Brush up on your treasury knowledge? Get our eBook: What is Treasury?

27-10-2022 | treasuryXL | LinkedIn |

How can you fast brush up on your treasury expertise, Treasurers, CFOs, Cash Managers, Controllers, and other Finance Addicts? Or how would you describe “What Treasury is” to family and friends? Well, there is an easy solution for it. Download our free eBook here: 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:

  1. 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.
  2. The 41 pages eBook, What is Treasury?

 

Subscribe, Join, Download and Relax.

Welcome to our community and have fun reading!

 

 

Director, Community & Partners at treasuryXL

 

 

Understanding the Importance of Working Capital for Treasury

27-10-2022 | treasuryXL | TIS | LinkedIn |

Working capital is a critical consideration for any business – particularly in an uncertain economic environment. If a company’s working capital is not managed effectively, the company may struggle to meet its obligations, secure the right level of funding, or invest in growth. But for many companies, gaining full visibility over working capital is often a difficult task – especially given how it is an activity that spans many different parts of the business.

Going a step further, recent economic and geopolitical events from the past couple of years have presented even more challenges to working capital management. In fact, PwC’s Working Capital Study 21/22 found that net working capital days reached a five-year high in 2020, “driven by the shock and uncertainty of the COVID 19 pandemic.” More recently, the 2022 AFP Strategic Role of Treasury Survey identified working capital improvements as one of the two most challenging tasks faced by treasury professionals today.

In order to manage working capital effectively, companies first need to understand it – you can’t manage what you can’t measure, as the saying goes. With this in mind, let’s dive a bit deeper into the core dynamics of working capital and the subsequent implications for treasury and finance.

What is Working Capital Anyway?

Simply put, working capital is the cash that businesses can use to meet their day-to-day financial obligations, such as for paying rent, employee salaries, and supplier invoices. Calculated as the difference between a firm’s current assets and its current liabilities, a strong working capital position is essential to the smooth running of any company. For this reason, working capital is often described as the lifeblood of a business.

Working capital can be measured using a variety of metrics. The following concepts are key when it comes to understanding the component parts of the working capital cycle:

 

 

  1. Days Sales Outstanding (DSO) measures how long it takes a company to collect cash from customers and clients (i.e. accounts receivable).
  2. Days Payables Outstanding (DPO) measures how long the company takes to pay its suppliers (i.e. accounts payable).
  3. Days Inventory Outstanding (DIO) measures how quickly the company sells its inventory.
  4. Cash Conversion Cycle (CCC) measures how long the company takes to convert the cash spent on raw materials into sales. This is calculated as follows: CCC = DSO + DIO – DPO.

As a rule of thumb, the shorter a company’s cash conversion cycle, the more efficiently it is using its working capital – although typical cash conversion cycle times can vary considerably between different industries, world regions, and company sizes. Any company’s cash conversion cycle can also be adjusted by optimizing one or more of the above components: companies can speed up customer collections, delay/expedite payments to suppliers, and/or alter the timeframe that cash is tied up in inventory.


You might also like: What is Working Capital Management, examples of typical acitivties and frequently asked questions; Explained by treasuryXL experts


How Does Working Capital Impact Treasury & Finance?

Treasury and finance teams have an important role to play in optimizing their company’s working capital.  Working capital is critical to a company’s financial health: if the business doesn’t have enough cash readily available, it may struggle to pay its obligations on time. It may also seek more external financing than is really needed or may lack the funds needed to invest in innovation or business growth.

In order to effectively manage these cash inflows and outflows, treasury must not only have an accurate and timely view of their “current” working capital status, but they must also have a grip on future cash flows as well. This means that treasury must be proactive in developing cash forecasts that reflect anticipated changes in working capital, including deviations in supplier invoicing or payment behavior, as well as changes to the level of planned spend by procurement and other internal departments.

By working with other departments such as procurement, AP, and AR, the treasury team is well placed to drive improvements to the cash conversion cycle and unlock the company’s working capital. Because treasury typically seeks to maintain global visibility and control over cash positions, payments activity, and general financial workflows, they are in the perfect position to evaluate and influence high-level working capital decisions. For this reason, treasury is sometimes referred to as the “steward” of working capital internally.

