Busting some of the ‘holy grail’ myth of reverse factoring as example of supply chain finance solutions….[Part 1]

| 7-1-2019 | by Marc Verkuil |

Supply Chain Finance (hereinafter referred to as ‘SCF’) involves financing solutions helping businesses, usually through the involvement of a third party lender, to free up working capital trapped in supply chains. These solutions target financing of specific working capital items, such as payables, inventories or receivables, as the underlying products move from origin to destination in the physical supply chain. Examples of SCF solutions include factoring, inventory repurchase, dynamic discounting, and reverse factoring programs. The latter solution (hereinafter, the ‘RF Program’), which has been offered by an increasing number of banks lately, involves a Seller being given the opportunity to sell its receivables (invoices) on a specific Buyer (typically) without recourse to a financial institution or investor (hereinafter, the ‘Factor’) at a discount in return for the immediate receipt of the (discounted) cash or liquidity from these receivables. In funding the Seller, the Factor is exposed to the Buyer as it assumes the credit risk on the latter, i.e., the (in)ability of the Buyer to pay its outstanding debt to the Seller (or Factor directly) at maturity.

RF Programs are in essence a form of credit arbitration and require participants in the supply chain with different credit standings…

SCF is often marketed as a ‘win-win’ for all parties involved. In recent years dozens of articles in Treasury and related magazines and possibly a similar number of sessions at conferences and seminars, some of which were even completely dedicated to this subject, have heralded SCF, and RF Programs in particular, as the ‘holy grail’ in working capital (finance) management. Although most of the observations in this article are valid for other SCF solutions, focus will be on RF Programs, which are based on the premise that a Seller will benefit from the better credit-standing (or rating) of a Buyer, as a Factor is willing to provide funding to the former on the basis of the credit (risk) of the latter, i.e., at a discount rate similar to the one the Buyer rather than the Seller would be able to obtain from lenders for funding its working capital. Interestingly enough, however, principally without exception all of these articles and sessions have been written and presented by representatives of two of the same participants in these solutions: the Buyers and the Factors, and although they all provide various, mostly valid arguments for the benefits of these solutions to the Sellers, they also tend to provide little or no input on the disadvantages, risks, and pitfalls of these solutions to the latter. Therefore, this article focuses on the perspective of the Seller, the financially and often commercially ‘weaker’ participant in the SCF transaction. Please note that the reference to the ‘weaker’ participant does not limit this to small SMEs, but in day-to-day reality applies to the vast majority, if not all Sellers (with an intent to) participating in SCF as the premise of the solution would otherwise not be valid anyhow. The author of this article used to work for an investment grade rated, powerful, global commodities trading company with revenues in excess of USD 45 billion, which was in fact frequently requested, or even practically forced to participate in RF Programs as the ‘weaker’ Seller.

The opportunity for Sellers to enter into RF Programs usually does not come in isolation…

One other aspect of basically any RF Program is important to take into account; even though an RF program cannot be directly or formally linked to the (payment) terms & conditions agreed between Seller and Buyer, as the program may in that case be deemed by auditors to correspond to and thus to be reclassified as debt in the financials of either participant which would defeat at least part of the purpose of these solutions, the most common benefit sought by the Buyer, often even expressed prior to the Seller being made aware of the opportunity to enter into an RF Program, is the request to the Seller for an extension of its payment terms to and in favor of the Buyer. The Buyer clearly does not wish to cannibalize the debt capacity with its lenders (read: the Factor) in return for nothing; in fact, the Buyer is usually the initiator of the sequence of events leading up to an RF Program in its efforts to improve working capital management first and foremost for its own and rightful benefit (and even if a Buyer would claim it (indirectly) offers an SCF opportunity in order to support a ‘struggling’ Seller, this would still be done primarily in the best (short term) interest of the Buyer, which in that case will no doubt already be looking for longer term buying alternatives). It should be evident that an extension of the payment term has an embedded cost for the Seller, which it should (at least try to) pass on to the Buyer through an increase of its product pricing. A term extension from, e.g., 45 to 90 days, will otherwise require the discount rate of the SCF solution to be half of the Seller’s existing cost of (incremental or marginal) debt funding in order for both funding options to break even.

