8 tips for leadership in times of crisis

07-04-2020 | by Rowan Hermes | Ilfa Group

Often a crisis surprises you. Even if there are signs of an upcoming crisis, you cannot always prevent it. It is important how you deal with a crisis situation. Leadership is key to find proper solutions for the situation. How does a good leader act best in times of crisis? Ilfa is sharing 8 tips for good leadership.

Blog is in Dutch language:

Een crisis kan heel acuut opkomen of geleidelijk aan ontstaan. Denk aan het plotseling breken van een belangrijke machine of opdrachten die langdurig uitblijven door het coronavirus. Zodra je de crisis niet meer kunt voorkomen, moet je besluiten hoe je met de situatie omgaat.

1.       Blijf kalm

Het klinkt heel logisch, maar toch is het vaak lastig om rustig te blijven in een crisissituatie. Wees een voorbeeld voor je team door de situatie rustig te bekijken en op te delen in behapbare stukken. Begin met het (online) bijeenbrengen van de juiste mensen en geef iedereen een (kleine) taak. Dit geeft richting en biedt houvast. Als de eerste taken gedaan zijn, kom je weer bijeen en pak je het volgende deel van het probleem op. Handel daarbij snel, maar niet overhaast.

2.       Zorg voor een duidelijke koers en blijf flexibel

Zorg dat er een duidelijk plan ligt en dat de gezette koers gevolgd wordt. Regelmaat geeft in crisistijd houvast, maar wees niet bang om bij te sturen. Je plan staat niet in steen geschreven en kan veranderen door nieuwe informatie. Probeer flexibel te zijn, maar ga vooral geen grote sprongen maken. Je hebt een doel en moet in die richting blijven werken.

3.       Heb realistische verwachting

Iedereen wil dat een crisissituatie zo snel mogelijk opgelost wordt, maar dat is niet altijd mogelijk. Breng eerst de omvang van het probleem in kaart en stel tussendoelen op. Denk na over nadelen en bedreigingen, maar probeer ook positief te blijven en kansen te zoeken. Communiceer ook op een heldere manier naar je team. Zo draag je bij aan het begrip van de situatie. Maak mensen niet bang, maar laat de ernst van de situatie doordringen.

4.       Kijk naar wat je in de hand hebt

Het is een natuurlijke reactie om je te richten op de problemen, maar deze heb je niet zelf in de hand. Richt je niet op zaken buiten je invloedssfeer, maar richt je energie en creativiteit juist op het vinden van oplossingen. Je weet wat je eigen talenten en de talenten van je team zijn. Zet deze in en bedenk samen oplossingen.

5.       Kies een passende strategie

De tips en voorbeelden van succesvolle leiders vliegen je om de oren, maar kopieer niet zomaar een andere leider of ondernemer. Gebruik input van anderen om een plan op te stellen en een stijl te kiezen die bij jou en je team passen.

6.       Kom afspraken na

In crisistijd worden vaak toezeggingen gedaan voor verbetering in de toekomst. Zorg dat je elke toezegging nakomt. Je wordt er keihard op afgerekend als je deze beloftes verbreekt.

7.       Zorg goed voor jezelf

Een leider moet er staan in crisistijden. Dit betekent niet dat je jezelf weg moet cijferen. Het is juist belangrijk om goed voor jezelf te zorgen. Eet goed, slaap voldoende en blijf actief. Door mentaal en fysiek sterk te blijven, kun je optimaal presteren in moeilijke tijden.

8.       Zorg goed voor je team

Een crisis zorgt voor veel angst en twijfels. Erken deze gevoelens van je team, het is een heel normale reactie. Zorg dat je duidelijk en eerlijk over de situatie bent, maar ook dat je met je team samen kijkt naar de mogelijkheden en kansen. Je moet samen door de crisis heen komen. Regelmatig communiceren is erg belangrijk. Dit hoeft niet per se in persoon, maar kan ook in een video- of telefoongesprek.

Source

6 tips to manage your liquidity

30-03-2020 | by Rowan Hermes | Jean Pierre Renard | Ilfa Group

Liquidity management is simply the systematic management of money that enters and exits your company. You systematically look ahead to your cash balance. For many companies it is an integral part of their business operations, but how do you ensure that you manage your liquidity as well as possible? In this blog, in collaboration with Jean Pierre Renard, associate partner at Ilfa, they provide 6 tips for managing your liquidity.