However, there are a variety of hurdles that can negatively impact treasury’s view of, and control over, working capital.

 

Challenges in Managing Working Capital

While the importance of effective working capital management is clear, there are a number of reasons why this can be a challenge:

 

 

Disparate Data Sources: By its nature, managing working capital means optimizing activities that span different departments within the organization, including accounts payable (AP), accounts receivable (AR) and procurement, as well as treasury and finance. Working capital needs to be managed holistically, with access to data from these different parts of the business – but this can be constrained by siloes and disparate systems and data sources.

Lack of Alignment & Communication: Effective working capital management can be held back by a lack of awareness or competing priorities across different parts of the business. Because there are a range of departments that need to be on the same page in order to drive working capital optimization, it can be difficult to align the KPIs and drivers of each department to achieve a cohesive strategy. For this reason, a strong focus on working capital is needed from senior management in order to ensure a consistent approach across the organization.

Global Operational Complexity: Payment practices, vendor or customer behavior, and internal business models can vary considerably across different countries and regions, which can make it difficult to manage working capital consistently at a global level.

Supply Chain Relationships: The relationship a company maintains with its vendors and suppliers within the supply chain can have a massive impact on working capital. For example, companies frequently adjust their working capital position by either reducing or extending the time they take to pay invoices to suppliers. However, these strategies can have an adverse impact on vendor relationships, especially if companies choose to delay payment as long as possible. As such, working capital strategies that focus on altering vendor invoicing or payment terms should always be treated carefully.

 

How Does TIS Help Treasury Manage Working Capital?

In order to drive improvements to working capital, treasury teams first need full visibility over their company’s global cash, payments, and invoicing activity. As noted above, obtaining this data in an accurate and timely manner presents a major challenge for most companies, as does the task of effectively analyzing and leveraging it.

In order to simplify these tasks for treasury, TIS recently launched a new solution, TIS Working Capital Insights, which provides companies with 360-degree visibility over their core working capital metrics and KPIs.

 

 

With this suite of capabilities, organizations can seamlessly integrate their ERPs and corresponding AP and AR data with our solution in order to review payment terms and behavior for vendors and customers, analyze invoice and billing activity, and measure all elements related to their net working capital status and cash conversion cycle.

As TIS enables clients to aggregate and classify their data, users can evaluate their metrics globally or granularly according to specific entities, regions, or customers and suppliers. Users can also leverage TIS’ visual dashboards for intuitive reporting and refine their analyses by any timeframe to view activity and cash flows through customizable and flexible parameters.

By leveraging these tools in conjunction with TIS’ other liquidity and payment management solutions, organizations can access all data and information related to their global cash balances, payment statuses, and broader working capital operations for the entire company. The result is total visibility and control over working capital, and a much easier workflow for identifying the best strategies to optimize it.

For more information about TIS Working Capital solutions, download the full factsheet or request to speak with one of our experts!


Eurofinance remains THE event for corporate treasurers | By Pieter de Kiewit

12-10-2022  treasuryXL | Pieter de Kiewit | Treasurer Search  LinkedIn

 

Throughout covid times the organizers of Eurofinance remained active and were able to create interesting web-based events. Still, general opinion in last weeks’ event in Vienna was that there is nothing like the live thing. The programme was packed with interesting content, the event floor with interesting companies and visitors.

By Pieter de Kiewit

Communication leading up to the event and the venue, the Wien Messe, radiated experience in events of this size. The numbers of representatives and visitors were impressive. Luckily, the venue is big enough to not nerve the visitors who have to get used to large crowds again.

The programme was spread out over the very large room for plenary meetings, five large rooms for parallel session with presentations & panel discussions and “open rooms” on the trade floor. Key note speakers like Guy Verhofstadt and Goran Carstedt were able to enthuse with stories beyond the scope of treasury, others covered topics about treasury technology, both practical & visionary and treasury organization, for example about my personal favourite, the treasury labour market.

