Citi Perspectives 2024 E-commerce Edition

18 | Services Citi Perspectives Faster, Smarter, Safer: Why scalable liquidity structures are key to going global Digital native companies are often differentiated from traditional firms by their agility and rapid growth. Many new economy sectors have a strong first-mover advantage, so companies aim to expand quickly when they spot business opportunities. However, with global growth comes the challenge of increasing complexity. One area where this complexity has an almost immediate effect is liquidity management. Liquidity is foundational to the financial ecosystemof any company; companies’ liquidity management needs to be robust and easily scalable tomeet the demands of today’s fast-paced world of cash management. Liquidity management structures have emerged as a meaningful tool to provide scale, efficiency and optimization that fast- growing companies need today. As a result, they have important implications for treasury and financial efficiency and should be a top priority for fast-growing companies. Getting it right from the start “Scalability matters,” says Joe Vasen, North America Client Advisory Head at Citi. “Liquidity management structures should be designed — in collaboration with banking, legal, tax and accounting partners —with the strategic objectives of the firm in mind. It’s important to get it right from the start: unravelling poorly planned liquidity structures is costly, time-consuming and could hamper efficient growth.” Effective liquidity management involves monitoring, accessing, and optimizing a company’s cash and other liquid assets — within its risk appetite — to meet its financial obligations. It helps enables companies to have enough cash or easily convertible assets to cover short-term liabilities while also maximizing returns on excess cash.