The benefits of RF Programs are evident…

The most obvious benefits of RF Programs to Sellers are well documented: lower cost of funding, immediate availability of liquidity, lower working capital and (usually) debt levels, financial opportunities to grow and invest, and more limited credit exposure to the Buyer(s). The risks, disadvantages, and pitfalls to the Seller are on the other hand much less frequently mentioned.

However, disadvantages may include an increase in the Seller’s cost of capital…

One of the most important objectives of a Treasurer, certainly one of a public company, is minimizing its company’s weighted average cost of capital or ‘WACC’, i.e., achieving the optimal level and cost of debt and equity funding. By entering into an RF Program, and most other SCF solutions for that matter, the Buyer and Seller are effectively scaling down the value of their working capital and balance sheets respectively; the Buyer by virtue of obtaining extended terms from the Seller and thus of increasing its days of payables outstanding leading to lower net working capital and (debt) funding balances, and the Seller by virtue of converting part of its receivables balance into immediate liquidity and thus of reducing its days of sales outstanding typically followed by the repayment of outstanding on-balance sheet debt. As the proceeds of an RF Program will practically never be used to return funds instantly to the Seller’s shareholder(s), the Seller’s WACC will practically always increase as it has reduced the normally more cost efficient (i.e., less expensive after tax) debt balance on its balance sheet without proportionally reducing its more expensive equity position, e.g., through share repurchases. An increase in a company’s WACC is hardly ever a desired outcome for a Treasurer in considering a financing transaction, and even if this by itself does not necessarily preclude Sellers from entering into these types of (off-balance sheet) transactions for other good reasons, especially the size and relative proportion of this type of debt funding should merit careful consideration from a Treasurer in its analysis of the company’s total (future) debt to equity mix. A company with a not a-typical debt to equity ratio of 30/70, a cost of equity of 8,5% and a cost of debt of 3,5% has a WACC of 7,0%; if, as a result of an SCF solution and the subsequent repayment of some of its on-balance sheet debt (and all rates staying equal), such company would end up with a debt to equity ratio of 20/80, its WACC would increase to 7,5%, even if its total cost of debt funding, i.e., including the cost of an SCF program that is less expensive than the existing cost of debt, would end up being lower in this example!

The argument of RF Programs resulting in ROIC improvement is generally true; at the same time, it is not the whole story…

One of the most important reasons for companies to use the proceeds of RF Programs to pay down debt is the fact that a vast majority of these programs is uncommitted, implying that each participant in the relevant supply chain, Seller, Buyer or Factor, may unilaterally and ‘without cause’ decide to discontinue or amend the RF Program at any given moment. E.g., a Factor may decide to increase the discount offered to the Seller if the former assesses that the Buyer’s credit-worthiness has deteriorated (or if the Buyer has been downgraded) or it may decide to discontinue or limit the RF Program if the Factor no longer has (sufficient) credit available on the Buyer, while the Buyer and/or Factor may decide to discontinue the Program if the Buyer needs its credit capacity for other transactions, such as a significant acquisition financing need. The Seller should consider two pitfalls as a result of the uncommitted nature of these SCF solutions: (1) the cost or discount rate of these programs should be compared to existing cost of debt funding of the Seller, and (2) prior to entering into an RF Program, the Seller should carefully assess its commercial proposition both at inception and at the moment these programs are discontinued.
With reference to the first pitfall, marketeers of SCF solutions regularly argue that their programs are “cheaper than the WACC of the Seller”, “will increase the return on invested capital (hereinafter, ‘ROIC’) of the Seller”, or will “decrease the total cost of debt funding”. With respect to the comparison to the Seller’s WACC, this argument has already been refuted earlier: it does not make sense to compare the cost of debt funding (in an SCF solution) to that of debt and equity funding (in a WACC) of a company, while SCF solutions will most likely increase the WACC in any case. The ROIC improvement argument is mostly true, but far from a complete one. Even if an SCF solution is significantly more expensive than a company’s cost of debt funding, an increase of its ROIC may be achieved due to the fact that despite the return, i.e., net income in the numerator decreasing, the invested capital, i.e., (receivable) assets in the denominator will decrease even more leading to an improved ROIC or return on net assets. However, in that case this company’s net income and thus its return on equity will decrease, while it will also lower the company’s earnings per share as a result of such transaction. Bottom line, such a transaction will reduce a company’s shareholder value (or EVA), another outcome a Treasurer would typically want to avoid. A numerical example of this is included at the bottom of the second part of this article which will be posted tomorrow. It suffices to say that unless a company only wishes to be managed and valued on its ROIC performance, which would be surprising to say the least, any SCF solution that is more expensive than a company’s existing cost of debt funding will harm most of its financial ratios and definitely its shareholders. This brings up the last argument mentioned above of a decrease of the total cost of debt funding; comparing working capital financing provided by SCF solutions to long term and often committed debt funding is an ‘apples to oranges’ comparison as the latter forms of funding are intended and used for different purposes or reasons, such as funding of permanent or other long term assets, or as a safeguard against volatile markets or sudden spikes in working capital needs. Furthermore, as argued before, the proceeds of SCF solutions are typically used to pay down short-term and usually uncommitted (working capital) debt making the comparison to the cost of (incremental or marginal) debt funding the only appropriate one in most cases.

