FinTech Archives - Page 19 of 29 - treasuryXL

CurrencyCast Season 3 is live!

27-09-2022 | treasuryXL | Kantox | LinkedIn |

Season 3 of Kantox’s #CurrencyCast is live! In the first episode, they examine companies that manage their FX risk via spreadsheets and how they may be exposing their business to a whole other type of danger, spreadsheet risk.

Agustin Mackinlay breaks down the dangers and pitfalls of spreadsheet risk and how it can slowly erode your FX risk management processes.

He walks us through:

🔹 What is spreadsheet risk?

🔹 How to recognise this type of risk

🔹 Where it can arise in the currency management process

🔹 How to manage and eliminate spreadsheet risk

It’s an FX masterclass, all in under 10 minutes.

👉 Watch the episode and read Kantox’s key takeaways here

What’s the best hedging program for your business? Take Kantox’s 1-minute assessment

26-09-2022 | treasuryXL | Kantox | LinkedIn |

Have you seen Kantox’s Currency Management Toolkit?

With rising interest rates, increasing inflation and today’s highly volatile environment, it’s more important than ever for your company to be protected against currency risk.

Take Kantox’s 1-minute assessment and discover the best FX hedging program for your business. You’ll find out which program can most effectively handle your FX needs, help you achieve your goals, and keep you ahead of the curve.

👉 Get started here

Where did the treasury applicants go? | By Pieter de Kiewit

19-09-2022 treasuryXL | Pieter de Kiewit | Treasurer Search LinkedIn

As treasury recruiters, we should know enough about corporate treasury to do intakes and screen candidates. Also, we should know the latest about what’s happening in the field of recruitment and so we read the publications of Geert-Jan Waasdorp of The Intelligence Group. I would like to share his latest, very interesting article and build the treasury connection.

By Pieter de Kiewit

Labour market pressures are not equally distributed among all employers.

I left a link if you want to read the full article but this is roughly what he says. There is a huge growth in people working since before covid. In parallel, there is a huge decline in active applicants. This pressure in the labour market is not evenly distributed among all employers. The ones that can find new employees can do so because of a strong employer brand and increased investments in own or external recruitment. Also, they are willing to decide quick and offer a better package.

So what does this mean if we project these findings on the corporate treasury labour market? My personal observation is that treasury staff is, on average, less driven by the company brand and more by the job content than candidates from other job types. We learned this working for clients like Tesla and Nike. Employer branding specifically towards treasurers would also be hard, I cannot envision a corporate recruiter promoting his manufacturing company at Eurofinance.

How to adapt?

The obvious low-hanging fruit is that the hiring manager, already at the start of the process, has to organise and choose a mindset in the following: being able to decide quickly, from fewer candidates than before, and offering more than the old standard. Even highly skilled recruiters sometimes underestimate these aspects over time.

The judgement if the internal recruitment team is equipped to tackle the search or whether an external one should do the job – we, Treasurer Search – I will not elaborate on here. What I do want to mention is another obvious source that can be opened. For some of us that are considered a paradigm shift: bringing treasury talent in from abroad, from within the EU or even sponsoring a work permit. I am aware that some of us consider this topic highly political. What I can tell, both from our own organisation, as well as from successful placements with our clients, that this can be a very successful solution. In the Dutch labour market already the majority of candidates placed by us is non-Dutch. This is not a plea to open the borders and not be critical. Regretfully we have examples where this solution did not lead to success as coming to The Netherlands can be hard for the new employee. But also locally found candidates can fail in their new job.

My conclusion is that indeed, the world is different, as is the labour market. And given current demographic developments I do not expect a shift back. Luckily there are solutions but we will have to accept the consequences and cannot lean back. Those that do will shrink and go extinct.

Good luck in your search,

Pieter

Thanks for reading!

Pieter de Kiewit

Could Stablecoins Drive Payment Innovation?

