From the March Special Report issue of Treasury & Risk magazine

Cash Flow Management in a Basel III World

The global standards laid out in Basel III were developed to shore up the global financial system, and consequently attention has been focused on the implications for banks. However, the implications of Basel III will also be profound for companies. In particular, new liquidity standards will change how certain deposits are valued by banks. Specifically, banks must now make assumptions about the stability, as well as acceptable liquidity sources and levels for each deposit type.  These changes could impact the rate of return banks are able to offer on a company’s long-term investment cash.

Companies will therefore need to rethink how they invest surplus cash to obtain acceptable yields, while maintaining the liquidity and level of security they require. Additionally, companies must make sure their cash flow management and forecasting moves cash through the company efficiently and predictably in order to facilitate efficient use of surplus cash.

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