| 11-08-2020 | Cashforce
Cash forecasting has been essential to treasurers over recent months both with respect to systems/behaviour/data.
In this webinar we discuss the future of cash flow, together with Caroline Stockmann (ACT), Ginny Wu (Walker Shop Footwear), Gerard Tuinenburg (Unilever), James Adams (Chalhoub) and Nicolas Christiaen (Cashforce).
Watch recording:
| 10-08-2020 | TIS |
Our partner is excited to present four topics that have to do with both payments and TIS.
Please join TIS for a short, but interesting learning experience and a chance to win some great prizes.
In order to be entitled to an academy degree, you must choose two subjects from the options below. Each topic consists of a webcast and a content piece. Watch and read each carefully.
At the end, you will receive an email with a link to a quiz which will test your knowledge.
All academy participants with the correct answers are entitled to win one of ten Amazon vouchers worth EUR 250. We look forward to welcoming you to the TIS Summer Academy!
Choose one of the sessions and dive into the world of payments and TIS. Enjoy the TIS Summer Academy.
10-08-2020| Niki van Zanten
Each field of expertise has some fundamental concepts that the decision makers tie to as general rules of thumb. For example, a purist chef might stick to a maximum of 5 ingredients on each plate, a winemaker might say only grapes and nothing else, and another winemaker might say any trick goes as long as it feels the wine.
The treasury purist might say the fundamental concept that should be applied and/or benchmarked is to get as close to a zero sum game as possible. I personally tend to agree with this concept, taking into account it’s not a pure mathematical equation. A zero sum game in Treasury would mean looking beyond one pillar of treasury (I would even recommend to look beyond the treasury scope once in a while and why not, even look beyond scope of just your company), and thereby combining the outcomes of a solution across multiple pillars and see if they balance out.
Today we will take a stab out doing that for FX and Financing. Below topics give some insights in when to apply and what to look at for:
Interest rates not only fluctuate but also have different (base) interest rates per currency/country. In general, the all in interest for financing consist of a base rate for a certain tenor and the bank spread based on perception of customers credit. At first glance it might seem interesting to look at financing in a low interest rate currency.
A few years ago many home owners in Poland used EUR mortgages to fund their homes reducing interest cost by a few percent. This of course is not a saving, even though the interest cost were lower, in return they received a FX risk on EURPLN. In case a forward (sell PLN buy EUR) would be used to eliminate the FX risk it would not only wipe out the interest benefit but also bring additional burden in terms of administration, settlements and understanding the complexity of the structure. One of the complexities of the forward is even a credit component, so the point here is, in order to really see the zero sum game picture and its leakage (spreads, out of pocket expenses etc) things can get tricky.
In most scenarios internal financing is a pass through and in principle it works the same as external with a back to back leg (albeit in a netting scenario). It does open a new array of choices. The more basic choices to put the (internal) FX risk, which tenors to use, accounting classification and perhaps even do everything back to back with a bank or take some risk on the books. In terms of currency and where to put the FX risk, the most straight forward option is to use the currency is which the predominant cash flows occur. You can also choose to centralise all your FX exposure at HQ but this could cause the accounting books to look different then the economics. In any case, with any back to back transaction in general the golden balance sheet rule should apply, ie duration and conditions internal need to match external, unless you choose to have risk on your books.
FX swaps (buy and sell currency for different value dates) are commonly referred as FX instruments, but in my view they are pure financing instruments. They can be used to hedge the FX on a loan or to adjust timing of cash flow or related hedges which are both financing related issues. When a swap is executed to spot reference on both legs is equal and therefore the pricing is pure interest based. Swaps can be a great way to fine-tune interest rates as forward prices tend to be closer to interbank then to manage through typical cash management products like loans and deposits. The trade-off can come in the form of a little extra work and basic knowledge is needed, but I would argue the same understanding is required when using a bank solution which has swap incorporated such as cross currency pools.
The FX market at first sight provides an excellent way to obtain close to interbank interest rates. Use it wisely and make sure you have a deep understanding of the situation. There are also many good reasons to choose a simple “plug and play” solution when looking at financing elements. As always, if you care about your funding and cash flow the understanding required for keeping it simple is no different than the understanding required for an outsourced (bank provided) solution. So either way, don’t do what you don’t completely understand. A chat with an expert and/or asking the right questions to your banking partners (don’t be shy to ask for the motives of the solution that is offered) will get you on the right path.
