Corporate governance – it is all about the rules

| 08-03-2018 | treasuryXL |

Corporate governance is the rules and processes by which a company is controlled and directed. It is a balancing mechanism between different stakeholders – directors, shareholders, management, government, external financiers etc. The treasury function performs highly skilled and complex tasks to ensure continued and harmonious execution of all cash related functions. At the same time, there is much interaction with both internal and external stakeholders. The corporate governance within the treasury function should always be performed in accordance with predetermined and approved metrics as laid out in Treasury statutes. This means undertaking operations that are consistent with the governance within the corporation.

Corporate governance helps to define the strategies of a company, and highlight how these strategies will be implemented throughout the policies, procedures and working processes. Normally, Treasury statutes are drawn up by treasury and management – detailing the accepted methodology to perform the approved tasks – whilst responsibility and approval is granted by the directors. Once agreed upon, the statutes have to be observed by staff carrying out their duties and responsibilities.

As the treasury function is highly complex – both in financial products as well as regulatory frameworks – both directors and management need to fully comprehend the functionality as well as the implications of different financial products and services. The onus lies on the treasury department to ensure that other stakeholders not only have enough knowledge about the products, but also awareness and understanding of the relevant risks. This is vital to ensure that the right decisions are made at the highest strategic level.

Directors and management need to understand:

  • Financial risks undertaken whilst running the business on a day-to-day basis
    Operational controls to protect the business from fraud
    Risks inherent in approved financial instruments
    Strategies used to identify and mitigate financial risk
    How risk is measured and reported
    Potential exposure as a result of the agreed policy
    Acceptance that not all risks can be qualified and quantified
    The influence of external factors – market risk, counterparty risk, interest rate risk etc.

Proactive role of the Treasury

  • Accurate valuation of financial products used – if you cannot value it, you should not be using it
    Quick recording of all transactions
    Ensuring with controllers that all financial products are correctly input for accounting purposes
    Implementation and management of agreed Treasury policies
    Determining if bank covenants are being maintained
    Ensure compliance with all external regulatory frameworks
    Collaborating with auditors – both internal and external

Policy is influenced by strategy and objectives. The role of Treasury is to help to fulfil those objectives. Treasury has a dual function – it both mitigates risk as well as being the source of risk. Treasury enters into financial transactions on behalf of the business in order to mitigate risks; however, something like an unauthorised trade could subject the business to financial loss.

It is essential that directors and management understand both the risks that treasury manage, together with the potential risks that those transactions can create.

From dull numbers to smart data: A new era of cash visibility is dawning

| 06-03-2018 | TIPCO | Sponsored content |

Building on information that is now more readily available than ever before, advances in technology help create new insights for corporate treasurers. 

 

 

For the last decade or so, many treasury departments have focused on getting their hands on the data required for establishing daily, or at least weekly, visibility of group-wide cash. Countless projects have revolved around collecting electronic bank balance data – think MT940 and others – and considerable time and resources have been invested in automating and speeding-up data retrieval from TMS, ERP, trading platforms and other source systems.

After all, besides bank balances, data on bank and IC loans and deposits, intercompany clearing accounts and other financial positions needed to be incorporated as well to allow for a realistic assessment of the group’s financial status and available headroom. However, reporting based on these data has remained a painful exercise for most treasury teams as it typically involved exporting information from various, isolated data silos to numerous spreadsheets containing a plethora of handcrafted reports. The result: the number of hours spent on consolidating data, updating reports and correcting errors often reached double-digits, on a weekly basis.

The first step: compiling information

In recent years, the provision of relevant data has become much more automated and common place since the goal of having electronic account statements of all bank accounts world-wide centrally available was high on the priority list of many corporates. Very often, this was part of a larger effort to streamline and centralise cash management and payments. In many cases, a TMS was introduced to replace Excel spreadsheets and the treasury modules of popular ERP suites started to offer more sophisticated features, providing corporates with a preference for all-in-one solutions with a viable alternative to a standalone TMS. A mix of tried-and-tested, file-based connectors and more sophisticated web-services allowed for even speedier data interchange between source systems such as TMS, ERP or trading platforms. And any data not centrally available to the treasury department was collected from subsidiaries – facilitated in the best case by easy-to-use, web-based applications. With this kind of information basis established, dedicated treasury reporting solutions were leveraged to achieve close to 100% visibility of cash. At the same time, the rise in business intelligence software allowed end users to easily retrieve data without having to resort to spreadsheets and accessing reports online or even via smart devices became the norm rather than the exception.

