Cash is The Whole Royal Family!

26-08-2020 | Olivier Werlingshoff | treasuryXL

Can the treasurer be the linking pin between different departments within organizations?
For cash related topics he or she has to be the linking pin to understand the cash flows within the company and to be in control. When you understand how all departments work and how the financial information is produced by controllers, you can help them and give advice on how to lower trapped cash.

Cashflow

To me the cash flow forecast is the basic of all treasury related items. When setting up the forecast (direct/indirect), it gives you the possibility to dive deep in the risk of FX and take actions to lower them or even better, to develop a guideline on how to handle FX risks in the future. The same can be done for IR risk, debtor risk and all other cash flow related risks. When making the cash flow forecast, you can literally make visual what the effect of a change in payment behavior of your customers or a change in FX rates will be.

The Treasurer’s task

The treasurer has to be in constant contact with all different departments to receive the most actual information. As treasurer, you also have to challenge the different departments on cash related topics. The reason for this is that most of the colleagues are not always cash focused. You have to set up an internal marketing plan to reach all necessary stakeholders (organize meetings, develop reports, mailings, organize events where colleagues can come with cash optimization related idea’s etc…).

Supply chain departments are focusing on delivering on time for production or sales. It is very interesting to focus on the ins and outs of world of supply chain. All goods can be categorized based on the time they will stay in the warehouse as well as the time needed to replace them and the cost of a reorder. When you combine all variables, an optimum can be reach. The information that supply chain and purchasing department can provide you is the order book. This can help you to extent the reliable period of the direct cash flow forecast.


By sitting close to the financial department or the shared service center you can have a better understanding of the payment behavior of clients but also the payment behavior of the company. Is there enough focus on the debtor collection process and is the sales department also aware of the payment behavior of their customers? Are the invoices send on time? Do they use direct debits or are balances on bank accounts swept daily to a master account?


Financial control is a department which is also related to the cash flow forecast. Most of the time they will make budgets of balance sheets and P&L and will make (monthly/ quarterly/yearly) estimations of the working capital parts such as inventory, accounts payables and receivables. By doing so they will be able to predict an indirect cash flow forecast. Are their presumptions for the working capital parts correct? Are they based on the budget sales, or based on the previous years? Most of the time the presumptions explain the difference between the direct and indirect forecast and difficult to track down.

Conclusion

Financing activities such as project financing, supply chain and trade finance can be set up based on a reliable forecast. By increasing the cash awareness in different departments, you will be able to release trapped cash, lower costs and have better control of all cash related items.

Olivier Werlingshoff

Olivier is an operational treasury manager who likes to connect and get in touch with different departments. By doing so he gets the treasury department and the awareness of cash in the picture, gets grip on the cash flow and releases trapped cash as well as lowers costs.
He is available for a permanent/interim position and you can reach him on

+ 31683629427

[email protected].


Does your business need support in Treasury or a Treasury QuickScan?

We have treasurers available, go to Rent a Treasurer for all information.

Recap of the first ‘Meet the Expert’ interview series and full overview

| 04-08-2020 | by Kendra Keydeniers |

A couple of months ago, we started the ‘Meet the Expert’ interview series with experts from the treasuryXL community with different treasury expertise.

Treasury needs to deal with an increasing availability of alternative financial products, intensifying risk management requirements, regulatory and compliance constraints.

What do our experts think about this rapidly growing movements within the treasury world? What developments do they expect in the future? What opportunities do they see?

We interviewed 10 experts over the last 10 weeks and asked them about their treasury career, experiences, the future of treasury and of course how COVID19 impact treasury from their perspective.

Did you miss an interview? No worries, here is a full overview of the ‘Meet the Expert’ series:

 

 

 

Bertus van de Kamp

Senior Business Consultant & Cash Management Specialist

read interview

 

 

 

 

 

Wim Kok

International Business Consultant & Trade Finance Specialist

read interview

 

 

 

 

 

Aastha Tomar

FX & Derivatives | Debt Capital Markets | MBA Finance | Electrical Engineer | Sustainability

read interview

 

 

 

 

 

Michael Ringeling

Corporate Treasury, Corporate Control and Banking

read interview

 

 

 

 

 

Olivier Werlingshoff

Cash- and Treasury management

read interview

 

 

 

 

 

Ger van Rosmalen

Trade Finance Specialist

read interview

 

 

 

 

 

Francois De Witte

Owner at FDW Consult | Sr. Project Manager at Gaming1 | CFO at Safetrade Holding

read interview

 

 

 

 

 

Arnoud Doornbos

Interim Treasury & Finance | Consultant | FX & Interest Derivatives | Treasury Outsourcing| Risk | Fintech | TMS

 

 

 

 

 

 

Vinzenco Masile

Treasury Expert/Credit Risk Manager

read interview

 

 

 

 

 

Arnaud Béasse

Debt Management Specialist

read interview

 

 


A big thank you to everyone that worked with me on this series, to everyone that selflessly shared their knowledge and experience with all of us! You guys rock.