In the next and final part of this article, focus will be on the possible commercial impact of SCF for a Seller and on the regulators’, investors’ and credit rating agencies’ points of view, while some conclusions and recommendations will be presented as well. To be continued…

Marc Verkuil

Treasury Professional

 

GEZOCHT: AFSTUDEERSTAGE FINANCE/TREASURY

| 3-1-2019 | treasuryXL |

Laat mij mezelf voorstellen. Mijn naam is Mohammed el Yaakoubi. Momenteel attendeer ik het laatste jaar van mijn studie Finance & Control aan de Hogeschool Utrecht. Tevens volg ik een pre-master aan Tilburg University.

Ter afronding van mijn studie, heb ik de kans gekregen om gedurende 20 weken een afstudeerstage te verrichten bij een onderneming naar wens. Voor de periode van februari 2019 (of eerder) ben ik op zoek naar een financiële/treasury gerelateerde afstudeerstage.

Ik heb de afgelopen jaren een sterke theoretische basis gelegd en zou nu graag mijn kennis willen toepassen in de praktijk. Daarnaast zou ik graag een uitdagende afstudeeropdracht willen uitvoeren. Heeft u een uitdagend vraagstuk? Dan ben ik hier erg benieuwd naar.

Naast mijn afstudeeropdracht zou ik ook graag willen meewerken op de financiële afdeling en zou ik graag en veelzijdigheid aan taken willen verrichten. Mijn interesses zijn treasury, investeringen en strategie. Daarnaast hoop ik ook dat ik de kans krijg om mee te lopen met de financieel directeur/controller/ corporate treasurer om zo mijn toekomstige beroep, taken en verantwoordelijkheden in praktijk in werking te zien.

Heeft u een interessant vraagstuk en een plekje voor een analytische, verantwoordelijk, proactieve, gedreven en leergierige afstudeer stagiair, dan kunt u mij contacteren via [email protected] 

Tot snel!

Mohammed

Merry X-mas and a happy new year!

| 24-12-2018 | treasuryXL |

2018 has been a good year for treasuryXL. We have welcomed many new partners, shared a lot of interesting content with the community, established collaborations and introduced the Treasurer Test.

We want to thank all partners and experts who shared their content with us. We also would like to thank everyone who contributed to the Treasurer Test.

For the new year we have a lot of new ideas. It looks like 2019 will be another great year. But first it is time to enjoy the holidays with family and friends.

We want to wish everyone a Merry Christmas and a happy New Year. A very nice holiday for those who go on vacation.

During the holidays we will post fewer articles than you are used to. As of January 2th you can expect an article from us every working day again.

Team treasuryXL

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Wat is corporate treasury?

| 20-12-2018 | by  Pieter de Kiewit |

Uw hypotheek, creditcard, vakantiegeld en lopende rekening hebben equivalenten voor bedrijven, ze worden beheerd door corporate treasurers. De titelvraag, of variaties, is er een die ik nogal vaak moet beantwoorden, vaker nog rond de feestdagen wanneer ik mijn familie ontmoet. Er is nooit één pasklaar antwoord, in mijn huidige strategie verbind ik privé met een zakelijke view. Misschien kunt u (expert in het veld of de leek) me laten weten of deze verklaring voor u werkt.

