Continued low interest rates, a build-up of excess cash that companies cannot easily re-invest in expanding production – but that they don’t want to re-distribute to shareholders – and regulatory pressures have forced change in how treasurers manage liquidity.
What started as adapting to extraordinary market conditions at a point in the cycle now begins to look more like a long-term and secular change in approach.
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| Natalie Cross, Invesco |
Natalie Cross, client portfolio manager at Invesco, says: “The persistence of low returns has meant that treasury teams now need to think more broadly about their cash investments.
"The buffer of much higher yields from pure cash holdings that we had before the financial crisis has long gone and treasurers now need to think more about cash-flow forecasting and how that might help them identify pockets of surplus cash that can be put to better use.”
Once this cash has been identified, treasury teams need to find where they can place funds, but still have access to them.
Jim Fuell, head of global liquidity sales, international, at JPMorgan Asset Management, says: “Corporates want to have access to their money when they need it.