Blog is in Dutch language:

De coronacrisis heeft grote invloed op ons dagelijks leven. Zowel zakelijk als privé zal er de komende periode een hoop veranderen. Opdrachten en afspraken worden afgezegd, klanten kunnen niet (op tijd) betalen en in- en verkoop verloopt moeizaam. Het is als mkb’er nu meer dan ooit belangrijk om te weten hoe je bedrijf er de komende maanden voorstaat. Liquiditeitsproblemen komen echter ook voor bij bedrijven die juist snel groeien. Ondanks groei en winsten kan je liquiditeit een probleem zijn, omdat veel geld vastzit in debiteuren en voorraden. Het is belangrijk dat je een duidelijk financieel overzicht hebt. In goede tijden helpt dit je verstandig om te gaan met je geld en in onzekere en slechte tijden weet je waar je aan toe bent en waar je bij moet sturen.

  1. Zorg voor een goede liquiditeitsbegroting 

Stel een liquiditeitsbegroting op waarin je de standaardpatronen van je cashflowverloop verwerkt. Laat je niet leiden door je banksaldo, deze mist toekomstige kasstromen, of je jaarcijfers, deze zijn sowieso verouderd. Focus op je huidige en toekomstige liquiditeitsbegroting om de positie van je bedrijf in de komende maanden in de gaten te houden en snel in te kunnen spelen op de actualiteiten.

  1. Gebruik software om inzicht te krijgen in je liquiditeit 

Je kunt je liquiditeit dagelijks inzichtelijk maken met behulp van software. SmartFunding en Ilfa bieden SmartCash aan, een cloudoplossing die kasstromen inzichtelijk maakt. Op basis van bankmutaties krijg je in een oogopslag inzicht in je huidige financiële situatie, waardoor je direct kunt bijsturen op verwachtte liquiditeitsproblemen en tijdig werkkapitaal kunt aanvragen om dit op te vangen.

  1. Factureer snel en volgens een duidelijk plan 

Zorg dat je betalingscondities duidelijk gecommuniceerd worden naar je klant en volg deze ook op wanneer de klant niet betaald. Zeker in deze onzekere tijden is het belangrijk om te waken voor oplopende debiteurentermijnen. Een goed (geautomatiseerd) systeem van herinneringen zorgt dat de klant de betaling niet uit het oog verliest. Houd de klant geen hand boven het hoofd. Je loopt het risico daardoor zelf in de problemen te komen. Je kunt klanten ook aansporen op tijd te betalen door een korting te geven bij een snelle betaling. Factureer daarnaast regelmatig. Bij dagelijkse facturering krijg je gemiddeld twee weken eerder je geld dan bij maandelijkse facturering.

  1. Manage crediteuren  

Als je problemen hebt met het betalen van je crediteuren moet je eerst kritisch kijken waar je kunt besparen. Annuleer overbodige abonnementen of kies een goedkoper alternatief. Plan daarnaast betalingen indien nodig in op de laatste dag van de betalingstermijn. Neem, als dat niet voldoende is, op tijd contact op met de leverancier. Neem zelf het initiatief, houd contact en maak een nieuwe betalingsafspraak.

  1. Houd contact met financiers 

Neem tijdig contact op met je financier(s) als uit de liquiditeitsbegroting blijkt dat je cashflow niet voldoende is om aan je betalingsverplichtingen te voldoen. Maak afspraken over het eventueel uitstellen van aflossingen. Denk daarnaast na over het afsluiten van een (korte termijn) financiering en mogelijk ook aan alternatieve financieringen. Voorbeelden zijn het leasen van machines in plaats van kopen of het verkopen van onroerend goed en dit terug huren.

  1. Verreken banksaldi 

Verzamel dagelijks, of toch tenminste wekelijks, informatie over je bankstanden en verreken positieve en negatieve saldi. In tijden van negatieve rente bespaar je zo dubbele kosten. Verdeel in het verlengde hiervan eventueel positieve saldi over diverse banken zodat je maximaal gebruik kunt maken van het depositogarantiestelsel.

Source

OpusCapita makes Liquidity Management free for all customers

| 26-3-2020 | treasuryXL | OpusCapita |

OpusCapita makes Liquidity Management in a basic version free for their SaaS customers

OpusCapita, treasuryXL partner and leading cash management solution provider announces today that they have chosen to make their Liquidity Management product free for all customers until the end of the year in order to help treasury and cash management professionals to meet the increased demand on accurate cash forecasts due to the spread of the coronavirus.

“We are living in unprecedented times and we want to help our customers. The demands on treasurers are immense right now and I feel if we can help by making our product for free it’s the right thing to do”, states Jukka Sallinen, Head of Cash Management, OpusCapita.

Liquidity Management will be available in a basic version to allow customers to start using it right away without any implementation or set-up needs.

“We are also looking for ways to enable companies who are not our customers to use this functionality at a heavily discounted price”, states Jukka Sallinen, Head of Cash Management, OpusCapita. 

“I am happy that we can help our customers in these tough times and that we as a company can do our part”, states Patrik Sallner, CEO OpusCapita.