U hebt op het moment een betaalrekening, spaarrekening en misschien nog een andere rekening. Je betaalt de huur, boodschappen en een biertje. U gebruikt een bankpas of creditcard, contant geld, een cheque, PayPal of betaalt misschien op een andere manier. U zorgt ervoor dat alleen u en de mensen die u vertrouwt toegang hebben tot uw geld.

Corporate treasurers bouwen en onderhouden een bankinfrastructuur die betalingen mogelijk maakt. Ze denken na over wie betalingen mag doen (vaak zijn zij dat), wie kan autoriseren (geen persoon die de betalingen uitvoert zijnde niet de cash manager), welke bank te gebruiken en potentiële andere betaalkanalen.

Je hebt een hypotheek of een persoonlijke lening zodat je een huis kunt kopen of kunt betalen voor boodschappen, terwijl aan het einde van je looncheque de maand nog niet ten einde is. Corporate treasurers vinden fundingsoplossingen/financieringsoplossingen voor hun bedrijf, zij hebben een breder pakket producten beschikbaar zoals kredietfaciliteiten, obligaties of nieuwe aandelen.

Je voelt fluctuaties in rente en valuta wanneer je de grens overgaat naar een ander valutaland, Uw hypotheek komt met rente, op uw betaalrekening en creditcard wordt met valuta marges gewerkt. Zowel valuta’s als rente zijn variabel, financiële markten zijn niet stabiel. Velen van ons accepteren deze veranderingen gewoon. Corporate treasurers denken na over deze risico’s en beheren ze: ze denken na over de valuta’s in commerciële contracten, over de duur en prijs van verschillende financieringsproducten en over het beheersen/beheren van de risico’s, bijvoorbeeld met behulp van derivaten.

Natuurlijk is de bovenstaande beschrijving een te eenvoudige beschrijving van de situatie. Treasurers hebben veel andere taken en de complexiteit is veel groter dan een standaard huishoudelijke situatie. Verder wil ik benadrukken dat treasurers geen boekhouders of controllers zijn: ze verzenden of ontvangen geen facturen en schrijven het jaarverslag niet. Ze beheren de feitelijke risico’s en geldstromen.

Ik hoop dat je dit jaar je familie beter kunt informeren over de baan. Geniet van de vakantie!

Pieter de Kiewit

 

 

Pieter de Kiewit

Owner of Treasurer Search

 

Flex Treasurer via treasuryXL: Wij regelen het voor je

| 18-12-2018 | treasuryXL |

Laagdrempelige en hoogwaardige expertise van ZZP’ers uit de treasury wereld voor kleine en middelgrote organisaties die geen treasurer of cash manager in dienst hebben.

WAT IS EEN FLEX TREASURER?

U bent de eigenaar van of werkt in een kleine of middelgrote organisatie die geen treasurer of cash manager in dienst heeft. U denkt waarschijnlijk dat er binnen uw organisatie geen plaats is voor een dergelijke functie. Maar, oordeel niet te snel: ook het MKB heeft behoefte aan professionals als het gaat om treasury en cash management. Toch gaat het aannemen van iemand vaak een stap te ver.

Welke mogelijkheden zijn er?

treasuryXL en Treasurer Search hebben de handen ineengeslagen om laagdrempelige en hoogwaardige expertise van ZZP’ers uit de treasury wereld te koppelen aan kleine en middelgrote ondernemingen die geen treasurer of cash manager in dienst hebben.

We willen met deze dienstverlening geen substituut worden voor de grote treasury consultancy organisaties maar we bieden graag ondersteuning bij vraagstukken die nu onbeantwoord blijven. U kunt de vraag aan ons stellen en wij zullen u vrijblijvend in contact brengen met de juiste deskundige. Leidt dit tot een samenwerking, dan kan dit op urenbasis, als lump sum of in een abonnementsvorm ingevuld worden.

Beschikbare diensten

Wij kennen Flex Treasurers uit verschillende vakgebieden: risk, bankrelaties & technologie, regulations, non-profit, financiering, trade finance, cash management, SME & overige gebieden.

