Ask the treasuryXL expert #2 How can I efficiently and cost-effectively get central bank approval/advice for cross-border flows in cash-strapped countries without delaying my business?
treasuryXL is the community platform for everyone with a treasury question or answer! Today, we discuss a question that treasuryXL expert Vasu Reddy often hears within his treasury network. The question relates to challenges for Treasury in Emerging Markets that most corporates continue to experience.
27-07-2022 | treasuryXL | Vasu Reddy | LinkedIn |
Question: “How can I efficiently and cost-effectively get central bank approval/advice for cross-border flows in cash-strapped countries without delaying my business?”
Answer (by Vasu Reddy)
“This is a common question I receive. It is related to emerging market challenges for treasury that most corporates still experience. Examples of these emerging markets include Brazil, Russia, India, China and South Africa (BRICS)
My idea is to proactively submit an application in advance. This application should indicate the nature and scope of the transaction, the benefits to the company, and the impact on the country (including currency and cash implications). Furthermore, it should include the reasons for not sourcing locally, the basis for the costing, and supporting documents such as supplier agreements, shipping documents, etc.
If it is a recurring remittance, such as royalties or monthly Global service charges, then a special dispensation should be applied for (renewed annually) to avoid individual applications resulting in increased costs, efforts and delays.
The best approach is to work closely with your authorized dealer, who is your main partner bank and who has strong links with the Central Bank, has automated systems and is fully aware of regulatory changes. ”
Vasu Reddy
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