Cash and treasury management in Latin America Q&A.Latin American markets, although successful and powerful, present many challenges for cash managers and treasurers. The region's economic volatility and political uncertainty present difficult situations and risks for financial managers, resulting in an increased necessity for careful investment and cash management strategies. LATIN TRADE Latin Trade is a monthly magazine covering global business in Latin America and the Caribbean. Similar to Forbes and Fortune Magazine in coverage, the magazine was founded in 1993 and now publishes 87,000 copies 1 each month in Spanish, Portuguese, and English. has gathered some of the leading experts in cash and treasury management to share their knowledge, in anticipation of the 10th Annual Eurofinance Conference on Treasury Management in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , which will be held in Miami, April 16-18. The following interviews focus on the trends, risks, challenges and the outlook of cash and treasury management practices in Latin American countries List of American countries Nations:
Jorge C. Moreno Pugliese Global Cash Management Director Transactional Banking Corporate and Investment Banking BBVA BBVA Banco Bilbao Vizcaya Argentaria (First Bank of Spain) Q: Considering all the changes in our evolving global economy, what kind of general opportunities and challenges do regional treasurers face in 2005? A: As opportunities, I would say that communications, Internet, technology and the environment around us, are helping businesses grow beyond their countries' borders. With so many opportunities appearing everywhere, regional treasurers are in need, much more than before, of learning better ways to be efficient in handling their cash flows beyond their borders. Unfortunately, this region presents many tasks that are difficult to solve. Different currencies, legal and tax policies, and countries' infrastructures are forcing regional treasurers to expend ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. too much time on country-specific problems instead of using that time on more profitable activities. Q: What are the trends in providing cash and treasury services Treasury services is a function of an investment bank which provides transaction, investment and information services for chief financial officers, treasurers. Treasury services concentrates and invests client money, and provides trade finance and logistics solutions as well as to the corporate market in Latin America, and how is your organization implementing them? A: The trends are oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. toward the automation of the operating processes. Our organization is making its best effort to provide Latin American companies with services and products. BBVA is helping businesses achieve their goals by developing regional tools like our web electronic regional banking product. BBVA is also putting in place a cash management global team, requiring it to focus on technological information, payments, collections and new ways to connect clients with the bank as host-to-host solutions. Q: Are there any unique risks or other factors that need to be considered when operating regionally or in certain countries? A: It is always wise to carefully watch surpluses in these countries, as well as economic trends and payment system maturity. Q: What are you advising your clients to focus on during 2005, as compared with 2004 or prior years? A: I tell my clients to concentrate on getting to know their businesses better--beyond the boundaries. I also advise them to be aware of the value of the information a bank like BBVA, with a strong presence in the region, can provide concerning payments and collections capabilities. Juan Jose Gomez Juan Jose Gomez (born August 11, 1980 in El Salvador) is a Salvadoran football (soccer) player, who last played Goalkeeper for C.D. Luis Angel Firpo . Amaro Director Banco Transaccional Division America Grupo Santander Grupo Santander (LSE: BNC, NYSE: STD, IBEX-35: SAN) is a banking group centered around Banco Santander, the largest bank in Spain. Together with its local subsidiaires it has large scale operations in Europe and Latin America. Q: Considering all the changes in our evolving global economy, what kind of general opportunities and challenges do regional treasurers face in 2005? A: Grupo Santander believes the trend to set up regional treasuries in the Latin American region will continue, even though its implementation may result to be more complex than expected. The most important challenges to cope with are the different regulations in each country, as well as regulatory restrictions on capital inflows/outflows. However, we see vast opportunities--due to a sharp economic recovery and increasing foreign trade growth, among all Latin American countries, which will further expand the business cycle and the regionalization regionalization Managed care The subdivision of a broadly available service–eg, a blood bank, into quasi-autonomous regional centers, capable of making decisions and providing more cost-effective and/or faster service to hospitals and health care facilities, processes--to foster efficiency and productivity. As the leading banking franchise, with an extensive presence in most countries in Latin America, Santander offers clear advantages to help companies enhance their cash management capabilities and help treasurers provide strong added value Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