12-09-2022 | treasuryXL | Kyriba | LinkedIn |

Despite the current market volatility, cryptocurrencies⁽¹⁾ are slowly seeping into everyday transactions,⁽²⁾ driven largely by small businesses. There are an estimated tens of thousands of businesses that are accepting cryptocurrencies as payments roughly representing about 0.01% of businesses worldwide.

By Rishi Munjal, Vice President Product Strategy, Payments, Kyriba

Source

Large corporations have stayed away from cryptocurrencies with a few exceptions⁽³⁾ where the use is limited to holding cryptocurrencies in treasury. The treatment of cryptocurrencies as an “indefinite-lived intangible asset”⁽⁴⁾ poses an accounting risk, forcing companies to write down⁽⁵⁾ the value of these assets when their value plummets.

The level of adoption is by no means impressive. Meanwhile, challenges with high-fees, scalability and volatility will continue to limit broad adoption of cryptocurrencies as a form of payment. Such limitations pose an important question for CFOs and treasurers: Are cryptocurrencies worth paying attention to?

Stablecoins and the Future of Payments

The answer is yes, given the potential for innovations that can shape the future of payments for corporates and merchants alike. This is especially true for Stablecoins⁽⁶⁾, as they present an opportunity to lower fees, reduce barriers and drive better services like instant cross-border payments. The promise hinges on a stablecoin’s ability to maintain its peg to a specified asset (typically U.S. dollars), or a pool or basket of assets, and provide perceived stability when compared to the high volatility of unbacked crypto-assets.

Since the launch of BitUSD in 2014 on the BitShare⁽⁷⁾ blockchain, stablecoins have evolved into public and private stablecoins. Public stablecoins exist in two forms. Reserve-backed or custodial stablecoins are backed by cash-equivalent reserves such as deposits, Treasury bills and commercial paper. These are issued by intermediaries who serve as the custodians of the cash equivalent assets and offer a 1-for-1 redemption of their stablecoin liabilities for the asset it is pegged against.

Algorithmic stablecoins (e.g.,UST) rely on mechanisms other than cash-equivalent reserves to stabilize their price. The peg to a specified asset is achieved by overcollateralized crypto and/or smart contracts that defend the peg by automatically buying or selling the stablecoin. These public stablecoins provide liquidity across the thousands of cryptocurrencies currently in the market. The private institutional stablecoins use tokenized deposits held by the bank for efficiently providing internal liquidity or liquidity for the bank’s wholesale clients between accounts held at the same bank. These coins (e.g., JP Coin) form a closed loop payment network similar to the ones offered by wallet providers like PayPal.

Stablecoin Guidance

Stablecoins have had their share of troubles⁽⁸⁾ and collapses⁽⁹⁾ in their short history. These risks were well understood by regulatory agencies. However, the explosive growth in cryptocurrencies has made it difficult if not impossible for regulators⁽¹⁰⁾ to keep up. Outside of the ad-hoc enforcement actions against crypto firms by the SEC⁽¹¹⁾, the industry continues to operate largely outside of regulations. Given the complexity of the crypto ecosystem, it is pragmatic for regulators to start with Stablecoins as they are relatively simpler and have real applications. It is therefore not a surprise, that despite the market turmoil, New York became the first U.S. state to issue guidance for Stablecoin issuers.

The Virtual Currency Guidance⁽¹²⁾ provided by the New York Department of Financial Services (DFS) outlines redeemability, reserve and attestation requirements for entities issuing U.S. dollar-backed stablecoins. The industry has been waiting for long-overdue commonsense regulations for reducing systemic risk and providing a fertile ground for stablecoin issuers and other fintechs to drive broad innovation in financial services and payments.