Meer informatie kunt u terugvinden op onze website: https://www.treasuryxl.com/community/flex-treasurer/ . Hier kunt u bijvoorbeeld een overzicht van de diensten vinden die we aanbieden in samenwerking met de Flex Treasurers zoals bijvoorbeeld een treasury quickscan en een treasury coach.

 

Netting: a viable value driver

| 17-12-2018 | BELLIN | treasuryXL |

How to save money and resources with a smart intercompany reconciliation process

The last two decades have seen treasurers graduate from haphazard data collectors to deliberate decision makers. As their empowerment is inextricably linked to the triumph of the internet and the technology it affords, it comes as no surprise that most of them are curious about new developments and eager to partake in them. Yet, the convenience and value of automated intercompany reconciliation is still comparatively underappreciated and overlooked. According to an article published in Financial Management just a few years ago, the vast majority of US companies still reconcile their balance sheet accounts manually and forfeit the countless benefits yielded by a centralized, agreement-driven netting process enabled by today’s technology.

What is Netting?

At its most basic level, netting is the offsetting of payables against receivables between two or more group companies to reduce the amount of net payments and save transaction costs. Originally a mere accounting task – ensuring that the balances of two accounts were matching – intercompany reconciliation has, with the advent of modern technology, transformed into an indispensable cash and FX management tool and thus become an integral part of treasury management.

The netting center — technology with teething troubles

The proverbial missing link to an enhanced netting process was the emergence of cloud-based Treasury Management Systems that afford users global visibility and control and enable the implementation of group-wide process automation. Bilateral netting was replaced by multilateral netting (figure 1) via the introduction of netting centers run by the group treasury. Isolated matching between single subsidiaries became obsolete, as the netting center acts as a reconciliation hub across the entire company: payables are made out by the respective group companies to the netting center, receivables get paid to the eligible subsidiaries by the netting center. Classically, this process was either payable- or receivable-driven. On the surface, this seems simple and efficient, but it’s not: as there is no room for doubt or dispute, it is susceptible to errors and abuse. In the case of payments-driven netting, subsidiaries can compromise the system by accidentally or willfully failing to enter invoices, while in a netting process based on receivables, group companies can enter fictitious agreements to garner illegitimate payments. In a setup like this, the netting center is as effective as it is blind – with guillotine-like precision it carries out what the subsidiaries have entered, without verifying its legitimacy. This creates uncertainty among the group companies and fosters catacombs of shadow bookkeeping at the expense of much-needed visibility.

Netting – it’s all about engagement

Therefore, modern multilateral netting systems should not only perform AP/AR matching but are also dispute management systems, performing – as we call it — agreement-driven netting. It enables payable- and receivable-driven netting, but in an advanced manner, as it encourages engagement and promotes transparency. Via the TMS, AP and AR line item data gets collected and subsequently matched. Disagreements are dealt with in a structured dispute process, the rulebook of which is defined by the company’s management according to the requirements of the group. Disputes between subsidiaries get reviewed by the netting center, which acts like a referee, applying said rules. The key principle and the main advantage of this approach is the engagement it fosters: each party gets their say, no one can be taken advantage of, all transactions are transparent as everything gets recorded and the proper settlement of balances is ensured.

Multilateral Netting as a cash and FX management instrument

The advantages of such a process are obvious: With fixed dates for netting runs, incoming payments can be predicted precisely. The netting center respectively the central treasury enjoys maximum control and visibility of cash movements and can optimize the use of funds within the group. The same holds true for FX hedging: netting enables subsidiaries to transfer the FX risk to the central treasury, where seasoned experts deal with it for the entire group. Consequently, the number of FX trades – and with it the transfer and bank fees – gets significantly reduced, as each subsidiary will only have one cashflow per netting run towards or from the netting center in a fixed currency set beforehand. As the netting center acts as an in-house bank, the group companies don’t make any payments via bank accounts anymore, which saves cost and resources and provides added transparency.

Cost reduction via best practice netting: figures!

