Public & Private Treasuries
We are quite often asked what the difference is between a Corporate Client and a Private Treasury Client? The short and simple answer is that a Public Corporate Client has Governmental registered financial instruments, values and retail needs while a Private Wholesale Treasury Client has private instruments, values and non-government needs that are carefully handled in their central internal accounting systems. A good example of this is a private ‘internal currency asset’ like that of the major Credit Card companies.
Our very first private Treasury client in 2016 was a wholesale client who’s Trust company required a transfer agent to accommodate their expansive asset securitization needs. Ask your trusted business parter how they can introduce you to us. Our qualified and trusted Treasury Clients can use our services to administrate private instruments, tokens and other complimentary alternative private transactions.
In 2017, 50% of Treasurers were focusing on managing liquidity
Don’t worry, you are not alone, the role and responsibilities of the corporate treasurer has been growing fast since 2008. It is no wonder that all banks are struggling to meet the diverse needs of Treasurers. As corporations scale faster than ever into an international marketplace, TREASURY EXCHANGE LIMITED® is solving these problems by combining direct connection to banks abroad with robust reporting of transactions so as to simplify and speed up your real-time reporting needs.
In light of the competitive environment, it’s good to know that TREASURY EXCHANGE LIMITED® knows not only what corporate treasurers need, but will also work with them to address further ideas and problems in these key focus areas.
Treasurers face operation issues in four key areas:
The role of the corporate treasurer, and the banking services they need to meet their responsibilities, have grown to need services for 1, cash and liquidity management, 2, forecasting and analytics, 3, risk and compliance, and 4, cost and operational efficiency which are all major bottle necks of operation that is holding back corporate Treasurers today.
- Treasury cash and liquidity management. As it stands now, only 13% of multi-national corporates can monitor their cash position in real-time. Corporate treasurers cite the lack of real-time data and reliance on manual processes as the biggest challenges they face today. Under bank regulations like Basel III that are more stringent than ever, treasurers rank timely data on their liquidity as “mission-critical.” Real-time payment schemes and improved domestic payment infrastructure can offer quicker settlement and more transparency. Additionally, cross-border payment activity is the central factor in this issue. This complicates the problem of liquidity management with foreign exchange and exotic payment corridors; a known pain point for global banks. A lack of interoperability across platforms makes monitoring balances across multiple providers nearly impossible. Legislation like PSD2 that pushes banks to allow for the development of open APIs will likely help solve this problem, but additional support for this area of corporate treasury may come from banks or from fintech challengers.
- Treasury forecasting and analytics. Real-time forecasting data was the most coveted service enhancement for 39% of corporates in this survey. Better data analytics could enable more accurate cash forecasting, according to corporate treasurers. The aforementioned real-time view of cash held in all accounts and interoperability of both transactions and data would allow for more precise scenario-based forecasting. Corporate treasurers in larger firms often manage a large number of banking relationships, in addition to other financial service institutions. Simplifying the way corporates view their trade flows, receivables, future liquidity, and credit needs is the most commonly repeated request in this report.
- Treasury risk and compliance. Managing FX risk is a primary challenge for 25% of corporates. As in every other job in finance, corporate treasurers face significant challenges in risk mitigation, as well as compliance and reporting. Most of the corporate treasurers surveyed identified risk as a particular operational challenge, as well as an expense. The report focuses this section in particular on FX risk for multinational corporates, for whom cross-border payments are a continual pain point. Banks stand to lose out on fee income as non-bank providers move in to offer improved services.
- Treasury cost and operational efficiency. 39% of corporates with $10B or more in assets still suffer from manual intervention in key workflows. The treasurer’s classic operational objective of managing cost and and maximizing operational efficiency is also the one most dogged by manual processing and antiquated infrastructure that leaves gaps in the digital services available from banks. Nearly 30% of respondents listed this as their biggest single operational challenge, noting that the problem is exacerbated in any process with multiple stakeholders.
Cross-border activity is the central factor underpinning this
The majority of all large corporates have a core of cross-border activity in their business, which also shapes the requirements placed on treasury teams. In turn, this has a critical impact on the cash and liquidity services that each corporate needs from its bank and financial institution partners. The need and use of trade services, local market support and advice, foreign exchange and financing are all influenced by the degree of trade, the manner of payment and the corridors involved.
There are also important differences at the industry level, which highlight the need for banks to consider vertically aligned product and service sets to match the specific dynamics of individual business types. Across all corporates, 25% receive over half their revenue from exporting goods and services, with 13% generating more than three quarters of their income from trade.
Due to the nature of the software industry in particular, technology businesses tend to rely most heavily on exports, with 56% receiving more than a quarter of their revenue this way (the majority through open account trading). Automotive and manufacturing, and pharmaceuticals are the most concentrated though, with 18% and 17% respectively seeing exports account for more than three quarters of their revenue.
Exports account for a significant share of revenues managed by Corporate Treasurers,
particularly in the technology and food & drink industries.