Cash & Liquidity Management

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Bringing Foreign Currency Closer to Home Where next for FX? The global cross-currency platform, FX4Cash, is providing a number of effective ideas for corporates the world over.

Bringing Foreign Currency Closer to Home

by Matthew Richardson, Director of FX4Cash, Global Transaction Banking, Deutsche Bank

Traditionally, companies have been obliged to hold bank accounts in every currency in which they paid or received cash. This has frequently resulted in a proliferation of accounts, with disseminated cash balances, additional administration for reconciliation, and compromised controls as authorities need to be maintained. FX4Cash, a global cross-currency and cash management platform offered by Deutsche Bank, represents a major departure from traditional methods of supporting a company’s foreign currency activities. Instead of making payments and receiving collections into foreign currency accounts, our corporate and financial institution customers are able to transact business in more than 120 currencies (including essential emerging currencies such as RMB, INR and BRL) through a single window and from a single account, as an integral part of their normal cash management routine. Furthermore, FX4Cash is available to any corporation, irrespective of whether they work with Deutsche Bank as their cash management bank. This article looks at some of the ways in which our corporate customers are making use of FX4Cash today, and how they are leveraging the platform to improve efficiencies, enhance controls and reduce costs.

Addressing corporate priorities

Rationalising bank accounts
FX4Cash is a platform with a diverse value proposition according to the needs of each organisation. For example, by integrating FX and cash flow processes, companies can reduce their foreign currency accounts considerably, particularly in peripheral currencies in which they have relatively few transactions. On average, we see about a 30% reduction in accounts by users of FX4Cash, both corporates and financial institutions. This in turn can reduce the number of banks that a company needs to work with, creating a more streamlined cash management infrastructure.

Transparency and control
For some, achieving transparency over FX pricing is a priority, resulting in enhanced control and reduced costs, even in decentralised treasury environments. For example, business units of a multinational corporation, located in different countries, may historically have sent cash through the external banking system to the group’s headquarters. Although the cost of doing so may not be immediately visible, the real costs may be substantial when considered in aggregate, with cross-border transaction fees on numerous transactions, and no control over the FX rates that are applied. FX4Cash automates the allocation of FX rates in a transparent and auditable way, as well as enabling cash to be exchanged via intercompany transfers, reducing costs significantly and accelerating the transfer of cash between entities.

Automation, efficiency and operational risk management 
Other companies may seek to automate manual processing of international payments, and in particular, to integrate external payment processing with internal systems to deliver improved levels of straight-through processing. Indeed, enhancing efficiency and reducing operational risk has never been higher on treasurer’s list of priorities in order to improve operational controls, reduce manual intervention and therefore the risk of error or delay, and enable resources to be applied to more value-added tasks. This was a key driver in the original development of FX4Cash, and our clients of all sizes and profiles derive considerable benefit from greater process automation and control.

Due to the diverse ways in which FX4Cash is used, and the variety of systems environments into which it is integrated, the platform offers a high degree of flexibility to accommodate each organisation’s workflow and integration needs. FX4Cash supports a wide range of file formats including SWIFTNet, ensuring maximum accessibility and full integration into each company’s workflow processes.

Credibility and global access
A global cross-currency platform such as FX4Cash is credible only if the provider is a key market maker in foreign exchange and an expert provider of global cash management services, in order to provide the relevant connections into national clearing systems and achieve competitive FX rates. Deutsche Bank is the top foreign exchange bank in the world by volume, and consequently we leverage significant economies of scale that we can pass on to our customers.  In addition, we are participants in clearing systems globally. The combination of strength in both FX and cash management is a very powerful proposition from which clients using FX4Cash can benefit directly.

Market proximity

Few companies have the resources and access to local insights that allow them to keep up to date with the latest regulatory changes in fast-changing markets such as China. By leveraging a platform such as FX4Cash, backed by the full resources of Deutsche Bank in each of the markets in which we operate, companies have the assurance that they are taking advantage of every opportunity for efficient cash and FX management on the one hand, whilst complying with local regulations on the other.

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