Let me provide you with just one example from the plethora of companies, who were able to streamline their operations and encounter significant savings via a TMS-based netting process: the Austrian tool manufacturer Tyrolit, whose Success Story and accompanying video we’ve featured previously as part of our We Love Treasury 2 series. Upon counting all payments via bank accounts between group companies, Tyrolit arrived at the impressive number of 600 per month, most of them international, entailing substantial bank fees as well as float. The fact that many of those transactions were made in foreign currency added significant translation costs to that, which were hard to calculate due to the different margins the banks offered. With the roll-out of an agreement-driven netting process across the group, Tyrolit managed to reduce the number of transactions to a mere 5% of the original amount and ended up saving the whopping sum of about 500,000€ per year on bank fees and translation costs alone.

Netting company-wide: benefits, benefits, benefits

By transforming a company’s entire intra-firm trade, a robust multilateral netting process offers benefits galore, including but not limited to:

  • a company culture that enables dialogue, promotes engagement and fosters transparency and trust
  • facilitated cash and liquidity management via centralized IC reconciliation on fixed dates in fixed currencies
  • fair distribution and optimization of refinancing cost
  • centralized FX hedging aiding the consolidation of an over-complex banking landscape, reducing bank fees and minimizing translation costs
  • overall enhanced efficiency, visibility, security and compliance

By the way: the implementation of netting software is fairly straightforward, software-wise, once you’ve decided that you want to follow through with the process. It’s a one-time technical impact, user-training can be performed very efficiently and hosting as well as outsourcing options are available to overcome capacity shortages. So what are you waiting for?


Dr. Teut Deese
Staff Writer – BELLIN 

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Check out the video: “Netting: How to save resources with smart IC Reconciliation,” in which Martin Bellin gives us an in-depth breakdown of how your company can take full advantage of the associated benefits.

 

YOU CAN BE ONE OF THE LAST PEER GROUP MEMBERS!

| 13-12-2018 | by  Pieter de Kiewit |

“Under 20% of the treasury population completed a formal treasury education. And over 50% of decision makers in the recruitment of treasurers does not know about the discipline.” We are one of the launching partners of the Treasurer Test that can bring an objective measurement that can tackle problems resulting from the described issue. Others are the Vrije Universiteit (Amsterdam), the University of Applied Sciences of Utrecht, software & assessment developers and law experts.

Key element of the test is the comparison with peer groups. These groups are defined by number of years of experience in treasury of its’ members. Our role as launching partner is asking 100 relevant peer group members that will create the benchmark that future testees will be compared with. Peer group members do not pay the €595 the test will cost when ready, but only €1,21. We carefully invited most, but there are still a few places left, especially in the group with under 9 years’ experience. If you are interested, please contact Roy Baaten, the community manager of treasuryXL at [email protected]

When the number of 100 is reached, reports will be sent out and the Treasurer Test is ready for use. We expect a lot. At Treasurer Search we will use the test in our committed searches and many other situations, when relevant. First expectation is to further improve the match making process. Also in choosing education, coaching, outplacement, team formation and salary benchmarking the test can come in handy. Perhaps even showing a CFO about the complexity of the discipline can be done. There is a peer group “no treasury experience”.

We look forward to the analysis that can be made after a bigger group of people completed the test What will we see in the correlation between age, education level, nationality on one hand and treasury skills level on the other? We expect to further contribute in raising the level of corporate treasury and hope you will join us.

For more information about the Treasurer Test please visit the Treasurer Test Blog page.

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

Training Blockchain voor Financials

| 11-12-2018 | treasuryXL

Op 18 en 19 december 2018 organiseert Alex van Groningen de training Blockchain voor Financials. 

Is blockchain een hype of gaat het de wereld echt drastisch veranderen? Wat is de gigantische impact van blockchain op de toekomst van uw financiële functie? Ontdek in twee dagen wat blockchain is, hoe u het toepast en hoe u ermee begint in uw eigen functie, organisatie of bij uw klanten

Uniek: Ontvang waardevol advies op uw eigen Blockchain Case

Breng uw eigen blockchain-use case in en deze wordt al tijdens de training besproken en beoordeeld op haalbaarheid. Ontvang bruikbare tips en adviezen waarmee u direct na de training verder kunt.