Table 1: Key points from The Virtual Currency Guidance provided by the New York DFS

Backing and Redeemability	Fully backed by safe reserve assets like T-Bills, Notes and Bonds Market value of the reserve is at least equal to the nominal value of all outstanding units of the stablecoin as of the end of each business day
Reserve	Segregation of reserves from the proprietary assets of the issuing entity Must be held in custody with U.S. state or federally chartered depository institutions and/or asset custodians.
Attestation	American Institute of Certified Public Accountants (“AICPA”) standard Examination of management’s assertions at least once per month by an independent Certified Public Accountant (“CPA”) licensed in the US

Kyriba has taken a forward looking posture in this space, for example via partnership with Copper to offer corporate treasury direct access to Copper’s award winning digital asset investment platform, and the ability to manage liquidity across fiat, crypto and money market funds.

While the specific time-horizon on when a trend would become meaningful is not easy to predict, CFOs and treasurers can preserve optionality by partnering with providers that stay at the forefront of payment market trends.

References

⁽¹⁾ FSB defines all private sector digital assets that depend primarily on cryptography and distributed ledger or similar technology as crypto-assets and not currencies; for this article the two terms are being used interchangeably.
⁽²⁾ Map of Cryptocurrency ATMs and Merchants, Coinmap.org
⁽³⁾ Public companies holding bitcoin, Coingecko.com
⁽⁴⁾ Accounting for and auditing of digital assets
⁽⁵⁾ MicroStrategy Posts a Loss After Taking Bitcoin Impairment, Bloomberg 2/22
⁽⁶⁾ Financial Stability Board, Crypto-assets and Global “Stablecoins”
⁽⁷⁾ Whitepaper: BitShares – A peer-to-peer polymorphic Digital Asset Exchange
⁽⁸⁾ Terra Luna timeline; TerraLuna UST collapse – What Happened?
⁽⁹⁾ CFTC fines Tether and Bitfinex for misleading claims; Panics and Death Spirals: A history of- failed stablecoins
⁽¹⁰⁾ Stablecoin risks and potential regulations, BIS Working Paper 11/2020
⁽¹¹⁾ Crypto Assets and Cyber Enforcement Actions, notes seven enforcement action for the period Jan – April 2022
⁽¹²⁾ Guidance on issuance of US Dollar backed stablecoins, New York Department of Financial Services, Jun 2022

Click here to view all blogs by Kyriba

Quickly refresh your treasury knowledge? Download our eBook: What is Treasury?

08-09-2022 | treasuryXL | LinkedIn |

Hello Treasurers, CFO’s, Cash Managers, Controllers and other Finance addicts, how do you quickly refresh your treasury knowledge? Or how do you explain ‘What Treasury is’ to family and friends? Well, there is a simple solution for it. Download our eBook: What is Treasury?

This eBook compiled by treasury describers all aspects of the treasury function. This comprehensive book covers relevant topics such as Treasury, Corporate Finance, Cash Management, Risk Management, Working Capital Management.

This eBook was prepared by treasuryXL based on the most useful best practices offered by Treasury professionals throughout the previous years. We compiled the most crucial information for you and wrote clear, concise articles about the key topics in the World of Treasury.

We took a deeper dive into each of the above-mentioned treasury functions and highlight:

The purpose of each named Treasury function (What is?)
What specialists do
Examples of Activities
Summary of Frequently Asked Questions and answers
Conclusion

How to receive the eBook ‘What is Treasury’ for Free?

We simply giveaway two presents for you! By signing up for our newsletter you will automatically receive the following in your inbox:

On Fridays, our Coffee Break weekly newsletter will land in your inbox. In this weekly newsletter, we will highlight the whole week full of the latest treasury news within our community.
The 41 pages eBook, What is Treasury?

Subscribe and Download

Subscribe, Join, Download and Relax.

Welcome to our community and have fun reading!

Kendra Keydeniers

Director, Community & Partners at treasuryXL

What personality traits do treasurers have?