If you’ve enjoyed our series so far, don’t worry, this is just the beginning! We are looking into more perspectives to share with you later this year when we will start the second ‘Meet the Expert’ interview series.

Take care and thanks for reading,

Kendra Keydeniers
Community & Partner Manager at treasuryXL

Who to choose: A generalist or a specialist?

| 11-12-2017 | Olivier Werlingshoff |

 

During the last few months this question has been on top of my mind. Is it better to specialize yourself and start a specific study?
First, we need to look at the definitions of both; a specialist is a person who is highly skilled in a specific and restricted field. A generalist is a person who is competent in several different fields or activities.

On LinkedIn you can find the 6 differences between a generalist and a specialist by “Han van Kasteren”.

 

I will mention a few:

  • Generalist can be more confronting; because they are sometimes not very familiar with procedures and will ask “strange and stupid” questions to understand the business,
  • A generalist will often use the Why question to understand the business,
  • Because a generalist is not stuck in a specific field, he can be more creative and can apply examples previously used in other fields.

But I also thought of two other differences which I would like to share with you:

  • A generalist can make an easier connection between the specific field and other departments because they are more familiar with the different other departments in a company
  • Because a generalist looks also to other departments they became more competent in selling internally their problem or their challenge to find a solution

Now I have mentioned a few bullet points I found on the internet, when can a generalist interim Treasurer be a good choice?

I would say especially in the field of cash management and working capital they could be a good choice. Both specialties have effect on different departments of the business to mention a few; controlling, sales department, procurement, tax and legal.

During my career I talked with a lot of CFO’s and financial managers of large companies and tried to understand their challenges and to help them achieve their goals. As treasurer I had my own challenges and tried to make links with other departments to achieve my goals.

I am a generalist with a passion for cash management optimization!

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Owner of Werfiad

 

Flex Treasurer: Who needs a treasurer?

| 05-10-2017 | Olivier Werlingshoff |

 

Do all international companies need a Treasurer or a Cash Manager? Yes and No would be my answer. In this article I will give my opinion on the reasons (not) to hire a Treasurer or Cash Manager.

First we have to focus on the definition of a Treasurer. Wikipedia: “he or she is responsible for liquidity risk management, cash management, issuing debt, foreign exchange and interest rate risk hedging, securitization, oversight of pension investment management, and capital structure (including share issuance and repurchase).”

 

Activities are Cash Management, Risk Management. Corporate Finance and Treasury operations & control. In a lot of companies all these activities and processes are part of the job of a controller and a finance manager.

When the company has financial problems the cash management activities, especially the cash flow forecast and the (inter)national banking environment, will come into the spotlight. A reliable cash flow forecast is built up on the right information about the cash position and the planning for the period to come. The problem is how accurate are the predictions for the future in the ERP systems? The right information can be obtained by asking not colleagues of the finance department but the sales colleague and procurement. This can be a time-consuming exercise.

There are a few new fintech companies who focus on the optimization of cash management processes. It is possible to manage all your bank accounts with one single system, where different ERP and company systems can be connected to each other which make it easier to set up a cash flow forecast. The search for the right information can be facilitated.

If you focus on the corporate finance activities such as an IPO or a refinancing, specific and knowledge is needed. This does not happen often.

My suggestion is to hire a Flex Treasurer and let him make a scan of all the treasury processes in the company. The Flex Treasurer can also implement improvements on the cash management and risk management activities. When all improvements are done see if the activities can be integrated in the existing jobs or you could hire a cash manager.

If a company decides to do an IPO or a refinancing there are plenty of companies specialized in this field. Therefore it would be smarter to use an interim consultant till the job is done.

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Owner of Werfiad

Going cashless or not – will we have a cashless world?

|30-8-2017 | Olivier Werlingshoff | GTNews |

In their article ‘Going cashless or not: are Central Banks resigning facing private companies?‘ GTNews and author Nathan Evans depict an image of a cashless world and the decline of Central Banks. With online shopping sites or GAFA companies (Google, Amazon, Facebook, Apple) taking over with cashless payments because, as Nathan Evans writes, ‘the more cash disappears from our economies, the more money falls into their virtual pockets’  will we have a cashless world? We asked our expert Olivier Werlingshoff to give us his opinion about a possible disappearance of cash.