In deze training onthult blockchain-expert Paul Bessems de nieuwe wereld van blockchain en geeft u daarbij vele aanknopingspunten om direct met blockchain aan de slag te gaan binnen uw organisatie of netwerk. Paul Bessems illustreert de theorie met vele voorbeelden uit zijn eigen praktijk waardoor de potentie van blockchain direct duidelijk wordt. Schrijf direct in.

Onderwerpen

  • Wat is Blockchain?
  • Het verhaal achter Bitcoin
  • Blockchain in de praktijk
  • Data Economics
  • Toekomst van Blockchain

Programma

Het volledige programma kunt u hier raadplegen.

Voor wie?

Dit programma is specifiek ontwikkeld voor financials zoals controllers, financieel managers, financieel adviseurs en financieel directeuren die betrokken zijn bij (management) innovaties zoals blockchain en digitalisering.

Bel voor meer informatie of een offerte met Ivo ten Hoorn op 020 639 0008.

Are you a treasurer? Here are 5 tips for a successful career

| 06-12-2018 | TIS | treasuryXL |


Treasurers – the guardians of money – play an important role in all companies. They work to regulate the flow of money by taking a more modern and contemporary approach than ever before. Here we say: Goodbye cash in the closet and hello digital possibilities of the 21st century!

At the same time, however, there is a heavy burden of responsibility on you because if you miscalculate something you will quickly be out of a job and the company will be out of business too. To make sure that doesn’t happen and that your career as a treasurer goes from strength to strength, we have compiled five tips to keep you on the safe side.

1. From controller to treasurer

The switch from money management and the associated creation of a treasury department is becoming increasingly common. In summary, here is a brief overview of what you can do to improve your work as a treasurer:

For example, the choice of bank partners should be carefully considered. By investing time in this, you can save fees later. Likewise, liquidity equalization should be reviewed. Cash pooling makes efficient cash distribution, in Europe or globally as well, easier as central financial management offsets excess liquidity or liquidity shortages. The treasury management system used should also be tailored to the needs of the company and its customers. If these have perhaps changed in recent years, an adaptation could be useful. In general, it is important to be able to ensure transparency for customers and within the company at all times in order to strengthen customer confidence and provide employees with all the information they need.

In the absence of transparency and an unclear view of banking activities, you can use the TIS Bank Account Manager. This is because TIS facilitates reduced bank account management to a single SaaS solution, allowing you to control all account details. For treasurers TIS is therefore worth its weight in gold.

2. From overview to perspective

Having optimized the technical and general structures that help treasurers make their lives easier, it is important to understand the state of the business. A complete overview is therefore priceless! To improve something, you must first know what there is to improve. Which is why a general check of the state of affairs is essential.

Then carry out a financial check: You need to find out about the resources that are available and which could be exhausted in any given case. In addition, you should know about the liquidity of the company – where are there still bottlenecks or where could they develop?

Caution! Because that is quickly neglected: Even within your team, you should know and keep track of the sequence of operating processes. This allows you to quickly identify internal vulnerabilities before you start looking for them externally.

Keep this overview up-to-date and expand it to include news and changes. This allows you to detect possible risks for your company at an early stage and reduce or even prevent negative effects. The overview also helps you to assess the support you need from other departments. They will certainly be happy if they do not have to spontaneously provide first aid for the issue but know in good time to integrate this request into their work. This will help you to ensure timely processing and thus, in the long term, to achieve your own goals.

Recognizing the need for action enables you to respond in good time. If you recognize a chance for long-term improvement, the necessary steps should be implemented soon. However, if the possibility of a short-term improvement is recognized, steps must be taken immediately.

As you can see: This overview helps you to no longer miss any room for improvement.

3. Only optimized reporting is also good reporting

Correct and detailed reporting on all current and future projects can play a major role in the success of the treasury department. It goes without saying that some projects work very well without a meticulous protocol, which also takes up a lot of time. However, at some point you may come across an error that cannot be traced back and could trigger a domino-like chain reaction – or maybe not, you don’t know. But would you not rather invest a little more work to be on the safe side? For this reason, optimize the laborious reporting process and fill it with details, so that if a problem arises later, you can directly identify and fix the source.

