06-04-2022 | treasuryXL | Treasury Delta | LinkedIn | The optimal, objective, and transparent selection of treasury supplier solutions and/or banking services, observing procurement principles and guidelines, remains a complicated challenge for all treasurers. It is extremely time-consuming and cost-ineffective. This article highlights a niche fintech solution developed by Treasury Delta to successfully digitize the […]
31-03-2022 | Pieter de Kiewit | Treasurer Test | LinkedIn |
On a regular basis, we write about your career planning in treasury, our opinions, and observations. Two articles on the website of Treasurer Search that are strongly related to this and very well viewed are:
Also, you might have noticed that we are big fans of the Treasurer Test, which helps treasurers in visualizing their skills and personality.
30-03-2022 | treasuryXL | Nomentia | LinkedIn |
An in-house bank is a group or a legal entity that provides banking services to different business units within the organization. The in-house bank replicates the services that are typically provided by banks. The in-house bank offers solutions for payments, liquidity management and cash visibility, payments on behalf (POBO), collections on behalf (COBO), FX requests, funding, and working capital to business units.
When organizations are looking for a way to improve cash flow processes, cash visibility, and reduce bank fees, the in-house bank can be a great alternative compared to working with countless banks internationally.
While the in-house bank is not an option in every country due to regulations, when it’s possible to use it, it will decrease the company’s vulnerability to regulatory changes as these could negatively impact business operations. Organizations are not only protecting themselves against regulatory changes of countries, but also against changes on the bank’s side for example when it comes to updating new payment file format standards.
Among the many benefits of implementing an in-house bank, centralized control, improved liquidity management, reduced banking fees, automated bookkeeping, globally harmonized payment processes and full visibility into subsidiary balances are perhaps the most important ones that organizations can realize.
Centralized control by the group is by far the biggest benefit of adopting an in-house bank to help with topics such as global payment processes, financing, investments, corporate-wide FX risk exposures, and hedging.
An in-house bank is especially favorable for companies with large amounts of cash or when there’s a constant need to move money between subsidiaries and the group. While the group gains a bigger control, business units and subsidiaries will have their own sub-accounts within the in-house banks. The balance limits are set and reviewed centrally based on the organization’s treasury policy by the group.
The group will be able to minimize global payments that include foreign exchange or cross-border payment fees as all the transactions can be conducted centrally instead of going through local payment processing third parties. With an in-house bank, there’s clearer visibility into the overall net positions per currency to manage and it’s possible to hedge FX risk at the group level for currency protection and fewer hedging transactions.
Also, subsidiaries do not necessarily need to go to banks for loans, but instead, the loan can be funded by the organization. Lending money to the subsidiaries can be significantly cheaper than paying high-interest rates to a third party like a bank or a creditor. Centralizing the internal financing to the in-house bank provides an easy way to document the processes for compliance as well as the process becomes more simple as all the applications will go through the group.
With a centralized in-house bank, treasury will have greater control over all the treasury processes, and this could significantly improve the liquidity position of the company.
Through the in-house bank, liquidity can be centrally managed and the group can decide whether external funding is required based on the cash position. With centralized reporting, the group does not only have better real-time visibility into the available cash, but decision-making becomes faster as the result of the available information. This is also beneficial for subsidiaries and business units as they will be able to receive funds a lot faster as a result of the automated cash pooling. This also ensures that there is adequate liquidity when and where it is needed instead of having excess amounts of cash on the accounts of subsidiaries that do not necessarily need the money at that point.
Of course, from time to time, organizations still need external funding for investments, but then it’s also easier to qualify for funding with better terms as a group than as a stand-alone subsidiary.
Getting started with an in-house bank will mean that the external banking cost will be reduced to the minimum so it’s a lot more cost-effective than using external banks globally. It’s also possible to save on bank transaction fees since the internal transactions do not need to go through external banking partners.
Centralizing the banking relationship management to group treasury can also increase negotiating power, so the enterprise can get better prices and improved services.
In-house bank users can auto-reconcile incoming payments and collections for higher efficiency. In a similar manner, inter-company cash flows can be also executed and posted. Balance reconciliation and reporting can be automated by fetching all account statements from the banks and allocating the transactions to the subsidiary’s in-house bank accounts. The rules of allocation can be set on a bank, company, or even an account level.
Using an in-house bank can remove the need for a separate netting solution. Instead, with an in-house bank, you can create the exact same process both for internal and external payments. When the internal payments remain internal and they do not require receivable-driven netting, you gain benefits such as always up-to-date bank account statements and fully automated reconciliation of internal transactions.
Subsidiaries also benefit from the harmonized payment processes. They won’t lose value dates and the month-end closing can be automated.