Alliance

According to Nathan Evans a surprising alliance is slowly coming together, in the global war on cash. Large internet-based companies and commercial banks are mixing interests with top-level governmental bodies to press for the disappearance of hard currency, and speed up the digital transition towards a cashless world. On the losing end of the intended shift, central banks which seem to be putting up feeble resistance. Private banks are fed up with the high costs and low profitability of managing cash and its expensive security services.The EU Commission discretely published its anti-cash measures on its website: “The establishment of a common cash control strategy upon entering or leaving the territory of the EU was a decisive step in the EU policy aimed at the strengthening of measures to prevent money laundering, terrorist financing and other illegal activities. One would have imagined that central banks and mints would be the first on the barricades to defend the national symbols bequeathed upon them , as they cease to exist if coins and banknotes dissappear.   But so far, they have been remarkably feeble in their resistance.

Our expert Olivier Werlingshoff has read the articel and comes back with the following remarks:
I don’t think cash payments will disappear soon. At this moment 60% of all payments in Europe are done with cash. A few positive aspects of cash are:

  • It is anonymous
  • Secure
  • A save haven
  • It is a direct transaction
  • And it helps budgeting

Two years ago I set up a test at a shop B2C to see what happened if during six weeks cash payments were not accepted. What happened was that the number of contactless payments increased but the total turnover of the shop decreased. After the test when cash was again accepted the turnover didn’t reached the level of before the test.

A few customers decided during the test to look for other shops where they could still pay with cash and decided after a few weeks not to come back.

For more information about this topic you can visit de website of G4S for the cash report: http://www.g4scashreport.com/

If you are interested to read the complete article at GTNews, please click on this link.

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Owner of Werfiad

 

 

 

 

More articles of this author:

How to improve cash awareness without targets

How to improve your working capital with trade finance instruments

 

 

Cryptovaluta: Goudmijn of zeepbel?

| 23-6-2017 | Olivier Werlingshoff | BNR | treasuryXL |

 

Een paar dagen geleden was op de site van BNR een artikel te lezen over de hype rond cryptovaluta. Onder cryptovaluta verstaan wij digitale munteenheden zoals bitcoins en etherum, soms ook alternatieve geldsystemen genoemd. Wij hebben onze expert Olivier Werlingshoff gevraagd hoe hij de situatie rond cryptovaluta inschat.

Cryptovaluta

BNR beschrijft de hype als goudkoorts en vraagt zich af, of het niet gaat om een nieuwe intenet zeepbel. Toezichthouder AFM stelt volgens BNR dat het grootste deel van de ‘cryptovaluta’s’ de waarde voor de reële economie nog moet bewijzen. Ondertussen stroomt het geld de markt in. De bitcoin is nog altijd de grootste en kost nu 2750 dollar. Op 1 januari was dat nog 960 dollar. De nummer twee, ethereum, is gestegen van 8 dollar op 1 januari naar nu zo’n 397 dollar. Dit betekent dat de ethereum dus bijna 50 keer over de kop is gegaan in een half jaar tijd. Deze enorme rendementen trekken natuurlijk mensen aan. Maar de AFM waarschuwt mensen. Beleggingsspecialisten vrezen dat mensen die nog nooit een aandeel hebben gekocht, nu in cryptocurrencies stappen, zonder zich goed te hebben ingelezen. ‘Hun doel is niet om te investeren, maar om snel rijk te worden.’  Maar dat lukt nu misschien niet meer. Het lastige van beleggen is namelijk dat op het moment dat werkelijk iedereen de kansen ziet en wil profiteren, het eigenlijk te laat is.

Olivier Werlingshoff geeft de volgende commentaar:

“Ik ben het eens dat de snelle stijging van de koersen van de Crypto Valuta een hausse is. In informele sfeer krijg ik meer en meer te maken met vragen of ik ook al bitcoins heb gekocht en hoeveel winst ik inmiddels gemaakt heb! Het lijkt heel erg op de gesprekken over internet gerelateerde aandelen eind jaren 90. Ook toen zag je snel stijgende koersen en dezelfde informele gesprekken ontstaan.