RECAP | Cash and Treasury Management Event Copenhagen | By Pieter de Kiewit

06-09-2022 | cashandtreasury.dk | treasuryXL | Pieter de Kiewit | LinkedIn

Last week, Pieter de Kiewit was Chairman of the Cash & Treasury Management Conference in Copenhagen. Pieter decided to take the effort to share his experience with you.

By Pieter de Kiewit, Chairman of the event

Corporate treasury events come in many shapes and sizes. Earlier this year, I reported on my visit to Mannheim, in a few weeks you can expect a blog about Vienna, in this blog more about Copenhagen. I can already tell you that I liked the format and set-up of this event.

Corporate treasury markets will always be very niche. The event organiser, Insight Events, targeted a mainly Danish-Scandinavian audience. The sessions were all in English and the venue was the beautiful Hotel D’Angleterre in the heart of Copenhagen. It was also a conscious choice to keep the audience small, just under 150 and of high calibre: almost all treasurers, most of them quite senior and well informed. The consequence of this choice is also that there were no parallel sessions, all sessions were attended by the entire audience. During the break one could meet the various treasury service and product providers, including treasuryXL partner Nomentia.

Last year, I was asked to present on “how to get hired for your next treasury position” and had some questions during other sessions. Based on the bond we built, I was asked to be moderator/chairman of this year’s event. I thought it was a great gig, if it was appreciated, you just have to ask others.

The programme consisted of presentations and panel discussions led by Nordea. I was impressed by the level of quality offered. There were two macro-economic presentations, one by the Chief Economist of Nordea, a well-known TV personality in Denmark and the other by a senior director of EKF, the Danish export credit agency. Both gentlemen brought very thorough interesting insights but, given the current global developments, also a gloomy and dark future.

Another highlight was the input on ESG financing where treasurers and senior sustainability experts together informed the audience about the reality of this type of funding making in, at least for me, an inspiring way. In a cleverly constructed format, credit rating and Basel IV developments were linked in a session with the most questions from the audience.

In other, more traditional but also essential and informative sessions, building treasury teams, mergers and career development were on the agenda. And the non-treasury topic was brought up in a very entertaining way about a hacked company that does not want to pay a ransom. Relevant not only for treasurers and definitely food for thought.

Looking back, I see a very successful and high quality event. On a personal note, I always enjoy the international in my work. Me as a Dutchman, extrovert, direct and sometimes unintentionally rude, communicating with civilised, reserved Scandinavians who do not ask too many questions hopefully did not result in not being invited for next year. We shall see…..

Thanks for reading!

Pieter de Kiewit

Managing working capital in challenging times | Attend on December 1st 2022

31-08-2022 | treasuryXL | The Working Capital Forum | LinkedIn |

Are you a Corporate Treasurer? Attend The Working Capital Forum Europe 2022 for free: use code TXL22CG

Banks, fintechs, and other solution providers can get 25% off the cost of a ticket using this TreasuryXL code: TXL2225

Mark your calendar for the 1st of December 2022! The Beurs van Berlage in Amsterdam will open the doors for The Working Capital Forum Europe. This event brings together leaders in treasury, procurement, and payments to share ideas and techniques for better working capital management across supply chains.

That’s never been so important as in these times of rising interest rates, inflation, and supply chain shocks, when managing working capital is everyone’s concern.

From supply chain finance to accurate cash forecasting, solutions for every component of working capital management will be discussed on stage, demonstrated in our information area, and examined in our workshops at the world’s largest specialist working capital and supply chain finance event.

We’re delighted to return to Amsterdam for this one-day live event, with main stage keynote sessions, panel debates, and breakout workshops and demos.

If you’re interested in optimising working capital in your organisation, you need to join us in Amsterdam for the most productive day you’ve had in years.

