In a volatile global operating environment, characterized by a varying interest-rate setting, optimizing liquidity management has become more important than ever for multinational companies. Global businesses need visibility over idle balances, as well as the tools to access these resources so they can be used for internal funding and to optimize the cost of capital. Treasuries are also playing a more strategic role, helping to enable new business models, such as subscription-based services, direct-to-consumer offerings or third-party money (3PM) solutions.
These competing pressures require a global treasury system that provides visibility over cash resources and supports real-time reporting and decision-making.
Read on for a look at J.P. Morgan’s unique approach to designing centralized, global liquidity solutions. We take an engineering mindset, which enables us to combine state-of-the-art capabilities into a connected, interoperable solution that is fine-tuned for each client’s exact needs.
We partnered with J.P. Morgan to provide us with a global Pay On Behalf solution in order to not only improve centralization of disbursement, but to also reduce costs by paying suppliers using local accounts and local clearing systems. This final structure has not only significantly reduced bank fees, but also improved our daily cash management.
Our process has five main elements:
At the heart of our approach is close and ongoing dialogue with our clients, so we can identify their entire spectrum of needs and benefits, as well as potential future enhancements. Each client has unique requirements, so we reject a “one-size-fits-all” approach. Instead, we focus on aligning our products to each specific business organization.
We also utilize expertise and knowledge from across our global franchise to enhance the solution. This could involve coordinating with FX specialists to design strategies for different currencies in a notional pool. Or it may require using our geographic expertise to understand local nuances and regulations, something we call “local in practice, global in reach.”
Ensuring our products fit the specific requirements of each client takes precision engineering. For example, there are a variety of ways to design cash concentration structures. We will engineer a pool that precisely serves each client’s global corporate and balance sheet structure.
It is also vital that different products connect with each other to create, a seamless, interoperable solution. For instance, we may connect regional pools together to ensure group liquidity flows, with certain parameters being automated to ensure maximum efficiency and centralized control.
Operational needs can change quickly, and we aim to ensure that our solutions will grow in-line with our clients’ business expansion plans and provide sustainable value over the long term. This also includes scaling across geographies. A solution we build for a company focused on Europe, can be designed so that it can support their expansion plans in Asia, North America or Latin America.
J.P. Morgan takes a distinctive approach to the design of liquidity solutions. We have global specialist solutions teams that can engineer a suite of products that are aligned to each client’s unique account structures, geographic footprint and ideal cashflow movement.
Treasury optimization is a journey. Take the first steps here.
Goodyear achieved millions in cost savings per year given the potent combination of solutions that includes cross-border, multicurrency, multi-entity, fully automated notional pooling, cash concentration and just-in-time funding mechanisms.
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