4. A planned approach to success

If you have a clear view of the current situation of the company, think about future successes and goals. To do this, you should create an accurate roadmap listing all projects, tasks, customers, etc. After you know what you want to achieve in the future and what your goals are, record them as well. Divide your goals into long-term, medium-term or short-term achievements and prioritize them. Look for a way to reach the goals from the current situation. The previously provided overview will help you immensely in evaluating the implementation options!

If a goal does not seem possible at the moment, shift it to a later date, but do not forget it. However, if you have found a way, get down to planning or directly to implementation.

5. Silence is silver, talking is golden

Even if the opposite opinion prevails in everyday life, as a treasurer you should maintain good communication lines with all stakeholders. Hold regular meetings with your team. This helps you to always keep an eye on the current status of projects. Introduce project completion reports and align your expectations with those of your colleagues. It is important to keep to your timetable and that objectives to be achieved are accessible at all times. You should not only keep your close colleagues updated, but also those stakeholders in other departments. This will allow you to obtain approval for the funds you need in future projects. Good internal communication is therefore important, what’s more, contact with external partners and customers is also crucial for successful cooperation. Here in particular you need to identify and fix problems quickly to prevent things from getting worse.

Unfortunately, as is often the case in life, there is no guide to guaranteed success. However, with these five tips, you are on the right path. It is important that you do not lose sight of your actual tasks during all the coordination work. Create an (imaginary) list of tasks to complete. It should strike a balance between your actual tasks, such as financial planning, hedging financial risks or maintaining contact with banks and capital markets and the coordination you have to provide. Usually one goes with the other, but neither should gain the upper hand alone. Stay focused!

You can read the full article on the website of Treasury Intelligence Solutions GmbH.

 

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Cash flow prognoses zijn van vitaal belang in corporate treasury

| 29-11-2018 | Cashforce | treasuryXL |

De lancering, eerder deze week, van het nieuwe liquiditeitsbeheerportaal van HSBC, moet begin volgend jaar worden gevolgd door een nieuw Cash Flow Forecasting-platform, dat laat zien hoe liquiditeitsbeheer en kasstroomvoorspellingen met elkaar verweven zijn. Er is een groeiend aanbod van leveranciers die zich op dit gebied concentreren, waaronder onze partner Cashforce.

Cashforce maakt verbinding met alle gegevensbronnen die het geld beïnvloeden, om een ​​zeer nauwkeurige cash forecast te bouwen. Slimme algoritmen worden toegepast om nog meer nauwkeurigheid te bieden en zullen
pro-actieve optimalisatie acties tonen. ”

Het belang van kasstroomprognoses neemt steeds verder toe. Bruce Lynn, Managing Partner bij The FECG LLC, is bezig met de laatste fase van zijn onderzoek onder 200 bedrijven wereldwijd en hun gebruik van cash flow forecasting en werkkapitaal management. Hij is van mening dat het belang van cash flow forecasting toeneemt omdat er sinds 10 jaar weer sprake is van een stijgend renteklimaat. Hij vindt dat:

  • De ‘beste’ bedrijven dit belang zullen erkennen en trachten de inherente variaties te verkleinen die zullen optreden omdat de toekomst onzeker is.
  • Ze zullen moeten investeren om “zichtbaarheid” te verkrijgen over hun “stromen” (werk, contanten, boekhouding, informatie). Investeringen zullen niet alleen veranderingen op treasury afdelingen, maar ook operationele afdelingen met zich meebrengen waar de grotere cashflows plaatsvindt.
  • De “slimmere” bedrijven zullen hun personeel naast de bestaande beloningen ook belonen voor het genereren van meer en stabielere kasstromen
  • Probleem (zoals onderzoek lijkt aan te geven): gebrek aan informatie op operationeel niveau; relatieve onbelangrijkheid van kasstromen versus winst. Hoge afhankelijkheid van de technologie van 1980 (dat wil zeggen spreadsheets)
  • De overige bedrijven zullen hun kapitaalkosten zien stijgen naarmate ze overgefinancierd raken of te weinig investeren. Het risico zal vooral hoog zijn voor bedrijven die vreemd vermogen gebruiken om het verwachte rendement van het eigen vermogen te verhogen.

Binnenkort zal er een survey uitgebracht worden waarvan de resultaten hier gedeeld zullen worden.


Cashforce – Cash forecasting & Smart Treasury

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