What does Liquidity Management Basic enable you to do?

With the basic package, you will be able to enable your subsidiaries across the globe to manually input (or upload from Excel) their current cash balances and future cash flows (for example AR, AP, taxes etc) in OpusCapita. Once you have this data centralized, the basic package enables you to setup Reports and Dashboards which will automatically consolidate and display all entered balances and cash flows.

In short, this includes:

  • Manually entering cashflows (Liquidity Unit Entry)
  • Manually entering cash positions (Liquidity Balance Entry)
  • Liquidity grid and graph, best-practice Reports such as:
    • Cash Visibility
      • Cash balances per bank account, per bank or per company
      • Actual inflows and outflows on bank accounts (if statements are imported in OpusCapita)
    • Cash Forecasting
      • Total forecast
      • Forecast per bank account, per company or per currency
      • Actual vs Forecast
    • Dashboards for visualizations cash positions and forecast

Three steps to get started

1. Get in touch with us so we can enable Liquidity Basic for you.

2. Add cash flows with pre-built templates or import them from Excel.

3. Build reports with our straight-forward drag’n’ drop functionality.

 

Read more information here.

 

About OpusCapita

OpusCapita enables organizations to buy and pay quickly and securely, with a real-time view of their business. OpusCapita customers use their source-to-pay and cash management solutions to connect, transact and grow. OpusCapita processes over 100 million electronic transactions annually on its Business Network.

Visit OpusCapita

Visit Partner Page

Read Customer Success Stories

treasuryXL announces partnership with OpusCapita

| 19-3-2020 | treasuryXL | OpusCapita |

treasuryXL announces partnership with OpusCapita, a leading cash management provider.

VENLO, The Netherlands, MARCH 19, 2020 – treasuryXL, the community platform for everyone who is active in the world of treasury, today announced the premium partnership with a leading cash management provider, OpusCapita.

As a marketplace, treasuryXL will offer OpusCapita market commentary and insight to its audience. Offering a continuous flow of relevant treasury content, making treasury knowledge available, results in treasuryXL being the obvious go-to platform for its’ audience. OpusCapita will have a prominent role in the Treasury Topic environment with coverage in Cash Management, risk management, Treasury Software, Payments & Banking and Fraud & Cybersecurity. Together they will host virtual roundtables in the near future to connect with partners and experts around the world.

“We are excited to take part in the treasury community that TreasuryXL is building and look forward to join the network of treasury experts.” Marc Josefsson, Head of Strategic Sales, OpusCapita.

OpusCapita has over 800 customers across more than 100 countries. Their secure, cloud-based solution enables Treasury and Finance professionals to harmonize global processes and policies, centralize treasury and finance operations and reduce complexity.

treasuryXL and OpusCapita strive for a fruitful partnership where its’ audience are top of mind making sure that (potential) clients are always up to date with the latest cash management news and events benefit from a comprehensive range of services and products.

About treasuryXL

treasuryXL started in 2016 as a community platform for everyone who is active in the world of treasury. Their extensive and highly qualified network consists out of experienced and aspiring treasurers. treasuryXL keeps their network updated with daily news, events and the latest treasury vacancies.

treasuryXL brings the treasury function to a higher level, both for the inner circle: corporate treasurers, bankers & consultants, as well as others that might benefit: CFO’s, business owners, other people from the CFO Team and educators.

treasuryXL offers:

  • professionals the chance to publish their expertise, opinions, success stories, distribute these and stimulate dialogue.
  • a labour market platform by creating an overview of vacancies, events and treasury education.
  • a variety of consultancy services in collaboration with qualified treasurers.
  • a broad network of highly valued partners and experts.

About OpusCapita

OpusCapita enables organizations to buy and pay quickly and securely, with a real-time view of their business. OpusCapita customers use their source-to-pay and cash management solutions to connect, transact and grow. OpusCapita processes over 100 million electronic transactions annually on its Business Network.

Visit OpusCapita

Visit Partner Page

Read Customer Success Stories

Are we entering an unprecedented economic situation?

| 28-02-2020 | treasuryXL | Pieter de Kiewit

One of my favourite professional pastimes as a corporate treasury recruiter is digesting treasury technical content and bridging it to the “rest of the world”. Or see what is happening in the global news and projecting it on the field of corporate treasury.

Currently there is a constant flow of news about too much money in the market. One would say this is a good thing. Let me give you some positive and negative examples of the effects:

But also:

  • Pension funds are not able to invest in a future-proof way;
  • We have to pay for our savings (if you have a lot);
  • Hedge fund managers use external funding, instead of the funding of their investors, to safeguard their bonuses.

