Cash Management / Liquidity Management

The objective of these "Transaction Banking" solutions is to manage and optimize the cash flow of companies.

Let's take an example: A multinational company has several subsidiaries around the world, each of which has one or more bank accounts denominated in different currencies.

Some of the accounts will be overdrawn, others will have cash surpluses. In order to optimize cash flow, the bank will use the accounts with cash surpluses to cover the overdrafts to balance the cash flow. This will require transfers, but also foreign currency transactions, and possibly even the use of derivatives (currency swaps). It is the bank that will offer this service to its clients. We speak for example of physical or notional cash pooling. The objective is to pool funds from different bank accounts into a single cash pool in order to better manage foreign currency flows and borrowing costs.

If, in the end, there is a cash surplus, the bank will invest this surplus in different products: loans, treasury bills, commercial paper on behalf of the client.
If there is a cash shortfall, the bank will refinance the client under the best possible conditions.

This is called liquidity management.

Of course, the bank will also offer multi-currency and multi-country payment solutions (to pay suppliers, employees, etc.) ranging from bank transfers to more complex solutions, as well as collection solutions.