Lack of visibility into corporate cash held outside of a home region can be frustrating for global treasurers. This situation generally leads to three main challenges:

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  Inaccurate or late reporting

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  Significant obstacles to liquidity management

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  Difficulty in accurately forecasting an enterprise cash position.

Solving for any of these problems would increase your treasury’s efficiency and effectiveness. But we think the dilemma that many global treasury teams face is that none of these challenges can be addressed in isolation. It’s like a treasure chest that can only be opened with three keys turning at once. For example, improving enterprise cash forecasting is difficult when reporting from overseas accounts is not accurate.

Properly addressing this three-body problem requires a three-pronged solution, providing timely and accurate information on overseas accounts, multicurrency management, and cash forecasting capabilities on your North American banking platform.

Companies in the U.S. and Canada with operations overseas often rely on operating accounts with local banks. As such, a North American-based global controller will work with local contacts across the globe to provide reports, typically via email, of their account activity and cash position.

The process is inefficient and prone to human error.

For instance, there could be delays in receiving information. Also, different countries use different formats to present account data, adding time and complexity to the process as the global controller must convert the various currencies and standardize the format of the information.

Furthermore, the delays inherent in relying on third parties can result in lost opportunities for utilizing excess cash.

Global treasurers often lack immediate access to cash held abroad. Not only does this pose obstacles to liquidity management, it also increases the risk of making uninformed decisions. Too often, we’ve seen companies tap a line of credit simply because they’re unaware of how much cash they’re holding abroad.

We recently worked with a Florida-based company with 50 international bank accounts spread across 12 banks with cash holdings in nearly as many currencies. By consolidating its bank reporting under one platform, we helped the company automate and improve its cash forecasting capabilities, enabling the global treasurer to make smarter borrowing and investment decisions. The transition also helped significantly reduce the company’s interest expense and maximize its return on cash while safeguarding cash held in U.S.-domiciled accounts.

We continue to hear from our clients about these challenges and address the issues with a solution that incorporates all company accounts across the globe into a North American-based treasury platform. Using a so-called “three-legged-stool” approach to global cash reporting, treasurers have the visibility they need to manage their overseas cash holdings.

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  Leg 1: a data exchange account. This provides timely and accurate information on accounts across the globe on a company’s North American online banking platform, where treasurers can access previous-day balances and transaction details. Also, direct and automated access reduces reliance on local contacts.

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  Leg 2: multicurrency accounts (MCAs). This improves liquidity management by providing more control over your global cash positions. Treasurers can hold international currencies in North American-domiciled accounts, reducing their foreign exchange risk while providing an extra layer of security. Treasurers can also move funds via wire, SWIFT or online banking.

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  Leg 3: global cash flow forecasting. With global accounts sorted by currency and reported alongside domestic accounts, global treasurers can make more informed decisions thanks to the ability to visualize historical and future balances and transactions. Because scheduled transactions are imported automatically, treasurers can create daily reports as well as weekly, monthly and annual forecasts, eliminating the need to wait for local contacts to send account information. Improved forecasting ability also means treasurers can conduct scenario planning to predict future cash flow needs.

Although some companies may consider the challenges of global cash management as a part of doing business, that doesn’t have to be the case. Many banks will provide one leg of the stool, some offer two. But we believe global treasurers need all three legs for the timely and accurate information needed to make better decisions about their global cash holdings. Problem solved.