For many, the trade floor was easily as interesting as the content. Visitors gained market information, for example preparing for a TMS selection and implementation. Also reuniting with old treasury friends and getting to know new ones, was relatively easy during well catered breaks. Some of the visitors created new legends during the Thursday night afterparty that is not covered by this looking-back-blog.

As treasuryXL ambassador I visited the various partners of the platform present and received positive feedback on the event. So Cobase, Kyriba, TIS, CashForce, Nomentia, Refinitiv and CashAnalytics, we hope to see you again in Barcelona again and welcome a number of new ones.

 

Hasta luego,

 

 

 

 

 

 

Thanks for reading!

Pieter de Kiewit

 

 

Don’t miss the latest episode of TIS’ Payments Hub Podcast!

06-10-2022 | treasuryXL | TIS | LinkedIn |

Don’t miss the latest episode of TIS’ Payments Hub Podcast! treasuryXL expert Patrick Kunz is featured in this edition. The topic of discussion is: Treasury in Finance; What are the newest trends and how can treasurers prepare?

In this episode, treasury and banking expert Kate Pohl speaks with industry consultant and thought-leader Patrick Kunz about the state of contemporary treasury best practices, technology utilization, and more.

Click here to listen to the complete episode


LIVE SESSION | My Treasury Career Development & How the Register Treasurer education contributed

29-09-2022  treasuryXL | Treasurer SearchLinkedIn

 

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:

𝐌𝐲 𝐭𝐫𝐞𝐚𝐬𝐮𝐫𝐲 𝐜𝐚𝐫𝐞𝐞𝐫 𝐝𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭 & 𝐇𝐨𝐰 𝐭𝐡𝐞 𝐑𝐞𝐠𝐢𝐬𝐭𝐞𝐫 𝐓𝐫𝐞𝐚𝐬𝐮𝐫𝐞𝐫 𝐄𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐞𝐝

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).

 

 

Everyone is welcome to this webinar. This webinar is extra relevant for those who consider joining the RT programme.

🌟Moderator: Pieter de Kiewit of Treasurer Search

🌟Duration: 45 minutes

 


We can’t wait to welcome you next week!

Best regards,

 

 

Kendra Keydeniers

Director, Community & Partners

 

 

 

 

Factsheet: The TIS Solution Suite

21-09-2022 | treasuryXL | TIS | LinkedIn |

Introducing CashOptix, PayOptix, and RiskOptix features from TIS (Treasury Intelligence Solutions), which offer enterprises of all sizes and industries improved capability to handle crucial cash management, payments, banking, security, and compliance demands. Find out more about the benefits of each suite right away in this unique factsheet.

Get to Know the TIS Solution Suite

TIS classifies the unique capabilities they offer clients into three distinct categories; CashOptix, PayOptix, and RiskOptix. When combined, this cloud-based suite provides organizations of all industries and sizes with superior functionality to address critical cash management, payments, banking, security, and compliance needs.

You can find the factsheet 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

Meet our partners at the EuroFinance next week!

14-09-2022 | treasuryXL | EuroFinanceLinkedIn

 

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.

Click here for the full agenda

Click here for the speakers overview

The line-up of 150 world speakers includes:

  • Kristina Moller, Treasury director, Spotify
  • Wendy Venema, Assistant treasurer, Tata Steel
  • 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.

Technology sponsors plus

Kyriba

Technology sponsors

TIS

Gold exhibitors

Nomentia

GTreasury

Silver exhibitors

CashAnalytics

Refinitiv

Bronze exhibitors

Kantox

Innovation alley

Cobase

 


 

 

I wish you a great time at the EuroFinance. Safe travels and enjoy!

Kendra Keydeniers

 

 

 

 

 

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

Could Stablecoins Drive Payment Innovation?

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.

Global Cryptocurrency Acceptance Chart

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.

More to Read:

  1. API: Copper Integration
  2. Blog: The Top 5 Trends for CFOs in 2022
  3. Blog: Digital Currencies: Not Ready for Corporate Treasury

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



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:

  1. 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.
  2. The 41 pages eBook, What is Treasury?

 

Subscribe, Join, Download and Relax.

Welcome to our community and have fun reading!

 

 

Director, Community & Partners at treasuryXL