Payments-on-behalf-of (POBO) minimize the reliance on external bank accounts by subsidiaries. With POBO, subsidiaries continue to process payments in the same way as before while using the debtor’s in-house bank account number.
With Collections-on-behalf-of (COBO), it’s possible to define allocation rules based on transaction details to allocate cash to in-house bank accounts. With virtual bank accounts offered by external banks, it is easy to set up an automated COBO process.
Without a centralized control that an in-house bank offers, the group treasury has often had the challenge of the lack of visibility into the cash balances of the subsidiaries. With an in-house bank, it’s possible to manage multiple cash pools to gain full visibility on subsidiary balances.
It is more beneficial to pool all cash and credit balances instead of having cash lying idle on the accounts of the subsidiaries. Business units may run net credit or debit balances in the subaccounts and either earn or pay interest on the net debit/credit balances.
When the group needs to borrow money to the business units, they can set their own interest rates that can even vary based on the subsidiary’s size and profile.
There’s no simple answer to this question. It should be a strategic decision and should be aligned with your organization’s roadmap.
To identify whether the in-house bank is the right solution for you, carefully evaluate your current processes: what is working and what could be improved? Could some of the above-mentioned benefits make your operations more profitable by controlling the organization’s cash centrally?
Of course, you may already have a good solution for example for liquidity or bank fee management, but if you have business units and subsidiaries globally and you are going to invest heavily in development, you deal with local taxation, transfer pricing, you may want to consider the option of implementing an in-house bank in the near future.
Before you make a decision, you should also be aware of the regulations of all the countries you are operating in, whether POBO & COBO are allowed in those countries, and what paperwork you need to move forward with an in-house bank.
Implementing an in-house bank is a significant undertaking as it will require buy-in from many departments, however, in the long-term, you will be able to build better processes, improve visibility, and save money.
21-03-2022 | Peter Löbl-Brand | treasuryXL | LinkedIn |
We are happy to interview our newest treasuryXL expert, Peter Löbl-Brand.
Peter has been a corporate treasurer for over 10 years and is also a lecturer for multinational finance and risk management at the University of Applied Science in Wiener Neustadt, Austria.
Peter gathered insights while advising multi-national listed companies as well as local small and medium-sized companies.
He currently lives south of Vienna and is focusing on re-/structuring corporate treasury departments of SMEs.
Visit Peter’s LinkedIn profile to see an overview of his career and activities. But first…
My treasury journey started about 10 years ago as a credit risk manager at RHI AG, now RHI Magnesita. After about 3 years of working in this position, I got the chance to take over the Treasury team as team leader.
It’s a people’s business. Ensuring liquidity and therefore laying the foundation for the operative business of the corporate while having always a close relationship with your capital partner end strengthening their trust in the corporate feels like being one of the most important and highly valued links in the business.
I started my career in the group treasury of a listed company. Stage by stage I developed myself into a full-scale treasury and commercial officer working for a bigger SME company right now. My focus is on small to medium sizes companies with a high need for commercial structuring and the need to set up treasury management from scratch. To build, entertain and lead by example is energizing myself to perform.
Enabling business with partly sanctioned customers and countries.
Maintaining the tension and excitement after more than 10 years in corporate treasury.
Do not trust a soft commitment.
From my understanding, the corporate treasury is a business enabler. Especially when driving business internationally the corporate treasury is able to pilot business relationships to success. Based on that understanding Corporate Treasury is always seeking to find better instruments and the appropriate solution to close a deal.
I expect more and more solutions and instruments acting on the blockchain. Right now the industry is too much focusing on the blockchain as an enabler for cryptocurrency. Using the blockchain in international business will also solve the impossible trilemma as it makes business cheaper, adding quality and reducing costs for all parties.
Get in touch with Peter
Click here for his Expert Profile
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL
14-03-2022 | Jermal McDaniel | treasuryXL | LinkedIn |
We are happy to interview treasuryXL expert, Jermal McDaniel.
Jermal is an accomplished Finance practitioner with over 16 years of Treasury operations and Finance experience.
Jermal is an innovative visionary who utilizes a “Think Tank” methodology to generate ideas and action plans designed to streamline and automate manual processes to facilitate department efficiency.
How did his career in Treasury start and what is his best experience working in Treasury?
My Treasury journey started when my agency recruiting career ended in 2003. I did not set out to be a Treasurer, I kind of found myself in the Treasury field and I am blessed to still be a part of the Treasury Community.
I love the sense of urgency, the attention to detail, and the camaraderie/synergy needed to be a successful Treasury department. I often tell my staff that Treasurers are not born, they are made, and if you are detail-oriented, can work well under pressure, and are timely and accurate, I can give you the rest of the tools to be successful.
