Are you thinking about how you can shape your treasury career and in need for inspiration? There are plenty of education opportunities, but in what education will you invest?
You are invited to join our next Live Session. Registration is Now Open for:
There is no standard career path for treasurers but one can learn from the choices and developments of the successful ones.
In this webinar two graduated Register Treasurers will share their stories:
🌟 Jurgen Wessel RT is interim Head of Treasury of SHV and has experience in a variety of international companies at HQ and treasury hub level.
🌟 Frank van der Hoeven RT van der Hoeven used to be a banker, moved to the corporate side and currently is Treasury Manager at IMCD, well-known for many successful acquisition and integration processes.
They will tell you about how they moved between various stations and will pay special attention to the added value of their post academic degree: The Treasury Management and Corporate Finance programme (RT Programme) at the Vrije Universiteit Amsterdam (VU Amsterdam).
https://treasuryxl.com/wp-content/uploads/2022/09/WEBINAR.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-29 07:00:452023-01-02 14:17:59LIVE SESSION | My Treasury Career Development & How the Register Treasurer education contributed
Are you a CFO or Treasurer drafting your upcoming budget? Find out how to set, defend and outperform your budget rate in Kantox’s exclusive new report.
Based on real industry insights, you can learn:
🔹 The best way to set a budget rate
🔹 How to delay hedge execution while reducing forecast risk
🔹 How to improve your budgeted profit margins
🔹 Top solutions to automate time-consuming processes
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
https://treasuryxl.com/wp-content/uploads/2022/09/currencycast-200.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-27 09:00:462023-03-03 12:09:49CurrencyCast Season 3 is live!
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.
https://treasuryxl.com/wp-content/uploads/2022/09/kantox-maandag-200.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-26 07:00:392022-10-14 12:53:47What’s the best hedging program for your business? Take Kantox’s 1-minute assessment
Also known as pre-transaction risk, pricing risk occurs between a transaction being priced and agreed upon. It materialises when exchange rates change after a quote has been delivered, either impacting the sales margin or incurring a re-price. treasuryXL expert Harry Mills, founder & CEO of CEO Oku Markets, will explain to us what Pricing Risk is all about, and how to deal with it.
Businesses experience pricing risk to a greater or lesser extent depending on the nature of their business, their marketplace, and their sales and purchasing cycles. We find it helpful to consider the following initial points when assessing pricing risk:
Is the transaction FX-denominated, influenced, or relatively insensitive?
What is the timeline between quoting and agreement?
What impact would a +/- 5% or 10% FX move have on margins?
A transaction is “FX-denominated” when it is in a currency other than the firm’s functional currency. An example is a UK business providing a quote to an Irish business for an export sale denominated in euros (instead of GBP).
How much influence? An example…
You’ll likely have an intuitive idea of the level of influence that fluctuations in FX rates have on your transactions, but consider a UK company that designs and builds high-end bespoke summer houses (why not?):
The company imports unfinished timber and metal fixings priced in dollars, and sources glass and other furnishings and materials from within the UK
The per-unit cost of production will be affected by movements in the GBPUSD exchange rate because timber is a major cost
But the basket of production costs also includes the UK-sourced materials, shipping, labour (design and build), amongst others (warehousing, storage etc.)
So we can see that a 5% drop in GBPUSD wouldn’t result in a 5% increase in production costs – understanding this relationship and ratio is critical
“Businesses should understand the precise impact of currency fluctuations on their costs and/or revenues to determine their FX sensitivity, especially concerning pricing risk”
Harry Mills, Founder & CEO Oku Markets
One-Size doesn’t fit all
Getting to grips with pricing risk can be fairly straightforward for FX-denominated transactions with a straight-through and linear FX impact on the price, but most businesses have a more complex setup.
Many businesses are converting from a just-in-time to a just-in-case stock strategy. which can bring complexity and may add to pricing risk. It’s our view, here at Oku Markets, that there is no one-size-fits-all approach for currency management, so here’s a few areas to think about:
Stock cycle and costing method
Pricing strategy and flexibility
FX price sensitivity (as detailed above)
The competitive environment and market practices
Pricing risk can impact procurement and sales, although we mostly think about the pricing that we are delivering. What about the pricing we receive, as customers? It’s not uncommon for Chinese exporters to add a large buffer to their prices to factor in fluctuations and depreciation in the USDCNY exchange rate. Read more about China and the yuan.