We enter an unprecedented economic situation only encountered by Japan and there is no obvious path to take. I will not try to clarify macro economics, it is not my field of expertise, but do know that changing demographics contribute. Us getting older and people retiring rich, most likely richer than their kids, has to do with this. What do I see as effects on corporate treasury? Let’s focus on three main tasks of a corporate treasurer.

In cash & liquidity management there are many exciting initiatives in the improvement of cash flow forecasting. Payments can technically be done smoother, safer and quicker. Cash visibility can be increased and liquidity is centralized. Most corporate treasurers want to implement these new solutions. As liquidity is high, many CFOs do not feel the urgency to invest in these initiatives. Doing nothing will not result in higher cost, so what is the ROI?

In risk & investment management the obvious focus is on interest developments. The general opinion is that interest will be low for a very long time. Getting long term funding for (almost) 0% is doable. So why bother matching long and short term funding options? This results in a situation that the use of hedging instruments is less important. Investing excess cash or helping the company pension fund with their strategy currently requires analysis and choices.

Corporate Finance has the fun task of optimizing the balance sheet and lowering funding costs to an extreme. I recently met the group treasurer of a real estate company who is able to make money attract funding for his company! The more challenging task of corporate finance is participation in business development and M&A. The willingness of entrepreneurs, shareholders and boards to invest in adventurous ways is high. The corporate treasurer has to hold on to his role of risk manager and hit the brake. This does often not increase his popularity…

A lot more can be said about the topic, that will be for other blogs. Back to a non-corporate mindset and not pretending to be a socialist, I hope all this money will be used to improve the world: better the environment, lowering the income gaps, makes us all happier. The real philosophical approach I leave to Notorious B.I.G.

Enjoy your money,

 

 

Pieter de Kiewit

Owner at Treasurer Search

Corporate Governance and Treasury | Embrace the Corporate Treasury Policy

| 18-02-2020 | François de Witte | treasuryXL |



Corporate Governance

Corporate Governance is a mechanism through which boards and directors can direct, monitor and supervise the conduct and operation of the corporation and its management in a way that ensures appropriate levels of authority, accountability, stewardship, leadership, direction and control.

The ultimate responsibility for Treasury management within an organization lies with the board of directors. Due to the practicalities and technical aspects involved in corporate treasury, the board typically delegates the daily management of risk to responsible individuals in each department. In the case of financial risks, many of these are delegated to the treasurer.

Whilst, due to its specific activities, the corporate treasurer needs to take a lot of actions and decisions independently, it is important that he does this within a framework and Governance. Quite a lot of corporates have formalized this in a “Corporate Treasury Policy”.

Corporate Treasury Policy

The Corporate Treasury Policy is the mechanisms by which the board, or risk management committee (RMC), can delegate financial decisions in a controlled manner. This document should be a summary of all the principles approved by the Board or the Financial Committee of the Board as a mandate of the Board to the treasurer (the Treasury Mandate).

The Corporate Treasury Policy is a framework document, which covers the following areas:

Organization of the Treasury Function

In most of the companies, the Corporate Treasury Reports to the CFO. The CFO is usually himself a Member of the Executive Committee, which itself reports directly to the Board of Directors. (Treasurer – CFO – Treasury Committee – Audit Committee – Board):

A policy should set out clearly which decisions are delegated to the treasurer and when the treasurer should refer a decision back to the board or other person within the organization. Within several corporate, the Board of Directors have delegated the decision process to dedicated committee, like the Risk Committee, and the Liquidity and Funding Committee.

Treasury Control Framework (including the Code of Conduct)

Procedures and controls to manage the risk should be put in place to provide an overall framework for decision-making by the treasury team.

Ideally, this should also include a code of conduct. The Corporate Treasurer should act as a Corporate Custodian. In other words, he is Protector of the company’s assets, and should act according to a strict Code of Conduct and Ethics. There exist examples of codes developed by professional organizations such as IGTA, ATEB, AFTE, ACT and ATEL.

Liquidity and funding

The board should be informed about funding possibilities to put currency, maturity, cost and equity/debt character into a wider context. The board should decide on the strategy but can delegate fund raising decisions and actions to treasury. However, I recommend that Treasury asks the final board approval for strategic decisions (e.g. major syndicated loans, bond issues, etc.).

The board should have an overall view on the liquidity risk of the company. The Board should also define the financial policy, covering the gearing and maturity issues, fixed and variable interest rate obligations, dividend policy and covenants.

Banking Relationship

Banks chosen by the treasurer must be able to meet the needs of the organization, both domestically and internationally. I recommend that the Board approves annually criteria for selecting the banks with whom it will work.

