Cash & Liquidity Management in Latin America

International cash management in Latin America is not easy due to the lack of advanced clearing systems and many restrictive regulations prohibiting cross-border cash pooling and other advanced cash management techniques, but, driven by the growth in the Brazilian economy and foreign investment pouring into Latin America, it is steadily improving.

Geographically Latin America region stretches from Mexico in the North to Chile and Cape Horn in the South. In cash and liquidity management terms, it is more effective to include Mexico in North America as it is part of the NAFTA area (North American Free Trade Agreement) which covers Canada, the U.S. and Mexico. Latin America is made up of three sub-regions Central America, the Carribean and South America - see below.

Main Developments
The main developments in cash and liquidity management solutions in Latin America over the last few years have been:

  • the mature payments systems across the region are enabling corporates to have centralised payments processing. Use of paper cheques is decreasing as electronic payments become more common, with increasing levels of automation and a priority on fraud prevention;
  • companies have focused on the reduction of operational risk and inefficiencies in their liquidity management, which has become a priority in an environment of scarce or expensive credit in recent years. Optimising liquidity management is hindered by restrictions on moving cash and cash concentration structures in some countries.

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