The 2013 guide to Liquidity Management: ABN Amro – Insight and control are essential
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The 2013 guide to Liquidity Management: ABN Amro – Insight and control are essential

In an economic climate that remains challenging, insight and control over cash management are more important than ever. ABN Amro offers its clients cash pooling solutions that enable them to manage their cash positions in one system, real time, with clear insight and complete control at all times.

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Erica Kostelijk is head of the department Working Capital Commercial & Merchant Banking, part of Marketing & Products. She is responsible for product management of payments, cash, cards, liquidity management (cash pooling and corporate savings) and documentary credits for ABN AMRO’s commercial clients. She is also a member of the supervisory board of Equens SA.

After her graduation from the Amsterdam Academy for Banking & Finance, Erica Kostelijk joined ABN AMRO as a trainee in 1993. During her career, she worked in various disciplines in the bank, such as correspondent banking, markets, risk and talent management.  Since 2007 she has been active in the payments area.
Matthijs Visser is product manager liquidity management, at ABN AMRO Commercial & Merchant Banking.  He is responsible for cash pooling products for ABN AMRO’s wholesale clients. Visser graduated from the Hotelschool in The Hague in marketing and finance. After his graduation in 2005 he started as a trainee at ABN AMRO. During the takeover Visser worked in a transition group divesting various parts of ABN AMRO’s commercial activities to Deutsche Bank and returned to ABN AMRO two years later.
The 2013 guide to Liquidity Management

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Drivers of change Erica Kostelijk, head of working capital at ABN AMRO, sees three important drivers that have an impact on the way corporations manage their cash flows.

The first is the economic climate. “As economic conditions remain challenging, our clients increasingly want to have a clear insight into their working capital conditions and liquidity,” Kostelijk says. Businesses wish to reduce their reliance on credit facilities, she adds, as liquidity in the market has become scarce. At the same time, by reducing their cash cycles, they can deploy their available cash more efficiently and enhance the yield on their cash positions. “This requires insight and control over corporate cash flows. Forecasting has gained significance for corporate treasurers.”

Secondly, she says, “technology is booming and innovations are more readily available than ever, enabling real-time insight into cash positions at any time and in any place.” Corporations can gain advantage from these technological innovations which allow, among other things, for even more accurate forecasting. “We are pleased we can now offer our clients cash pooling solutions which are based on the newest technologies and which we have developed in-house. This is a step forward and it enables our clients to gain full control and optimize their cash flow,” Kostelijk says.

Thirdly, evolving regulation drives change. “Basel III will change liquidity management as banks are required to maintain strong liquidity buffers. Thus, banks will start to provide more incentives to hold on to operating account balances from their clients. Making it more attractive for corporations to keep operating cash at the bank for a longer period of time will result in higher yields,” Kostelijk says.

In addition, Kostelijk says the introduction of the Single European Payment Area (SEPA) puts a burden on corporations in terms of resources and costs of implementation. “But it will also lead to standardized payments and collections in Europe, offering a level playing field for financial institutions and corporates, more transparency in products and conditions, while increased competition will bring more innovation. SEPA will ease transactions, which allows for more efficient cash management solutions.”

Changing needs

Kostelijk notes that the role of the corporate treasurer has changed in recent years. “The responsibilities of the treasurer have expanded and added weight. The scope may now, for example, also include procurement or inventory planning. This illustrates cash management has become more of a priority for corporations.” Kostelijk stresses that efficient use of the available cash to reduce dependence on external funding is here to stay.

Although the demand for flexible cash management has increased as a result of the economic downturn, Kostelijk says it will remain a focus area for companies. “Regardless of economic developments, companies will continue to aim to reduce their reliance on credit facilities. Treasurers will aim for accurate insight and control over their cash positions, anywhere and anytime, at their convenience.”

Cash pooling

As part of its international services, ABN AMRO offers its clients both physical and notional cash pooling solutions. International servicing is a strategic priority for ABN AMRO as corporations are increasingly internationally active. Being able to service its clients across borders is important for ABN AMRO as it is a global player in certain niche areas.

To meet the needs of its clients, ABN AMRO developed a new cash pooling system. “In the majority of cash pooling systems, it is only possible to sweep between the various accounts at a fixed time or a limited number of times a day, whereas we offer our clients the flexibility to sweep intraday,” Kostelijk says.

Kostelijk adds that intraday sweeping or target balancing offers companies the possibility to deploy their available cash much more efficiently. “Also, clients are able to centralize cash that is spread over multiple banks into one position.”

Effective cash management also requires access to a cash management platform that gives clients timely and accurate information on all cash positions, preferably on a real-time basis. This allows full insight and control over cash flows and offers the flexibility to make changes if required for payment or collection adjustments.

Matthijs Visser, product manager liquidity products at ABN AMRO, states that clients are increasingly demanding real-time insight into their cash positions, and wish to be able to adjust positions at a moment’s notice. “There is a growing emphasis on accurate, real-time cash forecasting and in-depth reporting, allowing corporate treasurers to gain more insight and control over their working capital,” Kostelijk adds.


ABN AMRO’s clients will be able to use the interactive portal for cash pooling, which gives them even more direct control, flexibility and insight. Visser says: “Businesses will be able to structure the pool themselves in terms of timing, targets, number of sweeps per day, intraday, end of day, single bank or multi bank. The different techniques allow clients to benefit from their own cash, reducing financing needs while optimizing returns.”

With the Inter Company Loan Administration, all intercompany loans resulting from the sweeps are automatically tracked and reported. It is possible to configure interest rates in several manners and to calculate withholding tax per entity. ABN AMRO’s cash pooling solutions offer clients a flexible way to have complete visibility of, access to and control over their global cash positions.

Visser explains flexibility for clients is possible because the entire cash pooling system was developed in-house. This allows the bank to act quickly and to implement timely changes, to be able to meet the client’s changing needs at short notice. The client can be served faster in its changing needs.

How it works in real life, two cases

Visser illustrates the solutions with an example of a client who runs petrol stations across the Benelux and needs to settle a central oil invoice daily at 2pm. “Just before two o’clock, all revenues from the local accounts are swept to the central account. This enables the company to meet its payment deadline without having to rely on a credit facility. At the same time, it offers the company insight into all transactions until two o’clock, as opposed to an end-of-day statement following the next day. This allows the company to optimize its working capital,” Visser says. “Our client requires real-time insight and control, up to the minute, therefore this solution perfectly meets his need.”

Visser points out another example of a client with subsidiaries across Europe. “Some subsidiaries relied heavily on local financing for working capital purposes. By making use of ABN AMRO’s cash pooling solutions, we were able to restructure the credit facility and centralize it in the Netherlands. The excess cash of the subsidiaries was swept to the holding company by the end of the day to reduce overnight usage of the credit facility. At one o’clock in the morning, by using the return sweep, fixed and variable amounts are swept back to the subsidiaries across Europe. This way, the subsidiaries reduced their reliance on local credit facilities for their working capital needs. Instead, this way of cash pooling allows them to leverage on internal financing. This is a useful solution for our clients, as it reduces their borrowing costs and optimizes their working capital.”

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