliver on treasury-on-demand real-time service — is taking shape. Simultaneously, the required skills and capabilities are changing, and the focus on cyber risk is at an all-time high.

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Supporting business leaders driving ESG

Environment, social and governance (ESG) matters are affecting lending, investments, supply chain finance programs and other areas that go well beyond reporting.

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Responding to demands to optimize cash

Reducing the number of bank relationships and bank accounts — including through advanced liquidity management techniques, such as in-house banking, and on behalf of structures — is a part of an overall streamlining agenda to strategically optimize cash and improve the customer experience.

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Sharpening the focus on financial risk

Risks stemming specifically from LIBOR transitions are on the radar as well as in foreign exchange (FX) management as a result of business disruptions and pressure on margins.

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About the survey

PwC’s 2021 Global Treasury Survey report reflects the views of 340 treasury department respondents contacted by the PwC global network from February through May 2021. The respondents are based in over 30 countries, across 22 industries and in companies with median annual revenue of $4 billion. The report also relies on insights from our global team of treasury function experts. 

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Eric  Cohen

Eric Cohen

Principal, Financial & Treasury Management, PwC US

Tel: (646) 246-7744

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