Staying Afloat: External Forces Impacting Corporate Liquidity Management

by Patricia Hines, March 31, 2016
Industry Trends
Global

Abstract

The third in a series of reports commissioned by HSBC and written by Celent examines the external forces impacting corporate liquidity management and why effective liquidity management is critical for companies to “stay afloat” in these turbulent times.

Simply put, the goal of liquidity management is to align sources and uses of funds across operating entities, maximizing returns on excess cash while reducing reliance on external funding. Historically a placid section of corporate treasury, liquidity management has recently begun to assume increasing importance as a result of external forces.

The report examines four key external forces impacting liquidity management:

  • Regulatory environment.
  • Economic influences.
  • Industry initiatives.
  • Technology evolution.

The most significant external factor is regulation, with Basel III changing the way banks structure their balance sheets and the relationship between business customers and their banking partners.

“Optimizing corporate treasury management demands a robust and efficient liquidity management and investment approach,” says Patricia Hines, a senior analyst with Celent’s Banking practice and author of the report. “But with external forces causing substantive and permanent shifts in available options, corporations need to have the technology infrastructure in place to manage their liquidity and investments with tighter risk governance.”

This 24-page report contains 8 figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction to Liquidity Management

3

Staying Afloat in Turbulent Times

7

Forces Increasing Volatility and Complexity

9

 

Regulatory Environment

10

 

Economic Influences

12

 

Industry Initiatives

13

 

Technology Evolution

15

Calming the Waters

17

 

Enhancing Visibility

17

 

Collaborating with Banking Partners

18

 

Continuous Improvement

19

The Path Forward

20

Appendix: Liquidity Management Techniques and Tools

22

About Our Research

24

 

Using Seasoned Professionals

24

 

An Unparalleled Network

24

 

Robust Research Methodology and Independence

24

Related Celent Research

25

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