Among the topics we will be covering are:

Cash forecasting and cash visibility
Payables finance
Receivables finance
Optimising receivables – get paid faster
Inventory management and inventory finance
Supply chain finance
‘Deep tier’ supply chain finance
Funding options for trade and supply chain finance
Using working capital tools for ESG objectives
Credit insurance
Disclosure rules on supplier finance
Ratings agencies and their view of working capital solution

TO REGISTER AND FIND OUT MORE VISIT: WORKING CAPITAL FORUM EUROPE

Visit the Working Capital Forum: https://www.workingcapitalforum.com/

Join our events here: https://www.workingcapitalforum.com/events

Enter the Working Capital and Supply Chain Finance 2022 Awards here: https://www.workingcapitalforum.com/awards.html

CFO Perspectives: How to set a currency hedging strategy

30-08-2022 | treasuryXL | Kantox | LinkedIn |

How should a CFO set their currency hedging strategy, to protect cash flows or to minimise P&L impact? In the fourth edition of CFO Perspectives, we’ll explore how senior finance professionals can choose the right path when it comes to hedging.

Credits: Kantox
Source

According to a recent HSBC report, the objectives of currency hedging are pretty extensive. While three-quarters of surveyed participants mention forecasted cash flows as an FX risk that their company hedges, 61% cite balance sheet items as the risk they hedge. Other participants say minimising the impact on consolidated earnings is one of their FX hedging objectives and KPIs.

The debate about whether to hedge cash flows or earnings —by removing the impact of accounting FX gains and losses— is as old as currency hedging itself. The two sides have powerful arguments in their favour.

Cash flow hedging vs balance sheet hedging

What’s the correct approach?

The debate will likely never be settled entirely. No single approach for currency risk management is definitively better than another. Different opinions may reflect the type of business activity, the preferences of investors and even managers’ own biases.

The key step for any CFO looking to establish or revamp their business’s currency hedging program is to clarify what the firm is trying to achieve. Only with enough clarity on this matter can the dangers of ad hoc or unsystematic hedging be avoided.

So, where does that leave us? This blog brings some welcome news to beleaguered CFOs as they take sides. While nothing replaces clarity regarding the key objectives of currency management, technology now makes it possible for risk managers to:

Use a single set of software solutions to run cash flow and balance sheet FX hedging programs
Automate the time-consuming and resource-intensive process of implementing Hedge Accounting

This is big news indeed!

Practical steps on the journey to the FX hedging decision

While a certain amount of debate and discussion is unavoidable when deciding the goals of a firm’s FX hedging program, a number of practical steps can be followed to determine what should be hedged.

These steps share a central concern about protecting and enhancing the firm’s operating profit margins by giving particular importance to the pricing characteristics of each business division.

These steps include:

Steer clear of ad hoc or unsystematic hedging. This is a path to nowhere and should always be avoided.
Set the goals of your FX strategy, such as defending a campaign or budget rate, achieving a smooth hedged rate over time, hedging transaction exposure, or removing the impact of accounting FX gains and losses.
Based on these goals, define the best hedging program while imagining that infinite resources can be deployed. By doing so, CFOs can squarely focus on their FX goals.
Consider using Currency Management Automation to seamlessly execute all the steps of your program, breaking internal silos and ensuring connectivity with your own company systems (ERP, TMS).
Only then ‘prune’ the strategy and adjust it to the available resources, while measuring the impact —in terms of risk, costs and growth— of this adjustment.
Use technology to automate the process of compiling the required documentation for Hedge Accounting.

In other words: to set a currency hedging strategy you need to do away with outdated constraints. Technology is putting to rest the traditional view of currency management as a resource-intensive activity. So the message is: give priority to your FX goals, not to the resources currently at hand.

Read the third edition of our CFO Perspectives series, 5 ways CFOs can increase the efficiency of treasury operations.

CFO Perspectives: 5 ways CFOs can increase the efficiency of treasury operations

16-08-2022 | treasuryXL | Kantox | LinkedIn |

In the third edition of CFO Perspectives, we’ll draw from our work with CFOs to explore five ways senior finance executives can increase the efficiency of treasury operations using purpose-built software solutions.