Risk Management

The Treasurer must identify the various risks to which the company is exposed, quantify the impact, and should inform the Board thereof. He should estimate the size of these exposure risks and their impact on the he overall operations and financial performance of the company, and make recommendations in these areas

The board must approve the hedging policy, the company’s foreign exchange, interest rate and commodity risk management policy and its attitude to risk. It should define which part of the risks must be hedged and the hedging horizon. I recommend that the Treasurer submits at regular intervals to the Board the list of authorized instruments, the amount per instrument and their term

Investment Policy – Counterparty Credit Risk

The board should approve the treasury’s Investment policy including the choice of instruments, the list of counterparties used + the maximum amount/counterparty & maturity. It is recommended that the Board provides guidelines and limits per instrument.

It is recommended that the Board approves the guidelines for fixing counterparty limits, and maximum exposure per counterparty.

Authorized instruments and Arrangements – Authorized Approvers

The Treasurer should make sure that the board must understands and approve the strategies and instruments used and sets guidelines for the appropriate limits for their use. These guidelines need to ensure that treasury has not sacrificed long-term flexibility or

survival for short-term gain, especially in view of the volatile financial market’s situation.

Treasury Operational Risk

The treasurer should make the Board aware of the operational risks to which the company is exposed. He should provide recommendations in this area. Furthermore, the treasurer should also submit recommendations to the board on the treasury organization and the ways to reduce the operational risks.

Monitoring

A Corporate Treasury Policy has only sense, if there is a regular follow up and control framework; Hence procedures and controls to manage the risk should be put in place to provide an overall framework for decision-making by the treasury team.

It is also important to provide to the Board a regular update on the way the treasurer complies with the policy. The policy should also be regularly reviewed.

Treasury must alert the board to external changes and internal strategic developments, which may have long-term implications for the organization and make proposals for managing them.

The policy needs also to be reviewed at regular intervals each “Policy” in function of the market and of other internal or external developments. I recommend having treasury on the Board’s agenda on a quarterly basis.

Conclusion

Treasury is not an island in the company. It is closely linked to the corporate governance. Hence it is important to define the right framework.

I recommend to corporates to put in place a treasury policy validated by the Board of Directors and reviewed regularly. It is important to update the Board at regular intervals about strategic topics, such as strategic financing topics and risk management.

The treasurer has also an important educational role, as he must be able to make complex treasury topics understandable for the board members.

Hence there must be a good interaction between the treasurer, the CFO and the Board is key, where the Treasurer is the linking pin.

 

François de Witte
Founder & Senior Consultant at FDW Consult
Managing Director and CFO at SafeTrade Holding S.A.
treasuryXL ambassador

Digitalization enhances the strategic position of the treasurer

| 27-12-2019 | TIStreasuryXL

Treasury departments are currently under pressure from two sides: Firstly, they are confronted with new regulatory changes for payment ecosystems, compliance regulations and provisions on combating money laundering and terrorist financing, which they must tackle by means of processes, technology and personnel. At the same time, digitalization is changing the business model of their companies. New technologies are coming to the fore, which redefine the payment area. The traditional, role, structure and staffing of the treasurer are thus being redefined. However, the opportunities of digitalization do not by any means poses a threat. Using them skillfully enables the treasurer to play a greater strategic role in future.

Cash and liquidity management, monitoring of accounts receivable and accounts payable accounting, budget and finance planning and financial risk management are the traditional core functions of the treasury as transaction and reporting center in the company. This is not going to change in the future either. What is new is that data material will be better exploited in the future by enhanced technologies. Among these technologies are: automation, artificial intelligence, big data analytics, machine learning, robotic process automation, open application programming interfaces (APIs) and cloud services. The “next generation treasurer” combines them to create a digital tool kit so he or she can become a more strategic bearer of risk and competence center for analytics in the company.

ENGAGE IN WINNING HORIZONTAL THINKING

Digitalization is a horizontal phenomenon. It affects traditional industries, their definition and boundaries. Companies are no longer attacked in the core of their industry, but at the perimeter. Those who do not pay attention, but restrict their strategy to their own industry, will be among the losers. However, those who engage in winning horizontal thinking – platform strategies, user-centric thinking, etc. – are much more immune from unpleasant surprises. Because these thought patterns are very similar across industries. We can shape our own future by borrowing from other industries. This can be transferred to the company level: The treasurer can also connect to new predictive maintenance technologies.

Changes in the treasury due to digitalization are already apparent and even acknowledged by the industry: In the middle of 2018, the British Economist Intelligence Unit conducted a study among European Senior Corporate Treasurers on behalf of Deutsche Bank. More than half of those questioned stated that their company had already changed its business model on the basis of disruptive technologies and this had a (negative) impact on their area of activity. Thus, significant innovations can be found in the areas of multi-channel payments, mobile solutions and product lifecycle of supply chains.

