Creating Advantage through Financial Excellence

Organisations can improve their bottom line, improve internal controls, and optimise management information through Financial Excellence.

Banks now want to earn more income from clients, whilst making less capital available for them. Despite accommodative central bank policies and historically low interest rates, the provision of bank funding is for organisations becoming increasingly scarcer. It has become very important for organisations to manage their own balance sheet, so that alternative funding resources can be made available.

The sovereign debt crisis has forced banks to increase charges on the services they offer. Credit charges, liquidity charges, trading charges, funding charges, Basel III costs and costs for the implementation of EMIR, to mention just a few, has made OTC derivatives considerably more expensive. This has increased the cost of hedging risk and thus also the cost price of your products. Some organisations now argue that, because of these increased costs, they do not want to manage their financial (non-core) risks anymore. This will undoubtedly bring them in trouble sooner or later. Implementing Financial Excellence means you are creating an alternative to effectively eliminate non-core risks efficiently without being forced to pay for these charges.

If you are able to retrieve bank funding, you will experience high credit charges making bank funding expensive. In these cases, banks more often also require ancillary business in return for funding. The profitable margin banks are making on this ancillary business is high also because banks require much higher returns because of Basel III. Apparently, banks prefer to make the profits on the ancillary business rather than claiming an even higher interest rate for the funding. The net result for the customer is that the cost of funding has become expensive. Financial Excellence means that you bring the availability and the cost of capital back under control by, amongst others, creating alternatives for bank funding.

Banks are now in the cross selling mode, which brings them high profits. Cash Management has become an ancillary business that is traded off with banks in return for funding. The result for clients is that they are forced to maintain bank accounts with various banks (the funding suppliers), who do not necessarily have the perfect matched cash management infrastructure for the client. As a result “idle cash” is increasing at the client’s end. This bring banks free liquidity on bank accounts that is not pooled (credit interest rates are virtually at zero per cent). We have seen examples of corporates that have to pay high interest rates to borrow their own “idle cash”. Implementing Financial Excellence means that you are creating a bank independent infrastructure to manage these situations and to fully eliminate “idle cash” so that your funding needs are minimised.

Treasury Services is in the business to improve the bottom line of its clients by cutting their costs and by improving their efficiency in finance. We solve issues like the ones raised above for our clients.