Credits: Kantox
Source

According to a recent HSBC report, as many as 81% of CFOs view the digitisation of treasury processes as an area of increasing importance. The same survey shows that technology has moved from ‘nice to have’ to a key differentiator for treasury.

The good news is that ‘special purpose’ technology exists that —working alongside your existing systems (TMS, ERP)— allows CFO’s and finance teams to dramatically boost the efficiency of treasury operations.

In this blog, we briefly present five areas of improvement across the FX workflow. Taken together, they present a unique opportunity for CFOs to turn the ‘digital treasury’ into a day-to-day reality, allowing members of the finance team to remove operational risks while devoting more time to value-adding tasks.

Improvements across the FX workflow

Currency management is a process undertaken in three different phases. In the pre-trade phase, FX-related pricing is managed alongside the crucially important collection and processing of the firm’s exposure. The trade phase, quite naturally, is concerned with trade execution, primarily through forward FX contracts. Finally, the post-trade phase covers accounting, reporting and analytics processes and the ‘cash flow moment’ of payments and collections.

In all of these phases, easy-to-install software solutions provide tangible improvements in terms of the efficiency of treasury operations.

These improvements include:

Improvement 1: Set a strong ‘FX rate feeder’

Pain point: Commercial teams often lack the capability to use the currency rates they need to price in a data-driven and efficient way. With favourable forward points, they could use the forward FX rate to price more competitively without hurting budgeted profit margins. With unfavourable forward points, pricing with the forward rate would allow them to remove excessive markups.

Improvement: Whatever the number of transactions involved, automated solutions to price with the required FX rate can be quickly scaled to all the required currencies, with the pricing markups per client segment and currency pair requested by commercial teams.

Improvement 2: Process all types of exposure

Pain point: When it comes to collecting the firm’s exposure to currency risk, most Treasury Management Systems (TMS) are designed with accounts receivables/payables in mind. While this works fine for balance sheet hedging, the focus on accounting items precludes the automation of cash flow hedging based on the exposure collected earlier — firm commitments and forecasts for budget periods.

Improvement: API-based solutions allow finance teams to automate the crucially important process of capturing the relevant type of exposure information and run a variety of cash flow hedging programs, including combinations of programs that require more than one type of exposure data.

Improvement 3: Connect the phases of the FX workflow

Pain point: The trade phase of the FX workflow is where most of the attention of CFOs has been placed, as Multi-Dealer Trading platforms such as 360T have reduced the cost of FX trading for corporations. But while the execution of trades is oftentimes manually initiated, most systems lack the capability to fully automate the process of triggering trades.

Improvement: What special-purpose software brings is the capability not only to automate the trade part of the workflow —via connectivity with Multi-Dealer platforms—but also to link it to the pre-trade phase as well by ensuring that trades are executed at the right moment in time.

Improvement 4: Automate Hedge Accounting

Pain point: Compiling the documentation required to perform Hedge Accounting can be a costly and time-consuming process, as hedge effectiveness is assessed in by comparing changes in the fair value of the hedged item to changes in the fair value of the corresponding derivative instrument. This forces companies to rely on highly skilled personnel to manually execute these tasks.

Improvement: The perfect end-to-end traceability of automated solutions makes it possible accounting team to automate the painstaking process of compiling all the required documentation to perform Hedge Accounting – allowing CFOs to cost-effectively provide more informative financial statements.

Improvement 5: Automate swap execution

Pain point: The process of adjusting the firm’s hedging position to the cash settlement of the underlying commercial exposure is one of the finance team’s most resource-intensive and error-prone tasks. It can require an enormous amount of ‘swapping’, particularly for companies that manage many commercial transactions in different currencies.

Improvement: Swap automation, a task that most TMS are unable to perform, is a key feature of Currency Management Automation software. Perfect traceability allows members of the finance team to automatically ‘draw on’ or ‘roll over’ existing forward positions while removing operational risks.