The next step: Turning information into insight

For many corporates, these steps were already a big leap forward. But what next, now that all the integration challenges have been mastered and information is readily available? Of course, the ‘data puddles’ turned ‘data pools’ mentioned above can be used for plain and simple financial status reporting. But, given that it is 2018 and self-driving cars will soon hit the road in California: should that really be it? For us, the answer is a clear ‘no’. Today, treasurers have access to a whole new range of applications which make use of information that is now more readily available than ever, and which leverage recent advances in technology such as artificial intelligence to provide value-added services to treasury depart-ments. While we are very careful when talking about ‘revolutions’ in treasury, the advances we want to highlight below surely are a noteworthy evolution. Until recently, data analysis in treasury was still very much a manual task. This no longer needs to be the case as smart tools greatly reduce the time needed for performing even in-depth data analyses, thus allowing more time to be spent on acting on the results of such analyses. Let us take you on a quick ‘tour d’horizon’ using five examples of how smart applications can take your cash visibility to the next level:

1. Policy checks
In a typical treasury policy, one finds numerous rules and regulations relating to the opening of new bank accounts, the maximum allowed number of these accounts, acceptable account purposes, etc. Why not replace email-based processes for new bank account requests with intelligent workflows that not only ensure an end-to-end audit trail, but which also ensure that new bank accounts are automatically fed into all relevant systems such as ERPs, TMS or reporting tools once finally approved.

2. Compliance controls
Combined with smart request workflows as described above, regular, system-supported compliance checks further enhance group treasury’s grip on what is going on around the group. Whether these checks relate to the number, currency or counterparty of bank accounts or other financial positions, or the timeliness of data on authorised signatories in the system, outliers can easily be identified, and compliance can be swiftly restored.

3. Fraud detection
When electronic account statements are merely used as a means of importing end-of-day balances, much of their potential is lost. Based on smart search patterns, data provided as part of the remittance information can be used for valuable insights: Where in the group do frequent cash-based transactions occur? Banks’ business transaction codes (BTCs) or other related text snippets can point you in the right direction and responsible, local or regional finance staff can be notified automatically, using workflow-based notification processes so the background and soundness of such cash movements can be checked.

4. Performance KPIs
KPIs as a means of systematically measuring treasury performance are high on the agenda of many of the more advanced treasury departments out there. Whether they relate to the efficiency of core treasury processes (think request and approval workflows once again) or to other indicators such as the overall number of bank accounts, the percentage of accounts included in cash pooling arrangements, the share of trapped cash in overall cash – to name only a few basic KPIs: a well-compiled set of such figures that covers not only cash management but other areas as well – presented in the form of a clearly laid out KPI dashboard, finally provides the treasurer with a strategic steering wheel.

5. Bank fee controlling
You wonder what bank fee controlling has to do with cash visibility. The short answer: everything. Regular, system-supported bank fee analysis is not only about penny pinching but equally about developing an in-depth understanding of what is going on further up the process chain. A strikingly high number of fax payments in a country where you wouldn’t expect them? Fees titled ‘Others’ which amount to thousands of euros every month? If nowhere else, then you’ll find this information in the electronic fee statements (e.g. camt.086) provided by your bank. A smart analysis tool allows you to interactively drill down from cruising altitude to the line item level and within minutes you can reach out to either your bank’s customer service, your subsidiary or both to clarify what’s going on.

If you would like to know more and find out how technology can help you go one step beyond cash visibility and ease your daily life as a treasurer, get in touch with us. We are looking forward to helping you unleash your data’s full potential.

TIPCO Treasury & Technology GmbH

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Italian general elections – the end of la dolce vita?

| 05-03-2018 | treasuryXL |

On Sunday 4th March 2018, Italy head to the polls. About 50 million people will vote for a new national government. They are looking to elect 630 members of the Chamber of Deputies and 315 members of the Senate of the Republic. A new electoral system will see 37% of seats allocated by a “first past the post system” and the remaining 63% allocated by proportional representation according to the largest remainder method. Political ideology is represented by more than 20 parties embracing the political range from communism to neo-fascism, together with 2 predetermined coalitions based on centre-left and centre right. One of the contestants is Silvio Berlusconi (representing the Forza Italia – the centre-right coalition) who is barred from holding public office until 2019 as a result of a tax fraud conviction! So what are the issues for the 3rd largest Euro-bloc country and what are the potential repercussions for the EU and the Euro?