DIGITAL ICING ON THE CAKE IS NOT ENOUGH

The fact that a negative impact is perceived or even feared is reflected in the ingrained “gut instinct” of the treasurer as custodian of the company finances. The analysts of the Economist Intelligence Unit discovered that many were still not ready for the enhancement of their traditional role. The industry must break free from this role as a response to digitalization. It needs a stronger entrepreneurial perspective which seizes new opportunities instead of lying in wait for threats. Because digital technologies give you the opportunity to carry out formerly manually performed processes faster and more efficiently by means of automation. This creates room for new themes and strategic participation.

It is not just a question of using new technologies within existing systems. Too often the focus remains fixed on more efficiency, automation and incremental advancement of existing technology. Covering up old business processes and putting “digital icing on the cake” lead to the past. Those who think like that have not understood the fundamental ideas of digital transformation, which read: Innovative technologies first open the door for completely new business models and processes which would have been utterly inconceivable without them. What is required is not just a digital strategy, but a business or company strategy in which digital technologies become an integral part of the value chain architecture. Digitalization as a means to an end for future business goals!

DATA IS THE TREASURER’S NEW GOLD

“Software is eating the world”, it used to be said. Today, data is the new gold Liquidity data, payment flows and cash flows in real time contain essential information, which can only be properly evaluated by the available technology today. Thus, they become the treasurer’s “gold nugget”. Cloud-based payment platforms such as TIS are the basis for making data available in real time to central office. The treasurer can evaluate it with AI software, can train neural networks with his or her payment patterns and receive solvency forecasts of individual clients, who are just as relevant for Purchasing as for Sales, the CFO or Executive Board. He or she provides his or her business partners with information, which is not just recommendations for action at an overall holistic level. But they reach down to the level of individual customers or customer classes.

Meanwhile, banks have a regulatory obligation to open their business processes to the public via open API. They can broaden the scope of cooperation to include Fintechs and integrate process steps faster, which these may master better, into the business process landscape via open interfaces. The open API concept requires openness and readiness to adapt the function to the new mindset. Treasurers must learn to think in accordance with the open API framework.

SPARRING PARTNER FOR THE CEO

Those who use the new data analysis opportunities will be a relevant sparring partner for the CFO/CEO. The treasurer is in an ideal starting position, because he or she is at the source: where the cash is. Especially in a volatile, complex business environment, a free cash flow buffer is precisely the currency that a company requires for experiments in the area of digital transformation. The treasurer thus plays a strategic role – less in the sense of long-term planning as before, but rather in such a way that the company can now, with his help, perform agile capital allocation for experiments.

DOES ONE WANT TO REMAIN A TREASURER?

Treasurers need not fear being disrupted if they are ready to think outside the box and jump at new opportunities.

They have the potential to take on a more creative role in the company, to contribute to new business models and to adopt a strategic position. This also requires a new mental model. Does one want to remain a treasurer? Or does one acquire skills in the areas of software engineering, data science and project management or lead a team comprising these disciplines. This should no longer even be a question for the next-generation treasurer.

DIGITALIZATION PLACES NEW DEMANDS

The treasurer of tomorrow…

  • pro-actively contributes to his or her company reaching competitive advantages in an uncertain business environment.
  • creates the financial conditions for an entrepreneurial, exploratory and agile organizational development.
  • becomes strategic advisor for the CFO and Executive Board during the change to new digital business models.
  • uses digital technologies to meet the demand of the company for real time financial information and to intensify cooperation with suppliers and banks (via open APIs).
  • deals with ethical questions connected with artificial intelligence and new risks (cybercrime)

About the author: TIS

TIS (Treasury Intelligence Solutions GmbH) based in Walldorf has been combining experience and competence in financial planning since 2010, with particular expertise in cloud
computing. The result is the TIS solution: a comprehensive,highly scalable cloud platform for managing company-wide
payments, liquidity, and banking relationships worldwide. TIS enables SMART PAYMENTS to help the customer make better decisions by analyzing financial and operative performance on
the basis of the real time of the payment flows. The TIS solution has been successfully used for years in medium-sized and
large companies, such as Fresenius, DACHSER, BearingPoint, Heidelberger Druckmaschinen, Marquard & Bahls and Swiss Airlines. TIS provides Software-as-a-Service (SaaS) and offers
internationally operating customers key advantages, such as lower costs, risk prevention, a higher degree of transparency, shorter integration times, fast worldwide roll-outs and smooth
updates. The high level of security and deep integration of the platform with existing ERP systems are attested by the ISO-27001, SOC 1 and 2, as well as SAP certifications. Financial
Times and Statista recognize TIS as one of Europe’s Fastest Growing Companies 2019.
Further information can be found at www.tis.biz/en

About the author: Dr. Carsten Linz

Dr. Carsten Linz is a proven expert in entrepreneurial leadership, innovation and business model transformation. As a multiple entrepreneur and New Business Developer he has built up several hundred million EUR-business in the course of his career. He was also responsible for transformation programs for up to 60,000 employees. For SAP, he leads the Center for Digital Leadership, a renowned think tank for next generation digital innovation and transformation approaches. Mr. Linz is active as a business angel and in the investment committee of the largest European seed fund and holds several advisory board seats.

