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Banking Relationship Management, new stakes for corporate strategy
Be it in today's or tomorrow's economies, companies continue to be the interface between the products they purchase from the supplier, and the clients. To ensure that this flow of goods and services is as smooth and efficient as possible, the company relies on several departments:
Computer Programming, Finance, and of course Sales and Marketing. This is one approach to doing business, but it is not the only one. For it is possible to apply this process in reverse, i.e., to have clients contact the suppliers.
Analysing companies from
a cash-flow perspective
Clients would pay, i.e. send information to the bank, asking the bank to forward this information to the supplier's bank, which in turn would provide the supplier with this information. Then, the company, or the company's bank, would take this transaction into account, and maximise its potential by controlling the risk factors (fraud, rates, currency exchange, etc.) and overseeing the payment for human resources and its infrastructure.
This contrasts sharply with the Net economy, wherein the number of clients and suppliers rises considerably, thus increasing the risk factor. Similarly, the fact that business is carried out at a much higher speed on the Internet, causing people to say that a trimester now resembles an entire year, further enhances this point. Americans refer to these changed circumstances as the three A's: anybody, anywhere, anytime. All companies have to adapt to this new business environment.
The 1980s: the ERP years
The 1990s: the CRM and
The limitations of these
concepts within the net economy
None of the initiatives we have just described solve the cash-flow problem, however. CRM tells us everything we need to know except whether or not the client has paid. That isn't CRM's domain. This also applies to market places: payment, risk factors, and fraud are not addressed by this software at all.
New obligations concerning
factors which alter companies'
cash-flow management needs.
The second factor is that the Net economy greatly increases the number of people involved, in terms of clients, suppliers, and partners. This consequently increases the risk factor as well as the complexity of the processes.
The 2000s: the emergence
of Banking Relationship Management (BRM)
Today financial management problem areas are no longer defined in terms of purchases made by the accounts manager seeking to optimise credit and receipt of payment, the treasurer seeking to maximise his investments, or for the manager merely seeking to ensure that payments are received. From hereon in, the common goal for both financial and general management is an investment with the capacity to synchronise the entire process, by ensuring transparency, control, and security from beginning to end.
To sum up the BRM concept, it is a broad-based approach to monitoring cash position, risks, and payments. Most importantly, it is also a means of ensuring the security of the cash-flow process from beginning to end, with complete traceability, and control over it. Treasurers', credit managers', and administrative managers' spending are thus replaced by a strategic investment made by financial and administrative management.
BRM demands that serious
thought be given to company management procedures
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