The main issues appear to be the economy and immigration. The arrival of more than half a million immigrants since 2013 has upset many Italians and led to politicians increasing their rhetoric on the subject. Mr. Berlusconi has concluded that immigration is a social time bomb and has advocated a policy of mass deportation. His comments are shared by many other political parties – though not all. Electoral manifestos have included such populist tracts as increasing the minimum wage and tax allowances, reduction in income and corporate tax, increase spending on public welfare and, ambitiously and without detail, a reduction in sovereign debt by 40 percentage points in relation to GDP within the next 10 years.

Italian economy

Italy has seen a faltering economy over the last 10 years. Their annual GDP growth rate has rarely exceeded 2% per year in that time. Industrial output is still 5% lower than before the crisis. This is in stark contrast to their peers in Europe who have mainly all recovered and now have industrial output higher than before the crisis. Reforms have seen more than 1 million jobs created since 2014, but more than 60% of these are part-time jobs. Unemployment has fallen but the rate of unemployment is still over 11%. One third of Italians aged between 25 and 29 remain unemployed.

Sovereign debt has increased over the last 10 years. Outstanding debt now exceeds EU 2.2 trillion and the ratio of debt to GDP is over 130%. The banking sector is also affected. More than 15% of all loans to businesses and consumers are now recognised as non-performing loans. Additionally, at the end of 2017, Italian outstanding debt arising from Target2 balances was approaching EUR 440 billion.

So, Italy has the 2nd largest debt to GDP ratio in the EU, largest ratio of bad debts at commercial banks and the largest outstanding negative balance at Target2. The only sensible way to prevent the levels of debt from becoming unsustainable would be for the Italian economy to grow faster that their historical average – a well-meaning definition, but one that looks very remote in the present economic and political climate.

Italian politicians have increased their anti-EU rhetoric recently, stating that the current situation cannot continue – both economically and in relation to the number of immigrants. How they think the EU will change at a time that they are facing more internal pressure from dissatisfied member states is a mystery.

First results should arrive around lunchtime on Monday 5th March 2018 – only then will we know what the future holds for Italy, the EU and the Euro.

The image of Italy, for some, is of La Dolce Vita as seen in the famous film of 1960 by Federico Fellini. The vision of Anita Ekberg in the Trevi fountain – once seen, never forgotten.

But the moral of the story was the unsuccessful pursuit of love and happiness.

 

Laatste trends in financiering: oog voor duurzaamheid

| 02-03-2018 | Bianca van Zeventer |

Duurzaam ondernemen wordt steeds belangrijker voor de toegang tot financiering en financieringsvoorwaarden. Al langer wordt door overheid, investeerders en banken kritisch gekeken naar duurzaamheid. Waar voorheen de overheid en gemeentes het initiatief namen, is de financiële sector nu ook een actieve kracht in het stimuleren van duurzaamheid, door middel van maatwerk financieringsvoorwaarden.

Voor financiering van duurzame projecten, zijn door de gemeentes de afgelopen jaren fondsen opgericht, die leningen verstrekken tegen aantrekkelijke voorwaarden.
De Regeling Groenprojecten van de overheid is sinds 2016 van kracht. Deze regeling biedt belastingvoordeel voor groene spaarders en beleggers en daarnaast de mogelijkheid voor erkende banken om via een ‘groen’ fonds geld uit te lenen aan duurzame projecten met een rentekorting. Het zwaartepunt ligt hier vooral op stimulering van energie besparende projecten, duurzaam bouwen en duurzame transportmiddelen.

Naast de overheid, richt nu ook de financiële sector zich, meer dan ooit, op het stimuleren van duurzaamheid.

Duurzaamheiddoelstellingen in financiering laten daarbij een duidelijke verbreding zien. Niet alleen energiebesparing, duurzame energie en CO2 uitstoot krijgen nu de aandacht, maar ook andere – veelal sociaal economische – doelstellingen. Bij de recente financieringen van Philips en Barry Callebaut zijn bijvoorbeeld de kredietvoorwaarden gekoppeld aan een beoordeling door Sustainalytics, die veel breder kijkt naar duurzaamheid. Dit in lijn met de doelstellingen van de Verenigde Naties. De VN heeft in totaal 17 SDG’s (Sustainable Development Goals ofwel Duurzame Ontwikkelingsdoelstellingen) opgesteld ter bestrijding van armoede, ongelijkheid en klimaatverandering.