As an extended faculty member, he teaches Executive MBA courses at the Mannheim Business School, the European School of Management & Technology Berlin, the University
of St. Gallen and the Stanford Graduate School. He is the author of several books, among them “Radical Business Model Transformation: How to Gain the Competitive Edge
in a Disruptive World,” which was awarded the Top Business Book 2018 and translated into five languages. His articles have appeared in Forbes, Harvard Business Review / Managers, ZDNet, Computerwoche, Frankfurter Allgemeine Zeitung, D!gitalist Magazine, CIO Magazine.

Dr. Linz was named “Top 100 Digital Influencer”, awarded the “Innovation Landmark” by the German Federal President, awarded the “Award of Excellence” by the Global Institute of Logistics, and named “Leader” in the Gartner Magic Quadrant. He is an advisory member of the Digital Enterprise and Digital Platforms & Ecosystems projects of the World Economic Forum. Dr. Linz is a sought-after keynote speaker (London Speaker Bureau) and advises board members all over the world.

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To swap, or not to swap that is the question

30-9-2019 | Marco Lassche |

Cash management in different currencies:
The FX swap, a way to optimize your interest result

Years ago, when I made my first baby steps in the world of Treasury at Bank Mendes Gans, my old teachers Jan Loohuis and Aart-Jan Lensvelt, taught me some good lessons. One of them, that I always used in the companies that I have worked for, is this one.

What if you have temporary an overall negative position in one currency (e.g. -/- EUR 10 mio) and an overall positive position in another currency (e.g. +/+ USD 11 mio)?

Basically you have two easy ways to manage this liquidity position and optimize your interest result. Both ways lead to Rome:

  • Keep the balances in your bank account
  • You swap the balances in different currencies temporary by means of a FX-swap

Option 1: Keep the balances in your bank account
This option does not need much clarification.

  • For your debit balance you pay interest (basic interest +/+ margin)
  • For your credit balance you receive credit interest (basic interest -/- margin

Option 2: The FX swap
In a FX swap you do a trade in your FX trade portal, in which you exchange the bank balances at a spot date (at the spot rate) and you reverse it at a future date (at the forward-rate). You do the trade at the same time, so no FX risk is involved.

Forward FX-rates are being calculated directly from the spot FX-rate and are adjusted for the difference in interest rates between the two currencies.

FX swap visualised

Option 1 or option 2?
When the interest rate difference between the two currencies is more attractive in option 1, you keep your bank balances. When the interest rate difference between two currencies is more attractive in option 2, you swap.

Example
I would like to clarify it by an example in which we have a EUR balance of -/- EUR 10 mio and a
USD balance of +/+ USD 11 mio. We will swap the currencies for 1 month (30 days).

Interest results after 30 days

Option 1) Interest result by keeping balances in your bank account

Total interest proceeds in USD: EUR 2,708 * 1.1000 = USD 2,979 + USD 18,563 = USD 21,542.
Interest rate difference between USD and EUR: 2,35% (2.025% -/- 0.325%).

Option 2) Interest result by swapping balances

Interest result FX swap

At the start date we buy EUR 10 mio, and sell USD 11 mio at the spot rate 1.1000.
At the end date, after 30 days, we reverse the trade as we agreed with the bank:
We sell EUR 10 mio, and buy USD 11,025,770 at the agreed forward rate 1.102577

Our total interest rate difference proceeds is USD 11,025,770 – USD 11,000,000 = USD 25,770.

Conclusion:
In this example the FX swap is USD4,200 more attractive than keeping the account balances like it is. Of course, this is not always the case, but a FX swap can be a good alternative in many cases.

* How to calculate the interest rate difference between two currencies in a FX swap
As previously said, the difference in spot and forward rates, can be explained by the interest rate difference between two currencies, We calculate the interest rate differences as follows:

Forward Rate on annual basis / Spot Rate

As interest percentages are always based on 1 year we multiply the 30 days forward points by 12 to get to 1 year forward points (EUR and USD, calculate 360 days in a year, GBP e.g. 365 days).
The forward points for 30 days: 25.77, which means for one year 12 * 25.77 = 309.24
Forward rate on annual basis: 1.130924

Spot rate: 1.1000

1.130924/1.1000 = + 2,81%

Please feel free to contact me if you need any further information.

 

 

 

 

Marco Lassche 

Founder and Owner of at Bedrijfskostenexpert

Is your company struggling with liquidity forecasting?

| 12-09-2019 | treasuryXL | Cashforce |

Is your company struggling with liquidity forecasting?
Find out how you can transform your forecasts from bad to best.