My Treasury experience is Mortgage-related. When studying for the CTP it gave me a lot of insight into FX transactions, Short Term liquidity investments, and optimal Debt vs Equity financing philosophies for Firms, but my expertise is in managing all aspects of Treasury including Banking relationships and building well run cross-functional Treasury Teams.
My best experience has been seeing a few of my former employees take the knowledge and guidance that I have given them and parlay that into Sr. Manager and Director of Treasury roles.
Data mining, and consistently getting timely information reconciled and into a useful form for Senior leaders to use for decision making.
You cannot perform all of the Treasury functions on your own and if you do not have a cross-trained Treasury team, there will be a high probability that important transactions will fall through the cracks tarnishing the reputation of your team and the department.
I am excited to see that Firms are really beginning to value what a good Treasury department means to the Firm. As the stewards of the Cash, making sure that there are enough funds to satisfy all of the financial obligations is Paramount to the success and reputation of the Firm.
There is a big push to bring on more Fintech resources to help with recording and reconciling all of the day-to-day cash movements. Treasury Management Systems are helping to streamline cash forecasting and reconciling by becoming a “Single Source of Truth” where information can be accessed by all of the Stakeholders making everyone involved more self-sufficient.
Get in touch with Jermal
Click here for his Expert Profile
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL
09-03-2022 | treasuryXL | Treasurer Test | LinkedIn |
How is your Treasury knowledge? Today we investigate your Treasury Expertise and ask you an example question that you might face when taking the Treasurer Test…
07-03-2022 | treasuryXL | Refinitiv | LinkedIn | Your new home for fixed income
03-03-2022 | treasuryXL | Treasury Delta | LinkedIn | Treasury Delta, our Irish fintech partner, recently formed an alliance with Blokken, a Dubai-based fintech aggregator. This strategic partnership will bring further innovation and digital technology deployment to the corporate treasury ecosystem within the Middle East. Credits: Blokken Source
01-03-2022 | Patrick Kunz | treasuryXL | LinkedIn |
We are happy to interview treasuryXL expert, Patrick Kunz.
With Patrick’s impressive career within the World of Treasury, you can really say that he lives and breathes Treasury.
Patrick is performance driven. He is an open minded, outgoing, rational person who is comfortable communicating and convincing on all levels of management.
Patrick is owner of Pecunia Treasury & Finance with several independent treasury and finance consultants and founder of treasuryabonnement.nl. Furthermore he owns an online FX trading and payment platform with a connection to a big FX broker.
Patrick has worked with both international corporates from all fields of business as well as national non-profit organisations.
We recommend to visit Patrick’s LinkedIn profile to see his stunning career and activities. But first….
During my study at Maastricht University I knew I wanted to work in the “world of finance” and more specifically trading or investment banking. In my 3rd year of university I got the opportunity to work as an intern for a Swiss Investment bank in Zurich which was a great first experience into wealth management and client exposure with high net worth clients. It also showed me that the client comes first, even though the client was not always right. This made me wonder if it was more fun on “the other side” at the buy side. It slightly frustrated me that a bank would not always provide the best solution.
After graduation I left on a trip around the world backpacking for 1,5 years. Enjoying ultimate freedom and fun before starting a career. When I came back to the Netherlands I applied for treasury roles at multinationals and landed my first job as cash & treasury manager at the German multinational Metro Group (the wholesaler, not the Dutch free newspaper). This was the start of my treasury career which until now I would never leave.
It’s the core of a company. In the end its all about the money. Independent on what products you are selling and how you are selling them. Cash in vs Cash out. Without cash a company has a problem. Cash is king and profit is an opinion so in my opinion managing cash is very important and therefore fun. The more complex the more fun. Managing a multinational company with hundreds of bank accounts in different currencies around the global; finding the optimal treasury setup and solutions is great fun. Lastly, treasury teams are smaller compared to accounting or controlling, which make the lines shorter and the team tighter.
I started in cash management and FX trading which are great basic skills for every treasurer. My first company also had very short treasury lines and I quickly was involved in global treasury solutions, financing solutions and group companies corporate finance. When I moved on to my second role as group treasurer of a regional housing association, I also got exposure to interest rate derivatives and guarantee management. Afterwards when I started my own consultancy and interim management company 8 years ago I got to do the full spectrum of treasury. So without arrogance I can say in treasury I have done it all. The last years I am doing a lot of TMS/Payment hub implementations, which I enjoy doing. After finishing an implementation it is nice to look back and compare the old way of treasury processes and the new and see how it improved after a couple of months. Very rewarding.
