The 2013 guide to Liquidity Management: Creating a global multi-currency notional pool
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The 2013 guide to Liquidity Management: Creating a global multi-currency notional pool

A leading international healthcare, medical assistance and security services company, working with Bank of America Merrill Lynch, faced a set of challenges familiar to many global companies. It had limited, unsophisticated liquidity management techniques – employed in-country – that were not linked to a liquidity management structure. Entities in each country built up or used cash in their local currencies and did not settle inter-company receivables on a timely basis. Moreover, the company had growing inter-company receivables denominated in various currencies, which exacerbated foreign exchange exposure and were not being effectively managed. Overall, the company had limited visibility of its cash positioning. Bank of America Merrill Lynch proposed the creation of a global multi-currency notional cash pool in Singapore, covering eight currencies. The pool automates data integration for cash reporting and consolidation. Implementation was achieved with minimal disruption to ongoing business activities. As a result of the project, the company has consolidated multiple currencies to achieve a net notional position in a single currency without the need to perform traditional foreign exchanges or swaps. It now benefits from intra-day monitoring of its net pool position using a current day reporting tool. In addition, the corporate has maximized its internal cash flow from overseas entities to its Singapore head office, minimized its foreign exchange risk exposure and reduced its borrowing costs in a tax-effective manner.

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