Nadeel van de bitcoin en andere cryptovaluta’s is het  hoge risico dat ermee samenhangt. Zolang de volatiliteit hoog is zal het moeilijk zijn om deze te gebruiken voor zakelijke transacties. Ik ben van mening dat na een “shake out” een enkele zal blijven bestaan, de volatiliteit zal afnemen en mogelijk kan de cryptovaluta, die er dan wel nog is, dan pas gebruikt worden voor zakelijke transacties.
Maar eerst zal de zeepbel in waarde,  die is gecreëerd moeten knappen!”

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Owner of Werfiad

 

Breakfast Session: Cash Flow Forecasting

| 2-6-2017 | Olivier Werlingshoff | Proferus BV | Sponsored content |

 

Proferus helps companies enhance their forecasting processes to fully take advantage of new opportunities and to get in control over their cash flows. Proferus will host their first breakfast session of a series dedicated to CFOs, Senior Cash Managers and Treasures, this time focusing on Cash Flow Forecasting.

Proferus

Proferus has expertise developing tailored solutions to improve cash management and treasury processes and has a strong partnership network to help companies introduce new tools and techniques to achieve their goals.

Breakfast Session

On June 20th, Proferus will host the first breakfast session of a series dedicated to CFOs, Senior Cash Managers and Treasures, this time focusing on Cash Flow Forecasting.

Content

In this session Proferus we will focus on sharing best practices and a round table about the following topics:

  • Cash Forecasting strategies Direct vs Indirect approach
  • Round table The Need for Cash Flow Forecasting
  • Cashforce Cash forecasting 2.0

Joining us in this breakfast session, Nicolas Christiaen Founder of CashForce will give real life examples of how CashForce is deployed to help companies efficiently deploy cash force forecasting for treasury management.

Date & Time

Tue 20 June 2017, 08:30 h  – 10:00 h
Add to Calendar

Location

Proferus
87 De Entree
1101 BH Amsterdam-Zuidoost
View 

Proferus would be pleased to welcome you.
If you want to register for the event please click on this link.

 

How to improve your working capital with Trade Finance instruments

| 22-5-2017 | Olivier Werlingshoff |

Trade finance instruments are developed especially for companies that deal with  export and/or import of goods to reduce risk but also to improve the working capital. Before going into the working capital part first let us refresh the theory.

If you are an importer of goods you would like to be sure the goods you will receive are the same as the goods you ordered. How can you be sure that the exporter sent you the right quality of goods and the right quantity, or that he sent them at all? One of the possibilities you have to reduce that risk is to pay after receiving the goods. If the quality and the quantity do not match with what you ordered, you simply do not accept the goods and do not pay the invoice.

At the same time the exporter of goods is worried that after sending you the goods, the invoice will remain  unpaid after the agreed payment period. What if the client does not accept the goods in the harbor? He would then have to arrange for new transport to return the goods or try to find new clients in a short period of time.

There is a lot of risk for both parties especially when they do not know each other very well or if they are located on different continents.

Letter of Credit

In this case a Letter of Credit could be a solution. With a Letter of Credit you make agreements with the exporter about the quality and the quantity of the goods that you buy, and how, when and where the goods will be shipped to.  Only if all terms and conditions of the Letter of Credit have been met the bank will pay the invoice. A lot of paper work will be part of the agreement for instance a Bills of Lading, a commercial invoice, a certificate of origin and an inspection certificate. As an additional security, the exporter can have the Letter of Credit confirmed by his bank.
In a nutshell this is the basic of how Letters of Credit (L/C) works.

Working Capital

Now you can ask the question how could this improve your working capital?

Firstly you will have more security that the payment will be made, therefore the risk of nonpayment will be reduced.

With trade finance you could also set up a line of credit based on your security and overall financial situation.

For the importer, he can finance the gap between paying the exporter and selling the goods to a buyer or use it for manufacturing purposes.

For the exporter, he can fund the gap between selling the goods and receiving payments from the buyer.

If there is not enough equity or there are no sufficient credit lines available, there is another option. Transaction Finance, hence the goods you will sell. [Export L/C] are used to fund [collateral] the buying of these same goods [Import L/C] This is called a Back to back L/C.

There could be a fly in the ointment, however! What happens when there is a mistake made in the paperwork? If this is a small mistake both parties would agree the transaction will go forward. But if during shipment the prices of the goods drop the importer will maybe not be very collaborative and will grab this opportunity to refuse the goods and not to pay the invoice!

Since the credit crisis the use of L/C’s went through the roof. If you need consultancy advise on this topic, drop us a line!

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff 

Group Treasury Director

 

 

 

More articles from this author:

How can payments improve your working capital?