I am curious about your thoughts. Please comment…
06-08-2020 | treasuryXL | XE |
In the second part of our blog series on transacting international business in USD, we take a closer look on how it can impact importers and exporters.
American companies continue to turn to international trade as a preferred method for growing sales or controlling costs. According to 2019 World Trade Organization data, international trade comprised 25% of the United States’ GDP, split between $3.1 trillion worth of imports and $2.6 trillion in exports.
Despite one-quarter of the U.S.’s GDP coming from international business, many American companies continue to transact all their international business in USD.
Why is this?
One primary reason is that certain industries have USD-functional supply chains – such as aspects of energy, agriculture and aerospace – have USD functional supply chains. Transacting in a foreign currency could be introducing FX risk.
However numerous other global industries are not USD-functional, and many American companies still choose to transact in USD.
Industry surveys reveal that two of the most common reasons cited are either:
A lack of FX risk awareness at the company
A management decision to transact in USD as this is easiest for their business.
Unfortunately, these decisions often result in the unintended consequence of transferring FX risk.
Keep in mind all international cross-border transactions, when the two counterparties have different functional currencies, have FX risk, even if priced in USD. One party must bear the FX risk and when an American company requests to transact in USD, that company is transferring the FX risk to the counterparty.
To quantify the “cost” of transacting in USD, we’ve considered two trade scenarios:
A U.S. importer transacting in USD with both a Chinese and European supplier
A U.S. exporter selling in USD to both Chinese and European customers
Looking at the 2-year EURUSD and USD-CNY charts below, the Chinese Yuan varied 12% against the USD and the EUR varied 10.2% versus the USD. This variance is the “cost” transferred to Chinese and European companies and it impacts both importers and exporters.
U.S. importers cite many reasons for choosing to transact their international business in USD. Each of these reasons has merit and may be appropriate for a company’s unique situation.
Industry standard: certain industries have USD-functional supply-chains.
Ease of doing so: “we’ve always done it this way”.
No other options: a lack of multi-currency accounting systems.
Supplier’s choice: the supplier says it wants USD.
First-time global trader: pricing in USD to focus on other trade risks.
Regardless of the reason, it does not alter the reality that:
Paying for imports in USD to a foreign supplier that is not USD-functional is transferring FX risk to the supplier, and
The supplier will need to be compensated for taking on the FX risk, most likely padding their USD price.
To illustrate the FX risk impact, the grid below shows the local currency impact of a USD payment to the Chinese and European suppliers.
Many importers report that their suppliers often change their USD prices—some say frequently—and almost always increase them. The most likely reason is FX. The supplier, converting the USD payable to local currency, is no longer receiving enough CNY or EUR to maintain their margins—thus, they ask for more USD. This most often happens when the USD weakens.
Many companies have adapted to this reality about FX risk even when paying in USD.
Some of the solutions we have seen in the marketplace include:
Companies asking for dual-currency invoices
Proactive companies paying suppliers in CNY or EUR, even if they are invoiced in USD
Companies asking for FX risk-sharing agreements
Companies embracing FX risk management and requesting local currency invoicing
Exporters also face the inherent FX risk in global trade as their end customers are most likely not USD-functional. Nonetheless, many U.S. companies still price their exports in USD. The most common reasons cited for this include:
Industry standard: i.e. USD-functional supply chain
No other options: accounting/ERP systems not multi-currency compatible
Convenience: ease of doing business to the American company’s staff
Again, regardless of the reason cited, it does not alter the reality that a company pricing its exports in USD is transferring the FX risk to the buyer. The buyer experiences the variability in the FX spot rates and will most likely:
Demand price discounts, or
Choose to buy from a competitor willing to price in their home currency
The grid below illustrates the FX risk impact transferred to the Chinese or European buyer over the last two years by the American exporter, as a result of pricing in USD.
Many exporter sales staffs know that pricing in USD is often uncompetitive. Their biggest risk is a strengthening USD as this makes their product or service more expensive. An exporter’s sales management must weigh the costs versus benefits of transacting in USD. The risks are:
Uncompetitive pricing: a stronger dollar makes their product or service more expensive.
Payment delay risk: customers that don’t hedge may try to wait for the FX rate to improve.
Profit margin risk: sales teams may need to cut prices to close the sale.
Lost sales revenue: buyers may choose a similar product or service from competitor willing to price in local currency.
Many companies have recognized these market conditions and taken actions to adapt to their international customers’ needs. Strategies have included:
Offer pricing in local currency and take on management of FX risk
Offer hedging on behalf of suppliers that cannot
Offer risk-sharing pricing agreements
Open local sales offices to build stronger relationship
Wherever you are on this journey to transacting in foreign currencies, the Xe Corporate Team can be your partner and help your company manage its FX risk and international business.