De aandacht voor duurzaamheid in financiering werkt twee kanten op.
Enerzijds zal financiering voor niet-duurzame projecten en ondernemingen beperkt worden. Banken en investeerders hebben bijvoorbeeld al aangegeven de financiering aan fossiele energie projecten te willen beperken en dat energielabels op onroerend goed een doorslaggevende rol zullen gaan spelen in de toekomst.
Anderzijds wordt duurzaamheid gestimuleerd, door het opnemen van duurzaamheidscriteria in maatwerk leningsovereenkomsten. Wanneer bedrijven aan deze duurzaamheidscriteria voldoen, betalen zij een lagere rente.

Oog voor duurzaamheid loont. Het vergroot de financieringsmogelijkheden en geeft toegang tot aantrekkelijke financieringsvoorwaarden. Bedrijfsgrootte is van ondergeschikt belang. Groenleningen kunnen bijvoorbeeld al worden afgesloten vanaf circa €10.000.

Uw Flextreasurer kan helpen bij het vinden van de juiste, en meest aantrekkelijke financieringsvorm.

Bianca van Zeventer

Treasury and Finance Specialist / Owner of CuCoFin

 

 

 

Regulating cryptocurrencies: walking the tightrope

| 01-03-2018 | Carlo de Meijer |

Long-time regulators world-wide took a wait-and-see attitude towards the non-regulated markets for Bitcoin and cryptocurrencies. But that is changing rapidly. With the growing popularity of the crypto market, the large number of unregulated cryptocurrencies (more than 1300, greater attention is now being paid by Governments and other stakeholders around the world.

Regulators across the world are looking at whether — and how — to regulate cryptocurrencies. As a reaction last week cryptocurrencies tumbled with the Bitcoin falling even below $6,000 after having reached a high of $20,000 on 17 December for fear of more regulation. The cryptomarket value also fell deeply from $674 billion in December to $315 billion. Also the hack of the Japanese crypto exchange Coincheck, where some hundreds of millions of dollars disappeared caused enough unrest. Up till now there is however no univocal direction in how cryptocurrencies are looked at and how to treat them.

Why intervene in the cryptocurrency market?

It is no surprise that governments and regulators are becoming more vocal and putting together tasks forces on how to deal with it. There are compelling reasons why cryptocurrencies should be under more scrutiny by regulators and supervisors. The threat of price volatility, speculative trading and hack attacks all call for stricter regulation. Main goal of regulators is to create long-term stability afforded by common policies and elimination of fraudulent actions and practices.

To protect the consumer

Firstly, there is the need of tighter oversight of crypto exchanges and trading platforms from the viewpoint of investor protection. These markets are however not transparent for private investors. There are clear risks for private investors associated to price volatility, operational and security failures at crypto exchanges, market manipulation and liability gaps. Many experts worry that the trade in Bitcoin futures, crypto funds and other highly speculative financial products will inflate a speculative bubble, while running the risk of losing all their money. In that case there is – unlike at normal currencies such as euro, dollar and yen – no public institution like governments or central banks behind it.

Fear of criminal activities

According to many, aside from the instability of cryptocurrency prices, these cryptocurrencies must have greater regulatory oversight in order to prevent illegal activity and illegitimate use. Aside from the instability of cryptocurrency prices, regulators are worrying about criminals who are increasingly using cryptocurrencies for activities (trading away from official channels) like fraud and manipulation, tax evasion, hacking, money laundering and funding for terrorist activities.

Systemic risk

There is also the systemic risk that is inherent to the crypto-economy. If it continues to grow uncontrolled there is the danger of destabilising the financial system worldwide. The overheating of the cryptocurrency market with speculative money and the wild price fluctuations have raised alarms and calls for tightening of regulations in many countries from the viewpoint of financial system stability. If the price bubble bursts, it can quickly endanger individual institutions and parts of the financial markets. If big losses would occur this could hurt the reputation of the whole market.

Regulators are stepping in

The advent and subsequent boom of cryptocurrencies on a global scale as well as the heavy fluctuations have left many governments scrambling to find ways to deal with this new phenomenon. Regulators and other official authorities worldwide are stepping in to define how they would oversee this cryptocurrency environment (what had been to date a legally “murky” environment). Governments around the world are now looking at how to regulate Bitcoin and other cryptocurrencies.

