Cash management in transition: From cash management to cash process management

Abstract

Cash management plays a major role for global enterprises. Liquidity requirements, interest costs, currency risks and transactional costs are just some of the issues for these companies. This paper presents the results of a survey on the current state of cash management conducted in 32 large European enterprises. The survey analyses the maturity of the companies’ cash processes and reveals that the majority of these enterprises are on the same road: they centralise, standardise and automate their cash processes. Furthermore, they implement payment factories and in-house banks and make extensive use of cash pooling services. Consequently, they are now substantially reducing the number of servicing banks and bank accounts. As a result, local banks will largely be replaced by just a few major banks operating worldwide. In addition, global enterprises are facing a transition toward digital payments at the retail customer interface. The survey shows that their payment processes on the sales front are still mainly based on local subsidiaries or regional sales organisations. In the near future, however, these enterprises will have to offer digital payments across all available sales channels. Thus, integration of digital payments into global cash processes is a mandatory requirement and a further challenge not only for the enterprises, but also for major banks and FinTech companies acting in this field.