Q: What are the trends in providing cash and treasury services to the corporate market in Latin America, and how is your organization implementing them? A: Companies are concerned with reducing their exposure to markets and clients, and in improving their cash flows and collections/payment cycles. Grupo Santander offers its regional tool, Infocash, which provides real time and online information and transactional services (interactive collections and payments), as well as local new services in several countries based on state-of-the-art mobile technology and services, helping companies to organize and follow up outstanding collections and cash balances, and to identify treasury optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. opportunities. Q: Are there any unique risks or other factors that need to be considered when operating regionally or in certain countries? A. There are currency risks associated with managing businesses and treasury operations in different currencies and in dealing with the foreign exchange policies applied by each Latin American country. It is also very important to consider local taxes (debit and credit) and withholding taxes The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. for intercompany loans Intercompany loan Loan made by one unit of a corporation to another unit of the same corporation. . The tax treaties among Latin America countries, the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. have an effect on regional and global centralization cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. solutions. Q: What are you advising your clients to focus on during 2005, as compared with 2004 or prior years? A: After an excellent 2004, Grupo Santander expects 2005 to be another very good year for the region. Nevertheless, in a higher interest rate environment, pressure on treasurers will be increasing, and cash flow management will be more and more challenging. Regulations are always an important subject to look at, as well as revising any opportunity to improve information and cash flows. Grupo Santander has a strong presence in Europe, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Miami and Latin America and can be very helpful in providing corporations with a great tool to achieve the best results in every market. Dardo A. Sabarots Global Transaction Services Head Citigroup Latin America and the Caribbean Q: Considering all the changes in our evolving global economy, what kind of general opportunities and challenges do regional treasurers face in 2005? A: I see an efficient marketplace driven by globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation , expanding Internet capabilities and increasingly sophisticated telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , against the realities of the last three years in the region. As the dichotomies of the global economy continue to pose new challenges, the most important task for CFOs is to develop the strategies that will move the focus of their corporations to the future, rather than on past performance. Q: What are the trends in providing cash and treasury services to the corporate market in Latin America, and how is your organization implementing them? A: It is crucial for companies in Latin America to examine cash and treasury services issues in-depth and to develop effective action plans that make the best use of available resources. The following strategies are already showing results in the quest for Verb 1. quest for - go in search of or hunt for; "pursue a hobby" quest after, go after, pursue look for, search, seek - try to locate or discover, or try to establish the existence of; "The police are searching for clues"; "They are searching for the better returns, greater efficiencies in operations, reduction in overhead costs overhead costs see fixed costs. and optimized working capital: * Using treasury regionalization to increase shareholder value. * Outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. repetitive treasury operations for additional efficiencies. * Effectively deploying working capital. As Latin America continues to become more regionalized, these strategies will become increasingly important for business leaders. Q: Are there any unique risks or other factors that need to be considered when operating regionally or in certain countries? A: The demand for regional and centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. treasury operations in Latin America is driven, in no small part, by the growing awareness of financial controls, as well as the need for cost and time-effective methods. Once companies have a single consolidated view of their activity via a common banking platform, they can manage their treasury more effectively across the region. Their corresponding need for online strategic analytical reporting, information on compliance, regulatory and risk matters can be filled through improved information channels, such as the Internet, utilizing web-enabled software. Q: What are you advising your clients to focus on during 2005, as compared with 2004 or prior years? A: Companies seeking to establish a regional treasury solution should begin with a knowledgeable bank partner--ideally, a global bank with deep roots in local markets across the region. The right financial partner will be able to help you structure an effective solution in an optimal location and provide electronic banking systems and host-to-host connectivity for your company's accounts payable and employee payments. For global and regional companies, as well as large local companies that will one day be regional, maintaining a strategic partnership with a global bank has become increasingly important. Essentially, this is the most cost-effective and strategic method for ensuring ongoing operating efficiency and the best treasury infrastructure delivering the information, controls and services your company needs locally, regionally and globally. Furthermore, a global financial partner who is familiar with your company, who knows how you collect and how you pay, and how you manage the disparities in timing can help you manage your working capital for maximum effectiveness--wherever in the world you do business. Whether your company is a multinational manufacturer of automobile parts, a Latin American developer of agricultural chemicals or a locally owned exporter of textiles, Citigroup is well-qualified to help you succeed with your regionalization efforts, by instituting best practices and integrating your cash management functions. As a trusted advisor and partner to CFOs and treasurers of companies large and small, we draw on a broad range of experience to anticipate problems and design effective solutions. |
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