Cash management poll 2001: Top two dominate as treasurers vote on best providers

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Monitoring thousands of accounts payable and receivable flowing daily through myriad bank accounts, while minimizing short-term borrowing costs and maximizing returns on investment of liquidity, is a huge challenge for corporate treasurers. They value highly banks that do this well. But Euromoney's poll shows few banks excel.

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Corporate treasurers are beginning to worry about how few banks are capable of providing a decent and reliable international cash management service. Euromoney's first annual poll of corporate users of cash management services drew detailed responses from treasurers at 129 international companies spread across 44 countries.

The results are alarming. Just two banks - Citibank and Deutsche Bank - clearly emerge as the leading providers, with HSBC, ABN Amro and JPMorgan comprising a chasing pack trailing some way behind. Our poll includes a review of the capabilities of these five leading banks in 30 key sub-sectors of cash management.

Treasurers of multinational companies are presented with a limited choice of lead banks capable of providing a global service in a core aspect of corporate treasury.

And the choice is unlikely to expand. The leading banks have invested huge amounts in the core technology supporting their cash management businesses and in devising new products and internet delivery as well as providing customer support. Corporate customers are grateful for this, though some complain that the quality of service does not always seem to reflect this heavy investment.

Even some of the world's largest banks may soon find themselves unable to maintain the high level of investment required to stay at the cutting edge in international cash management. Many will now begin to admit the limits of their geographic coverage and product expertise. Increasingly these banks talk of leading partnership teams of providers, including technology firms and even secure delivery groups, to build a solution for multinational corporations.

Those smaller banks which seek to earn a return from providing cash management at a purely country level, are, treasurers complain, now providing at best a variable - for which read often disappointing - level of service.

All this comes at a time of reduced availability of bank credit and capital markets funding for many companies. It's all the more vital that cash resources should be well husbanded, and payments and receivables processed efficiently so as to cut short-term funding costs.

In addition, corporates need to improve the monitoring and reporting of the cashflows inside their underlying businesses, partly to meet reporting requirements, also to pave the way for securitization of certain classes of receivables. More and more corporates are looking to securitization as a source of working capital as banks reduce their lending commitments during an economic downturn. Strong cash management is a prerequisite for such securitization.

Euromoney's poll suggests that large numbers of companies - up to a third - will seek to review and possibly change cash management providers every one to two years.

While the main criterion for choosing domestic cash management banks is price, treasurers place a high value on their international cash management providers' ability to devise innovative payment and collection products, to back these up with strong customer support, provide them over a global network and show strong expertise in technology, including internet technology.

Such factors outweigh banks' relationships with the company in other areas, such as credit provision. As recession bites and banks reduce their investment budgets, treasurers' choices may reduce even further.