What could they actually do: the options

There are various options to deal with cryptocurrencies, ranging from a complete ban to the other extreme of creating an own state digital currency. The options are just warn and further do nothing, complete ban, categorise as financial asset, regulate the exchanges or create a state owned crypto currency.

Read the full article of our expert Carlo de Meijer on LinkedIn

 

Carlo de Meijer

Economist and researcher

 

 

Fiscal union and the Euro – a modern version of Helen and Cassandra?

| 28-02-2018 | treasuryXL |

There are many reasons for the creation of the Euro – mainly linked to memories of senior politicians who had experienced the Second World War, together with the fall of the Iron Curtain. Countries that trade together, share institutions, and a common currency, are less likely to declare war on each other seems to be the thinking. Furthermore, statesmen explained that economic and monetary union would lead to greater prosperity, increased employment opportunities for citizens and a higher standard of living. Cohesion, convergence, increased wealth and peace were certainly attractive points. So why, after 19 years, have the countries not achieved more convergence?

To truly obtain integration it was always evident that steps would have to be made towards fiscal union – monetary union was just the start. A fiscal system needs to be in place that ensures a form of stability – transferring funds from strong countries to weaker countries. Whilst the Euro has contributed to growth in trade between member states, and certainly citizens have been able to source and price goods and services without an exchange rate risk, it has fallen short on certain goals. Mobility within the labour market was never going to replicate that in America. The national boundaries might have gone, but the language and cultural borders are still present. Therefore, a shortage of labour in Poland, can never be met by an influx of Belgians and Spanish looking for work. Investment capital has certainly not moved as freely as anticipated – the idea that surplus funds from Northern Europe would flow freely to the South and allow them to strengthen their position in the marketplace has remained an idea.

As previously stated the expected convergence of different economies has not happened. In fact, it would appear that they have diverged. There is much information that can be found on the internet that explains how the countries in the South increased wages by a far greater factor than productivity after implementing the Euro. It appears that gaining wage parity with the Germans was more important than actually increasing productivity. These excess wages were invariably spent on well-designed, but expensive, German products resulting in trade deficits with the countries in the North.

Emmanuel Macron – the President of France – has vociferously stated that Europe has to be more politically integrated; have a common defence policy and armed forces; more regulation of business; and a transfer mechanism to transfer funds from rich to weaker countries – a fiscal union.

However, considering that the countries within the EU have actually diverged from each other on the basis of GDP, inflation, Government debt, unemployment etc. since the inception of the Euro, and even more so since the start of the financial crisis, there is an inherent danger in transferring funds.

The word transfer implies not only something going from A to B, but also from B to A. The disparity within the economies would mean that the transfer would only be going in one direction for a very long time in the foreseeable future. The political implication is profound – would people from countries that are considered rich accept a long term action that would see their wealth reallocated to weaker countries. Some supporters might say that this just a matter of semantics – however the consequences are far reaching and permanent.

Which brings us round to Cassandra – when recollecting stories from Greek mythology people have a good knowledge of the story of Helen of Troy. One of the minor characters, but a very important one, is Cassandra. She who received the gift of prophecy but was cursed never to be believed. She warned about the fall of Troy, the Greeks hiding with the Trojan horse and the war that would happen when Paris fell in love. No one listened to her. There are many politicians and economists who have previously tried to warn about the problems within the Eurozone. Some voiced their opinions even before the Euro existed – but their voices were also dismissed.

There have been more than 50 infringements by member states on the criteria of the Euro since its inception. No sanctions or punishment were ever handed out. To think that things will be different in the future is wishful thinking. In almost a decade since the financial crisis, there has been no structural solution to the inequalities within the Euro and their members. We are almost 10 years further and the differences are even greater and still not resolved. Further integration whilst not acknowledging and addressing the imbalances can only lead to further divergence.

If you want more information please feel free to contact us via email [email protected]

 

Cashforce raises €2 Million to accelerate international rollout

| 27-02-2018 | Nicolas Christiaen | Cashforce | sponsored content |

Cashforce, a fintech leader in Cash forecasting & Treasury solutions for corporates, announced today that it has closed € 2 million in Series A financing. The internal funding round was led by Volta Ventures and Michel Akkermans (Pamica NV), reinforcing their previous commitment to the company. The Series A financing enables Cashforce to accelerate the ongoing international roll-out and fuels its rapid global growth and industry leadership as a premier provider of Cash forecasting & Treasury solutions. Organisationally, staff will be expanded, and operations will be scaled up – with a significant number of new hires in 2018. Product-wise the company is working on developments that will enable even more insights and potential savings for its clients. Commercially, supporting and growing the customer base and increasing customer success and adoption as well as continuing to build strategic partnerships and alliances are part of the strategic plan.