Managing cash across borders

How to improve cash awareness without targets

Regulatory demands: compliance required!

| 20-4-2017 | Olivier Werlingshoff | Sponsored content |

 

Complying with regulatory demands is a must, and banks know it. In practice, however, the majority still can’t manage to meet all requirements. Manual solutions prove to be insufficient and important rules are often overlooked. But how does one ensure that all regulatory demands are complied with?

Facilitating screening

Today, most banks offer apps that customers can use for online banking purposes, such as opening an account. However, there are two important aspects when onboarding a customer. First, you need to have adequate controls and procedures in place to know the customer with whom you are dealing. Adequate due diligence on new and existing customers is a key part of these controls – which can be done using advanced software that is linked to different sanction lists. Second, all customer transactions should be monitored for AML – which is done after the settlement of a transaction and live transaction screening, which happens in real time. The moment a payment is made and a beneficiary bank receives it, sanction lists are instantly scanned to check if there is a hit or not. This is done for every transaction, ensuring that regulatory demands are met.

Compliance: points of attention

Some banks still don’t comply with regulatory demands. They merely check sanction lists for the customer’s name – often manually –, which is by no means sufficient! For example, one should also verify whether the customer’s name appears in any media or lawsuits, and a customer’s partner needs to be checked as well. So what you need is a comprehensive solution that takes all these different aspects into account.

Implementing a solution

Proferus helps banks and corporates opt for a proper automated solution based on the demands involved. We assist in choosing the right software and support teams that have to learn to work with it. Basically, we help them in two respects: we provide consultancy – by conducting business analyses – and we implement the technical solution!

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Managing Consultant at Proferus

How can payments improve your working capital? Part I

| 6-4-2017 | Olivier Werlingshoff |

Working Capital is the term for the operating liquidity of a company that can be used and is needed to continue the day to day business. To calculate the working capital you have to deduct the current liabilities from the current assets. By managing your account receivables, accounts payables and inventory you can fluctuate your cash position and optimize your working capital so that the cash “trapped” in the company can be lowered to a minimum while you are still able to meet your payment agreements.

The way you are making or receiving payments can have influence on the trapped cash and therefore can influence your working capital.In a few articles we will dive into the world of payments and explain the influence on working capital. In this first article we will discuss the wire transfers within the EU and cross border.

Wire Transfer

SEPA
With SEPA all payments in the EU are considered as a local payment. To minimize your banking process time with bank transfers you don’t need to open local bank accounts in the different countries in the EU anymore. If you have a customer in, let’s assume Spain and you agreed on a payment term of 30 days, you send your invoice by mail as soon as the  client signed the contract. At that moment your working capital will increase with the amount until the moment the amount is paid into your bank account.

You can mention on your invoice that payments can be done by transfer to your IBAN number in The Netherlands. The maximum processing time will be one banking business day if you send the payment instruction before the cut off time of your bank. This means that if the client is doing the payment on Friday before the cut off time, mostly 3.30 PM, the amount will be on your account on Monday. Otherwise you will receive it on Tuesday.

Risk of non-payment
With wire transfers you still have the risk of nonpayment by you customer. Within the SEPA area you can also use Direct Debits. With this type of payment you can be the one who initiates the payment and if your client accepts, your money could be on your account after the agreed payment term of 30 days. Furthermore Direct debits can’t be reversed by your client when you use the Business variant.

Cross border
If you have a client in the US, you will also send him the invoice by mail to skip the postage process. You can ask him to transfer the amount to your IBAN number. The client will probably convert the amount in his own currency and make an international transfer. With a cross border transfer you will have different costs: the outgoing transfer cost, the incoming transfer cost and also even sometimes correspondent bank costs. Besides the high costs, payments can even take a week before reaching your bank account.

What is the effect on your working capital? Because it takes a long time before you get paid, your accounts payables will increase and the “days sales outstanding” will be longer than the 30 days you agreed on.
When you have a lot of international clients in one specific country you can make a calculation whether opening a local account in the country of your clients could be profitable for you. To avoid correspondent cost you can choose a bank that has connections with your main bank.
After receiving the money on your local account there are some instruments you can use to sweep the balance to your main account in The Netherlands, those products are called pooling techniques.

In the next articles we will focus on payments by internet, credit – and debit cards but also payment on delay and trade products.

Olivier Werlingshoff - editor treasuryXL
Olivier Werlingshoff

Owner of WERFIAD

 

 

 

More articles from this author:

Managing cash across borders

How to improve cash awareness without targets