Get in touch with an Xe expert and we’ll help you:
Analyze dual invoicing
Make and informed decision
Upskill your team and reap the benefits!
Get in touch with XE.com
XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.
Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.
Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multi billion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.
Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.
Visit XE.com
Visit XE partner page
| 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
Wim Kok
International Business Consultant & Trade Finance Specialist
Aastha Tomar
FX & Derivatives | Debt Capital Markets | MBA Finance | Electrical Engineer | Sustainability
Michael Ringeling
Corporate Treasury, Corporate Control and Banking
Olivier Werlingshoff
Cash- and Treasury management
Ger van Rosmalen
Trade Finance Specialist
Francois De Witte
Owner at FDW Consult | Sr. Project Manager at Gaming1 | CFO at Safetrade Holding
Arnoud Doornbos
Interim Treasury & Finance | Consultant | FX & Interest Derivatives | Treasury Outsourcing| Risk | Fintech | TMS
Vinzenco Masile
Treasury Expert/Credit Risk Manager
Arnaud Béasse
Debt Management Specialist
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
03-08-2020 | NPEX |
The NPEX stock exchange brings entrepreneurs and (institutional) investors together for financing and returns.
We share 8 reasons why you need to invest on the Dutch NPEX stock exchange.
Blog and whitepaper continues in Dutch language
In 8 redenen vatten we samen waarom beleggen via NPEX voor u als belegger interessant is.
Download de gratis whitepaper en lees over alle voordelen.
30-07-2020 | treasuryXL | XE |
American corporations often transact their international business in USD because they believe it eliminates FX risk. Unfortunately, this is a false sentiment.
XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.
Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.
Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multi billion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.
Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.
Visit XE.com
Visit XE partner page
| 29-07-2020 | treasuryXL | Pieter de Kiewit
Organisations with treasury exposure, without the expertise. The ones of you who know me longer, know this is one of my favourite hobby horses. For a longer period of time I have been tinkering with many plans to help the aforementioned organisations. This led to contributions to treasuryXL as a community and educational institutes like the Hogeschool Utrecht and the Vrije Universiteit. Now we will work on the obvious: bringing highly skilled treasury interim managers to organisations without a treasurer.
Treasurer Search has a long and solid track record in finding interim treasury managers to large organisations with a corporate treasury function. One of our team members reaches out on a continuous basis to these managers to ask them about their availability, skills and preferences. Many of these managers love to work in smaller size organisations. There they can have real impact, save costs, mitigate risk and create opportunities.
One of the important target audiences of treasuryXL is the group of CFOs, group controllers and entrepreneurs who, consciously or not, deal with treasury topics. In the content distributed on the platform the following is taken into consideration: non-technical treasury information on a regular basis with a clear upside-story. The communication channels that are used are also the ones that hardcore treasurers might not tune into but other financials do.
All the pieces of the puzzle have been on the table for a long time. The plans have been there for a long time and now we will act. As Ben Tiggelaar states: “the gap between plans and success is action”. Through treasuryXL you can “rent a treasurer”, click the link for more information about the concept.
Thank you,
On behalf of Treasurer Search, Pieter
On behalf of treasuryXL, Kendra
Owner at Treasurer Search
28-07-2020 | Arnaud Béasse | treasuryXL
Welcome to the 10th and last (for now) interview of the ‘Meet the Expert’ series. This time we interviewed our brand new Expert Arnaud Béasse. Arnaud is founder of the advisory firm Arts+Brands and an expert in Debt Management. He started his career as Regional Financial Controller, cumulating the responsibility for IT.
Arnaud has more than 17 years experience in Banks focusing successively on Structured Asset Finance, Corporate Banking, DCM and in Multinational Corporates for their Energy and Metals trading and Project Finance. He created Arts+Brands to expand his entrepreneurial spirit by advising small ventures and start-ups (Fintech, Biotech, IT) for their Fund Raising and Finance strategy and also by getting involved in the daily operations.
Arnaud is fluent in English, German and French and is used to work in international, multi-cultural and virtual teams environments.
During my first assignment as a regional financial controller, I have been immediately confronted to a complex consolidation of cash streams from different emerging countries with different currencies and regulations. Finding secure and systematic solutions has been challenging but also interesting and fun. This was the beginning of my treasury discovery, from which I moved then to asset finance, project finance, trade and export finance and later to the complete « corporates and markets » solutions offered by a large European bank.