Too much manual effort and too little time for analysis, a statement (too) many treasurers can relate to. According to PwC and their Global Treasury Benchmark Survey, still 87% of treasurers use technology from the 1980s (i.e. spreadsheets) or have a disparate set of ERP systems, multiple bank websites and email. Consequentially, this leads to a lack of visibility and makes it very arduous to answer critical questions like “Is my company over borrowed, underinvested or overexposed?”.

An inability to answer this question not only constrains treasury’s ability to measure its success but could harm the future viability of the company. With automated and accurate forecasts & simulations within reach, this is a clearly avoidable risk.

During this one hour webinar, Bruce Lynn of the FECG and Nicolas Christiaen from Cashforce discuss how to radically optimize your cash forecasting workflows by:

  • Identifying the operating risks by utilizing existing resources
  • Quantifying the benefits to be gained by examining existing “flows” regarding cash, accounting, work, and information, whether across treasury, the business units or other financial parts of the company.
  • Using a step-by step approach to set up an accurate & automated forecast

About Cashforce

Cashforce is a ‘next-generation’ digital Cash Forecasting & Treasury Platform, focused on analytics, automation and integration. Cashforce connects the Treasury department with other finance / business departments by offering full transparency into its cash flow drivers, accurate & automated cash flow forecasting and working capital analytics. The platform is unique in its category because of the seamless integration with numerous ERPs & banking systems, the ability to drill down to transaction level details, and the intelligent AI-based simulation engine that enables multiple cash flow scenarios, forecasts & impact analysis.

Cashforce is a global company with offices in New York, Antwerp, Amsterdam, Paris & London and provides Cash visibility to multinational corporates across various industries in over 120 countries worldwide.

 

THE CHALLENGES OF LIQUIDITY PLANNING AND FORECASTING

| 17-06-2019 | treasuryXL | Cashforce |

For more than a decade, liquidity and cash flow forecasting have remained in the top three challenges for CFOs and treasurers globally. This begs the question: why has this been a perennial challenge for so long? The reason: treasury operations today are, for the most part, a series of unintegrated systems, spreadsheets and silos between groups and other departments.

Companies are often faced with multiple ERPs, many entities, and different currencies. These make the task of managing liquidity a major challenge, not to mention a significant manual effort involving many people. The result: lots of time spent gathering and validating data while still not having a full, transparent view into the numbers. The volume, variety, velocity and veracity of data generated each day has made traditional analysis – using spreadsheets, for example – obsolete. It is just not possible to manually aggregate and analyse that much data with sufficient speed to be able to gain insight, and then turn that insight into action. To be able to do so you need the right set of tools.

WHAT SHOULD A TREASURER OR CFO BE ASKING THEMSELVES?

  • Can you identify all your sources of data that you need to make a cash flow forecast? Eg ERP (how many do you have, are they all on the same instance), CRM, bank statements, trend analysis, manual data (such as budgets).
  • How often do you refresh your short-term/mid-term cash forecast? (Daily, weekly, monthly, quarterly, or I don’t make a cash forecast).
  • How do you ensure no mistakes happen in your data capturing/consolidation?
  • How do you incentivise your subsidiaries? Local subsidiaries and users typically download information from their ERP, and upload in other types of files to HQ, or in SharePoint, or they will just send Excel files from all over the globe to HQ, which means it’s 100% manual. There’s no real alignment of the processes across subsidiaries and no audit trail at the local level.

WHAT TO CONSIDER?

  • Companies should ensure their information is system-based. In other words, they have full integration with their ERP, so they don’t have to manually download data (it should flow automatically).
  • Any augmentation of data should have an audit trail so that, ultimately, the group treasurer can see who did what, and when they did it.
  • Automate the process and deploy alert functionality, such as reminders for subsidiaries to post their local forecast, and for the group treasurer to look for it.
  • Ensure bank connectivity to enable comparison of actuals with forecast figures.

I HAVE THE DATA. NOW WHAT?

With this data, treasurers should now be able to answer these four key questions: what happened; why did it happen; what will happen; and what should be done?

  • Descriptive analytics answers the question, “what happened?” This is the most basic form of big data analytics, and provides a picture of past events.
  • Diagnostic analytics, “why did it happen?” Diagnostic analytics enables you to perform root cause analysis and use that information to prevent future repetition of events.
  • Predictive analytics, “what will happen?” Predictive analytics uses advanced algorithms – often with artificial intelligence and machine learning – to forecast future events.
  • Prescriptive analytics, “what should I do?” Prescriptive analytics tells you what the best steps are to achieve a specific result. Prescriptive analytics requires advanced machine learning capabilities.