In a recent article, Ripple told about solving the problems of cross-border treasury management using ODL.
In a recent article on its website, Ripple told about solving the problems of cross-border treasury management using ODL. The key points were:
Corporate treasury operations help ensure funds flow smoothly and on time throughout an organization, in sync with business needs and economic environments. Like a fleet manager at an airline responsible for aircraft optimization and up-time, it guarantees money is in the right place at the right time to fund obligations and maximize opportunities.
Small- to medium-sized enterprises (SMEs) must pay employees overseas, collect revenue from international markets and pay vendors that want to be billed locally rather than by a foreign corporation—all in different currencies, time zones and individual banking structures. These tasks necessitate an incredibly complex web of money movement that must be timed to minimize taxes and fees, avoid shortfalls and optimize revenue.
Treasury forecasting challenges for multinationals are heightened by the slow and expensive legacy payment rails companies have traditionally used to manage and move their capital across borders. Oftentimes it takes 3-5 business days for funds to fully settle which requires moving money well before payment is actually needed. Legacy systems also require companies to pre-fund accounts in local currencies on each side of a transaction. This forces treasury departments to tie up increasingly scarce working capital, straining forecasting efforts and preventing alternative uses for these funds.
In addition, it’s become increasingly challenging for companies to send funds to and from certain countries and regions like Brazil, Mexico, India and Southeast Asia. Even major banks are finding it difficult to maintain funding in certain payment corridors. Without readily available, highly liquid connections to these areas, treasury departments can be caught flatfooted when paying employees and vendors or collecting revenue from these markets.
Ripple’s On-Demand Liquidity (ODL) payments solution eliminates these challenges, enabling just-in-time treasury operations. With real-time global settlement, ODL closes transactions in fractions of a second, while dramatically reducing both costs and the need to pre-fund foreign destination accounts. Increased transparency is also a key benefit for corporations and their customers, both for pricing and payment tracking. This enables better upfront visibility and tracing of all costs involved.
ODL also offers superior liquidity for cross-border payments—including complex corridors—by virtue of its strong global payments network and ability to use XRP as a neutral bridge for various fiat currency pairs. Ultimately, corporate treasury teams can leverage crypto solutions for business like ODL to improve cash flow planning, enhance commercial terms and help suppliers factor their receivables.
Beyond these core transaction advantages, companies using ODL also benefit from access to Ripple’s Line of Credit (LOC) to cover their own capital needs, extend lines of credit to partners and offer flexible repayment terms.