I find the central role played by treasury in supporting a business very motivating: it manages all financial resources a business needs to generate returns. Perfect understanding and anticipation of the needs (planning) and an accurate analysis of the resources available (controlling) are therefore essential. I also like the necessity of combining short term priorities like cash management and long term planning like investments.
Capitalising on my long banking and large corporates experience, I have acquired a strong knowledge of all kind of debt solutions associated with credit, regulatory, compliance competencies. I have specialised in Debt Management, Fund Raising, Asset Finance, Leasing, Cash Flow Management, Trade and Export Finance and Project Finance. I am currently focusing on Sustainable Finance to support firms aligning their finance resources with their commitments towards the environment.
The starting point of debt management is a careful analysis and control of the cash flows. Borrowings need to align with the business cycle of the company and eventually its equity profile. Once the needs of each business line and the corresponding cash flow generation are consolidated, the adequate debt structure can be designed with a mix of junior to senior, short term to long term solutions and a calibrated interest rates structure.
I remember a dramatic situation occurring during a local currency crisis in an emerging country, where we had arranged a large equipment finance. The debt repayment plan did not anymore match with the borrower’s cash flow generation and we were heading straight to a default situation. After long and numerous discussions, we managed to get transferred a large position on natural resources the company was owning but not operating and structured it in a way that the majority of risks were covered, the credit committees and respective boards were satisfied and ultimately the borrower managed to earn additional profit. I admit there is a part of luck in this experience but getting from this desperate situation to a point where all parties were so happy has been my most fulfilling experience so far!
I consider the toughest challenges in a company are almost always linked to human resources management and termination of assignments. But if we remain within the treasury topic, my biggest challenge so far has been to accept a board decision not to conclude an M&A transaction, whereby all indicators (profit, risk, market position, further opportunities) were very favourable for the group and I had worked for more than one year on the case. Some months later, upon publication of the yearly results, it became clear why the project was rejected!
Along the various experiences I had with treasury, the most important lesson might be to always seek the most simple and straight forward option. There are many ways of hedging a currency position, improving the average interest rate of a pool of debt facilities, leverage the value of an asset, optimise the return of positive cash position. But the risk and time associated to it can rapidly be disproportionate to the purpose and the size of the original transaction. Treasury shall normally create value, not necessarily profit!
Obviously, the role of Corporate Treasurer has become more and more complex. Treasury needs to deal with an increasing availability of alternative financial products, intensifying risk management requirements, regulatory and compliance constraints. But at the same time, the emergence of digital treasury platforms and integrated cash management systems are making the steering of treasury much easier and more accurate.
Treasury is between a rock and a hard place: as a consequence of the crisis, sales are dropping and cash flows are missing but the financial obligations (debt, salaries, rents, supply, …) remain and the access (if not the availability) of financial resources become difficult. For treasurers who had a prudent cash flow management with enough resources to bridge the gap, it has been a confirmation for their risk management strategy. For others with more lean structure, it is, in the best case, a very stressing moment trying to find last minute and costly (not only in terms of interest rates) funding solutions. Some businesses, which have bet on a very tight business model, will probably be restructured. The crisis will certainly lead corporates to adopt more careful models with sufficient reserves and flexible organisations but also postponed or reduced investments.
The main trend is definitively the further digitisation of the treasury functions, offering more reliable, more secure and faster execution of the transactions: payments, cash management, trading, trade and export instruments, guarantees, etc. As the execution of transactions will be more and more automated and integrated in the supply chain systems, treasurers will shift their focus on analysing and planning for the financial resources in order to formulate strategies.
Another interesting trend for the treasurer is the further development of the non-banking debt market. This shall broaden the borrowers’ horizon, balancing again the bargaining power in favour of the corporates and generating even more tailor-made/OTC debt solutions.
Running a business without a treasurer can only be considered for small businesses. For standard operations, managing the daily needs with modern digital tools will always become easier, even if substantial support shall be required during the implementation of a system. Once the system is running, the daily treasury tasks can be integrated in the accounting and finance agenda.
However, as soon as operations get more complex (investment, take-over, international development, restructuring…), the support of a specialist remains essential, be it for a limited period of time like part-time or ad interim…
23-07-2020 | treasuryXL | XE |
When there’s a lot you need to save, it can seem daunting, and you might not know where to start. We want to help you with your savings plan.
XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.
Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.
Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multi billion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.
Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.
Visit XE.com
Visit XE partner page
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