So it’s worth considering and asking your suppliers and international partners about how they manage FX – is there an opportunity for increased transparency and better terms by tackling the problem together?
FX Risk Map
It might be helpful to visualise the lifecycle of a transaction to identify when currency risk occurs. Again, there is no one-size template for this – every business’ FX Risk Map will look a little different, but here’s a basic setup to get started with:
Pricing Risk: the FX risk between quote and agreement
Transaction Risk: the FX risk between agreement and settlement
Translation Risk: the FX risk between accounting (PO/invoice) and settlement
Dealing with Pricing Risk
Three ways you can reduce pricing risk and deliver more consistent results are:
Include a quote expiry date – limiting the time reduces risk
Add an FX buffer to the price – 5% is typical for short periods
Build an FX clause into the quote – transparency means no surprises
The most appropriate route or combination of mitigating actions is unique to each business. An online travel company delivering live holiday prices will require higher frequency updates to FX rates and a tighter quote expiry date and FX buffer when compared to a company providing quotes for custom-designed summer houses.
When it comes to an FX buffer, we suggest considering the volatility of the currency pair and adjusting for the relevant quote period.
Let us help you quantify your FX risk
Quantifying currency exposure requires thought and specialist skills and expertise. Most FX brokers lack the capabilities to do this properly, resorting instead to emotionally-charged deal-making which can result in poor outcomes for clients.
We’re proud to work transparently with our clients, and we work hard to break the asymmetry of knowledge and information in the FX market.
You can contact us for a review of your currency processes and for our guidance and suggestions at [email protected] or 0203 838 0250.
Thanks for reading 👋
Harry Mills
Founder at Oku Markets
Managing Business FX Risk
https://treasuryxl.com/wp-content/uploads/2022/09/harry-200.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-22 07:00:342022-12-29 13:20:02What is Pricing Risk (FX Risk) and how to deal with it?
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.
https://treasuryxl.com/wp-content/uploads/2022/09/blog-pieter-19e-200.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-19 07:00:032023-01-02 14:18:20Where did the treasury applicants go? | By Pieter de Kiewit
The EuroFinance will finally open their doors in exactly one week. After two years everyone can meet in person again at the largest and most senior gathering of corporate treasurers worldwide.
For over 30 years, EuroFinance is where best-in-class treasury teams come together with the most innovative fintechs and renowned financial institutions to share experiences, discuss best practices and collaborate to solve the challenges of the day.
Schedule your EuroFinance program in advance
Benefit from the extensive expertise of 150 world-class speakers across 3 days of thought-provoking keynotes, lively debates, in-depth case studies and technical discovery labs providing practical insights and key skills to advance your treasury.
With such a great number of high quality sessions it’s wise to schedule your session program in advance.
Elise le Clerc Director global treasury Willis Tower Watson
Jean-Baptiste Disdet, Treasury technology director, Japan Tobacco International
Kristina Moller, Treasury director, Spotify
Mack Makode, VP, treasurer, Under Armour
Mandana Sadigh, SVP, corporate treasurer, Mattel
Victor Pausin, Treasurer – Americas, Nissan Motors
Clive Bailey, Treasurer, FCE Bank
Connect with our highly valued partners for a chat and a coffee
We are happy to announce that the partners that are highlighted below will host a booth at the expo. Together with them we build the treasuryXL community by delivering daily treasury news, blogs, events and vacancies.
They would love to welcome you at the expo and invite you for a quick chat. You can also book your appointment in advance to secure some extra time. Contact me directly and I will introduce you personally.
https://treasuryxl.com/wp-content/uploads/2022/06/pexels-photo-5986115.jpeg7501125treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-14 07:00:562022-09-13 15:06:09Meet our partners at the EuroFinance next week!
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 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.
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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…..
https://treasuryxl.com/wp-content/uploads/2022/09/Cash-and-Treasurer-featured-200x200-1.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-09-06 11:00:102022-09-06 12:46:51RECAP | Cash and Treasury Management Event Copenhagen | By Pieter de Kiewit
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.
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.
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.
https://treasuryxl.com/wp-content/uploads/2022/08/kantox-cfo-4-200.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-08-30 07:00:362023-03-03 12:10:02CFO Perspectives: How to set a currency hedging strategy
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