“Cash management & Treasury is evolving from a focus on data acquisition to Treasury automation and data analysis, enabling Treasury departments to bridge the gap between the Finance and other operational departments and enable data-driven strategic decision making. On top of that, Cash flow forecasting has become the major focus of the industry.”, said Nicolas Christiaen, CEO and co-founder of Cashforce. “This investment also re-confirms our investors’ confidence in the leadership that Cashforce has established in the Treasury space, our continued rapid growth and the potential to re-define the category.”

Additionally, Cashforce announced that Michel Akkermans will become Chairman of the board. Michel Akkermans is a serial entrepreneur in fintech companies. Amongst others, he was the Chairman and CEO of successful companies such as FICS and Clear2Pay. After the global payment solution company Clear2Pay was acquired by FIS in 2014, he became an active investor and board member in several companies and private equity organisations, as well as a venture partner and Chairman of Volta Ventures.

Cashforce: The Leading Cash forecasting platform for the Modern Corporate

Cashforce is a next-generation Cash forecasting & Smart Treasury Management System, focused on automation and integration for corporates. It helps corporate finance/treasury departments save time and money by offering accurate cash flow forecasting, pro-active working capital management analysis as well as flexible Treasury reporting & automation.

Cashforce is unique because it offers full transparency into what exactly drives the cash flow of mid-size & large corporates with different complexities such as multi-entity, multi-bank, multi-currency and complex ERP(s). Smart algorithms are applied to generate highly accurate Cash forecasts. The intelligent simulation engine enables companies to consider multiple scenarios and measure their impact. Its intuitive user interface allows for extensive and tailor-made analysis & reporting possibilities. Unlike other enterprise software players, the platform is set up quickly, even in the most complex environments, and connecting seamlessly with any ERP system through its ‘plug-and-play’ connectors. As a result, finance/treasury departments can be turned into business catalysts for cash generation opportunities throughout the company.

“While we started off as a Cash forecasting tool, we have added Advanced Working Capital analytics and Smart Treasury functionalities, and are now operative as a comprehensive modular Treasury Management System (TMS). This makes Cashforce a one-stop-shop for the many analytical and operational practices that benefit Financial and Treasury departments,” says Nicolas Christiaen, CEO of Cashforce. “The endorsement we get from both industry experts and clients progressively confirms that our solution really does bring change into the Treasury market. We now see that potential customers compare the classical TMS providers to Cashforce with Cashforce ending up as the preferred solution! Then you know you’re on the right track. We therefore strive to continue our vision to further integrate and automate to provide our customers with an even more effortless experience.”

“Cashforce has brought a very compelling solution to the corporate Cash management market, which is clearly seen in its results. Since its last financial injection in early 2016, Cashforce has demonstrated a rapid growth, including well over 100% annually recurring revenue growth”, explains Michel Akkermans, the company’s recently appointed chairman.
“With a surge in employees to over 25, an increasing and global interest from the market and partnerships with leading corporate banks, private equity firms & Treasury consultants, Cashforce has been expanding both reach and product. We have heard back from multiple existing customers about their positive experiences with the solution and its impact on their business, and they strongly believe in its trajectory moving forward”.

“Cashforce set foot in the Netherlands this year and has been growing substantially, proving that the company can be scaled up relatively easy,” says Nicolas Christiaen. “This would not be the case without the help of Volta Ventures and Michel Akkermans, who not only provided funding, but also lent their vast strategic experience in our market. The plans for Western-Europe as well as the US are outlined, and this funding round will be valuable to accelerate the international roll-out.”

About Cashforce (www.cashforce.com)
Cashforce is a ‘next-generation’ Cash forecasting & Smart Treasury platform, focused on integration and automation. With its technology, Cashforce is helping Treasury departments from large capital-intensive businesses save time and money by offering cash visibility & pro-active cash saving insights. The platform is easy to use and install, and connects seamlessly with any ERP system. Cashforce is headquartered in Belgium with an office in Amsterdam and New York, serving customers globally such as TomTom, Hyundai and Greenyard among many others worldwide.

