Navigating an Uncertain Rate Environment

When it comes to dealing with fluctuating interest rates and a wide range of outcomes, corporate treasurers can face a great deal of uncertainty. Global organizations with accounts in multiple currencies and strong cash flows could benefit from taking a closer look at their liquidity strategy to help weather the unpredictable market dynamics.

• Forecasting: Many corporates have limited experience dealing with this type of uncertainty, and are unsure how to plan or adjust. Some may lack the appropriate treasury management solutions or may not know how to maximize liquidity process efficiency.
• Cost fluctuations: Shifting rates can affect the cost of unplanned funding shortfalls. These shortfalls are more likely if a company has not fully automated its processes.
• Consideration of operational investments: High or low interest rates can affect companies’ decisions to make or hold off on substantial investments in treasury solutions.
• Optimizing return on cash: As rates change, treasurers may be unsure about how to continue to optimize the value of cash balances and fall back on “safe” approaches, which may not be flexible enough to keep up with the changing economic environment.

• Are you prepared for multiple-rate-decision outcomes, such as higher for longer, additional hikes or rate cuts?
• Do you have the necessary cash or working capital where it is needed most?
• Is there room to further optimize or automate your treasury structures and/or operations?
• Have you considered testing your current systems to determine how they may perform in response to different interest rate levels?
• Do you have a liquidity strategy for all your currencies?

The good news is that there’s a range of treasury management solutions to lessen the impact that changing rates can have on your business. As an experienced international partner, Bank of America can help optimize treasury processes, increase capital control and mitigate market uncertainty through:

• Digital solutions: Streamline processes and avoid fees that may be triggered by manual errors with innovative technology like CashPro® — our best-in-class treasury management platform that can help set up automations, alerts and other ways to avoid overdrafts.
• Automated liquidity solutions: Optimize liquidity and increase global visibility of cash positions through automated solutions.
• Cash concentration for larger companies (physical & notional): Consolidate cash balances and manage liquidity across multiple accounts in different currencies.
• FX solutions: Make the cost of managing multiple currencies more predictable with automated FX solutions.
• Earnings Credit Rate (ECR) products: Use liquidity to help offset service fees.
• Supply Chain solutions, such as Supply Chain Finance and Card: Extend payments terms and increase working capital.

Navigating an uncertain environment can be daunting. Having a trusted advisor to guide you through any interest rate change — rise or fall — can make all the difference. Contact your Bank of America liquidity expert for more information.