Building a treasury from scratch is most rewarding and fun to do. 2 years ago I got the opportunity to build the treasury role at the Dutch born AEX company Takeaway.com. There were treasury processes in place but scattered in different departments. Also some of them were sub-optimal. My role was to bring them together and optimize them. Besides increasing the reporting and importance of treasury to management this also brought significant cash savings on bank and FX costs. A couple of months into the rule, the merger/acquisition of Just Eat was approved and the integration with the existing treasury team in London could start, making the team suddenly 400% bigger. After 5 months my work was far from finished but it was time to hand it over to the existing/new team. Looking back what was done in this short time this was one of my greatest experiences in treasury. And a great company to work for.
Nowadays: Opening a company bank account in a short timeframe without difficult KYC questions, especially for companies with difficult or complex structures. I was with a client last year, a scale-up, that moved fast in several countries in Europe. Treasury processes needed to be implemented from scratch in each country while operations was much further ahead but legal and treasury still needed to start. Working with this fixed go live we had to make sure we could receive payments from day 1 onward. In one country we were actually live on day -1 with no room for error. Stressful but successful.
As a consultant I sometimes face tight deadlines or difficult projects that need to be delivered but are dependent on other stakeholders. That is not always easy but this gives me energy to make it happen.
You can go fast on your own but you go far together. Sounds cliché but it is especially true in treasury as the treasury department is dependent on data from other departments to make it function. You cannot run risk analysis if you have no exposure data. Same for FX. Doing cash flow forecasting? You need data from procurement, AR and FP&A.
Also visibility and transparency is key. Even the other financial departments accounting and controlling sometimes see treasury as this special people that they have no idea what they are exactly doing. Make sure they understand (and vice versa) what each department does and how you can work together and what data can be shared. Also to avoid duplicating work. So leave the ivory tower and go out there and collaborate.
The speed and amount of information has increased and is increasing. Also the complexity of treasury departments. Luckily also the solutions available to manage them has improved. Next to swift solutions we now see advanced TMS solutions or payment hubs that can be implemented within a couple of months giving you full visibility. A treasurer nowadays needs some tech skills to be able to understand the information to implement the TMS or hub. Because the tool will be only be as good as it is being used; garbage in is garbage out. During the many implementations that I have done I have learned a lot about technical connections (sFTP, h2h, API), information exchange formats, XML file types, swift messages etc. This knowledge now helps me a lot in implementations and supporting the IT department determining the information needs and sources.
Instant payments are a big thing in treasury which is cool but will not necessarily bring much added value to the treasury. Instant information processing is more important especially in e-commerce. Clients expects instant service. If they pay online they expect to get the service or goods asap. Treasury can help with this by connecting their PSP’s or bank information to their systems. Not necessarily linking the payment to an invoice which is an accounting reconciliation process. More importantly linking the positive acknowledgment (the customers has paid) to the sales. Customers start demanding this more and more and treasury has to adapt to this instant world. This means more automation.
Clients also demand more payment options, some of them are not available at banks. This means that treasurers will have to move away from the traditional model of banking partners for cash management but to a more hybrid model of cash at bank, cash in transit at PSP’s, virtual credit cards, wallets etc. Maybe even crypto or CBDC deposits/balances. This will all add to the complexity of the cash and risk management.
Isn’t treasury the best department to be in? 😊 I already get excited saying this.
Get in touch with Patrick
Click here for his Expert Profile
Join Patrick and experts from Kyriba and Deloitte at the Panel Discussion: How Can Treasurers Overcome Today’s Security Challenges?
When? March 9
Start: 4.00 pm CET
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL
23-02-2022 | Eurofinance | treasuryXL |
If your company operates in Africa or is thinking about it, then join us at Effective Finance & Treasury in Africa on March 23rd in London. Now in its 9th year, this intimate event brings together more than 150 senior corporate treasury professionals from leading multinationals – all involved in markets across the continent.
With peer-to-peer learning and knowledge-sharing more important than ever before, join other treasury leaders to debate the key issues, share success stories and gain practical guidance on how to overcome your shared challenges.
From treasury technology to managing liquidity risks, financing strategies, FX, payments and more, the concise 1 day agenda will provide all the information you need to redesign your treasury operations for cost and efficiency, power innovation and support business growth.
Speakers include:
Jan Beukes, Group treasurer, MultiChoice Group Ltd
Omofolake Fawibe, Head of finance, IBS, Danone SA
Ricky Brink, Treasury professional, Siemens SA
Titus Owoeye, Head finance, Fan Milk West Africa
Gain all the tools you need to succeed in Africa in 2022 and beyond.
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