About Pamica (www.pamica.be)
Pamica is the investment company of Michel Akkermans.

About Volta Ventures (www.volta.ventures)
Volta Ventures Arkiv invests in young and ambitious internet and software companies in the Benelux. The fund has € 55 million under management and is supported by EIF and ARKimedesFund II.

Press Contact Information
Nicolas Christiaen – [email protected] – +32 479 65 52 95
Michel Akkermans (Pamica NV) – [email protected] – +32 3 202 40 30

 

Looking back after 10 years of SEPA

| 26-02-2018 | Paul Stheeman |

Cash Pooling

 

Last month we saw the anniversary of several historical moments. 1000 years ago, in January 1018 the Peace of Bautzen ended the German-Polish War. More recently, in January 1998, American President Bill Clinton surprised the world by denying in a press conference that he had sexual relations with Monica Lewinsky. More importantly for Treasurers and the citizens of Europe January 2018 marks the tenth anniversary of the establishment of SEPA, the Single European Payments Area.

 

In Europe we have become used to SEPA. Initially we all groaned at the idea of having 22-digit long bank accounts numbers called the IBAN, nicknamed as “IBAN the Terrible”. But the introduction of SEPA in January 2008 has brought a number of benefits to over 520 million citizens in Europe. Not only are the 19 Eurozone countries members of SEPA. All other EU countries participate as well as countries such as Norway or Switzerland.

The main benefit is that we now have one payment zone. Previously, making a transfer from Italy to the Netherlands was a cross-border payment. This meant that a whole week could pass between the time when the payer initiated the transfer in Italy and the recipient actually received the funds on his Dutch bank account. In addition, banks in both countries would charge considerable fees for making the transfer. Payment is now done within 24 hours and banks should not charge more than for a domestic payment.

SEPA not only covers transfers. Direct debits and debit cards also are handled in a similar manner through SEPA. And a new instant payment scheme is currently being rolled out, allowing payments to be completed within seconds on a 24/7/365 basis.

SEPA is also strongly regulated. The European Commission established the legal foundation through the Payment Services Directive or PSD. Payment products are overseen as are technical standards.

In the last ten years SEPA has established itself as being the platform for payments in Europe. Due to its wide acceptance and success in its first decade it is likely to accompany us for many years ahead as new payment methods are developed in the digitalised world.

 

Paul Stheeman

Owner of STS – Stheeman Treasury Solutions GmbH

 

Internal Fraud – or how not to cheat yourself

| 22-02-2018 | Lionel Pavey |

Most companies, regrettably, experience internal fraud. The financial value of the loss can be small or large – however the impact is the same. Internal investigations, procedural reviews, the time spent on detection, possible prosecution, together with the potential loss of reputation are significant factors above and beyond the monetary loss. Fraud can never be eliminated, but the threat can be minimised through proper procedures.

Fraud is normally caused by false representation, failure to disclose information and abuse of power and position. As fraud is performed by people and their actions, a first step to prevent fraud would be to look at the current working environment within a company. If a company is putting extra stress on employees – bigger targets, loss of overtime payments, reductions in secondary benefits, no pay rises nor promotions etc. whilst the directors receive bonuses– this can lead to employees becoming aggrieved  and seeking retribution. Furthermore, employing more temporary staff and external contractors, can distance the remaining employees and challenge their allegiance and loyalty.

Internal procedures

One of the least sexy components within a company is internal procedures. They need to be drafted, amended, agreed, published, implemented and reviewed on a rolling basis. Very few people enjoy writing these manuals, but they are essential to ensure that everyone is aware of the correct procedures that have to be followed to perform any tasks. Often there is talk of a “four eyes principle”. Personally, I have always believed in a “six eyes principle” as it requires more independent control and makes fraud less easy to perform. Most of the procedures are, of course, built  around common sense. Duties should be segregated – different departments have different roles to perform in ensuring the complete procedure is followed throughout the company. Even within a single department, attention should be paid to segregating duties.

An example would be the administrative function relating to a purchase. There are 4 distinct stages – procurement, arrival, warehousing and dispatch/shipment. If one member of staff was responsible for the relevant data input for all 4 stages, there is an increased risk that fraud could take place. This is not to say that work should be segregated that one employee only ever does one function – this could also lead to fraud either through disenchantment or over familiarity of the systems and procedures used at one specific point in the production chain.

External procedures

Certain departments within a company have contact with external sources – suppliers, clients, financial institutions. Anyone who has contact with an external counterparty can be swayed by opportunity if the controls are not in place. In respect of purchasers – what contact do they have with suppliers outside the office? Are they entertained – restaurants, sports events etc? How often do they have contact? In respect of sales – are they responsible for determining the sales price? How often do they see clients and spend money on them? The same also applies to treasurers, cash managers, risk managers etc.

The necessary checks and balances need to be put into place. A record of all contact with external parties needs to be kept, updated, verified and stored. Temptation can be caused by personal hardship, flattery or grievance at how the person is perceived to being treated by the company.

Standing up to the boss

As stated, a healthy company should have procedures and statutes in place. These need to be adhered to at all times – there can be no exceptions. However, a mechanism for escalation is often missing. Example – someone sends in an expense claim approved by their manager. The treasurer or controller might question the veracity of a particular entry. A proper mechanism to escalate the discrepancy needs to be firmly established. That a manager has signed off on the expense claim does not mean it is correct.

Even directors have to make sure that their claims are signed off by other members of staff. Being at the top does not mean that the procedures do not apply. Requests for a priority payment outside of the agreed procedure should always be questioned. If everyone has agreed to the standard procedures, then there can be no justification to make a payment outside of the normal procedure, just because it has been deemed a priority. If truly deemed necessary, then authorisation must be given not only by management and directors, but also by the legal department. If this occurs, then the existing procedure needs to be examined as to why the incident occurred and where the procedure broke down. This all has to be detailed in writing – fraud can happen at the highest level as well as low down with an organisation.

Static data

Every contact both inside and outside of the company should be recognised and recorded in a data system. Static data refers to all relevant data concerning an entity – full name, registered address, bank details, contact details etc. This data should be fed into all other systems, but data input should be restricted to a small number of employees. These employees should not have access to any of the systems that are used to input data relating to daily operations.

Another key area is in the cash management side – book keeping can be complex and differences not noted until the yearly audit. However, cash movements contain plentiful details – name of beneficiary, account numbers etc. This can be reconciled against the prevailing static data – are the bank account numbers the same?

Fraud can never be eradicated, but by being open, allowing questions to be asked, even performing unexpected checks on the system and its integrity, and creating an atmosphere where staff know that they can question without fear of reprisal, then at least everyone will know that the company is alert and vigilant.

That knowledge and awareness will make a potential fraud think twice.

 

High Road or High Horse?

| 21-02-2018 | Pieter de Kiewit |

I want to include you in my search for what is right. Newspapers don’t publish what is right but what sells (for the Dutch, why did the Volkskrant publish the story of Jillert Anema this week?). Politicians don’t work from their convictions but what gets them votes. Large companies pay low level taxes in countries where they don’t manufacture & sell, and no taxes where they do. Actions that benefit the environment are not implemented because it weakens our position in global markets.

Now I am not known for being politically active or interested. Many of my clients are corporates that are in the line of fire following the whole Panama Paper affair. So understanding what is happening would make sense, perhaps I could even form an opinion. So far, this is what I see and think:

• Newspapers created news by publishing what has been known for a long time. As far as I can oversee there were no convictions in The Netherlands based upon the Panama Papers;
• Poor countries are put in off side position when it comes to receiving taxes;
• Politicians created the rules and now shout from their high horse that corporates, following their rules, lack proper business ethics;
• Large corporates are able to hire the best tax lawyers and enjoy the largest tax cuts;
• Newspapers pick the corporates with the most prominent brands as an example and do not tell the story of both sides.

This equation has (too) many variables. I think Joris Luyendijk’s remarks about being immoral or amoral (https://www.theguardian.com/sustainable-business/2016/jan/18/big-banks-problem-ethics-morality-davos) are very relevant. The difference between “I follow the rules” and “I follow the rules and think about if they are right and enough”.

Given the fact that the revenue of the large corporates is bigger than the GDP of many countries, we cannot solve the problem locally. We cannot decide for other countries but we can decide for our own. Do we want to be on our high horse and economically weak? Would that be taking the high road? I am afraid I do not oversee the full picture. If I do, am I willing to accept the consequences as a consumer, entrepreneur and employer?

Would you?
Pieter

Pieter de Kiewit
[email protected] / +31 6 1111 9783

Pieter de Kiewit

 

 

Pieter de Kiewit
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