Werkkapitaalbeheersing bij professionele servicesorganisaties: de olie voor uw (economische) motor!

| 13-10-2017 | CFO Netwerk |

Waarom aandacht voor werkkapitaalbeheersing? Professionele services organisaties zoals advocaten, accountants maar ook andere tijd schrijvende organisaties kenmerken zich door een uiterst loyale cliënt opstelling. Loyaal in de zin dat de cliënt vraag centraal staat en dat deze vraag zo spoedig mogelijk beantwoord dient te worden. Als het probleem van de cliënt is opgelost is de professional tevreden. Op zich is daar niets mis mee. Maar dan……..

Nadat het probleem naar tevredenheid is opgelost wordt er pas gekeken naar de vraag of de diensten die door de professional zijn geleverd gedeclareerd c.q. gefactureerd kunnen worden en als laatste ook betaald kunnen worden door de cliënt. Met dit laatste houdt de professional zich het liefste niet bezig, dat lost de financiële administratie en debiteurenbeheer wel op.

Deze wijze van cliënt benadering heeft tot gevolg dat veel van dergelijke services organisaties een beroep op bijvoorbeeld de bank moeten doen om hun financiële huishouding rond te krijgen. Maar bankfinanciering kent uiteraard ook haar grenzen. De organisatie zou deze vastliggende liquiditeit veel beter kunnen aanwenden voor de groei van de organisatie, investeringen in nieuwe competenties en vernieuwing van het bedrijfs/business model.

Werkkapitaal is niet het domein van Finance alleen, maar dient integraal benaderd te worden.
Wie zijn werkkapitaal onder controle houdt, beheerst niet alleen de korte termijn liquiditeit, maar investeert ook in continuïteit.

Wat wordt verstaan onder werkkapitaal en cash conversion cycle?

Werkkapitaal

In de theorie zijn veel definities te vinden. Bij professionele services organisaties wordt onder werkkapitaal met name het onderhanden werk en het uitstaande debiteurensaldo verstaan. In dit kader wordt geabstraheerd van de crediteurenpositie (DPO Days Payable Outstanding) omdat het grootste probleem bij professionele services organisaties zich met name in het onderhanden werk (DIO Days Inventory Outstanding) en debiteuren (DSO Days Sales Outstanding) bevindt.
Werkkapitaal dient niet geïsoleerd binnen finance beschouwd te worden, maar integraal en passend bij de strategie van de onderneming: het gaat erom daadwerkelijk te doorgronden welke processen uiteindelijk een impact hebben op welke manier we zo goed mogelijk ‘goed’ werkkapitaal kunnen genereren. Sta kredieten toe aan goede cliënten die veel en /of winstgevende diensten afnemen die op tijd betalen en die passen in de toekomstvisie van uw bedrijf. Met andere woorden: de absolute waarde van werkkapitaal is niet zo belangrijk, enkel het hefboomeffect naar winst is van belang.

Een beter credo is: investeer in ‘goed’ werkkapitaal

Cash conversion cycle (CCC)

Elke component van werkkapitaal heeft twee dimensies: geld en tijd. Met effectief werkkapitaalbeheer schenken we ook aandacht aan de tijdsdimensie, aan de snelheid waarin een component van het werkkapitaal roteert. Dit wordt ook wel de cash conversion
cycle genoemd, hetgeen in de volgende figuur wordt weergeven:

Hoe lager het aantal dagen CCC, hoe beter u het werkkapitaal in de hand heeft en dat biedt de volgende 5 voordelen:
1. minder werkkapitaal;
2. hogere rentabiliteit;
3. meer activiteit met zelfde kapitaal,;
4. hogere solvabiliteit;
5. en goedkoper lenen.

Cash is King

Dit artikel is eerder verschenen op CFO Netwerk en is geschreven door Rob van de Ven.

Entering the Financial Markets Data environment – Review Screen Market Event

| 12-10-2017 | Pieter de Kiewit |

Last Tuesday Screen Consultants organized her annual event for the 25th time. An excellent opportunity to put the topic of financial market data on the treasuryXL agenda trough layman’s eyes.

There are a few obvious reasons why a corporate treasurer should pay attention to market data:

  • “Using old market data is like betting on a horse after the race is run”. Buying currencies and commodities without up-to-date market knowledge is burning money;
  • Accurate market data is essential in proper bookkeeping, especially in the current regulatory framework;
  • Information is one of the essential components in the pricing of financial products;
  • Knowing about the various developments influencing markets will help you create a strategy. This applies to hedging, investments but of course for the company as a whole.

With this in mind I entered the event, expecting a very dominant presence of Thomson Reuters, Bloomberg, VDW, Morningstar, Moody’s and similar firms. I did not see them but was offered a fragmented, diversified group of companies and that reminded me of the European Fintech Awards. Bear in mind: the event’s main audience are financial service providers like asset managers. Corporate treasury is for most of the providers a small portion of their client portfolio at best. Especially for the treasury with substantial excess cash, commodity traders and other heavy users going to this event will be inspiring.

For me in many of the parallel sessions, there was most to be learned. These are a few of the eye-openers I would like to share with you. “Market data is in the top 3 cost drivers at financial service providers”, “the margins of providers did not suffer under the crisis and are relatively high”, “Regulatory changes like Mifid2 will have a huge impact on the industry”. The sessions made clear that investing in understanding how markets work before you acquire data is essential. An example that stood out is the impact analyst reports have on markets, regardless the quality of their research.

I want to conclude with two questions. First, tell us about your experience in this field, perhaps the treasuryXL readers deserve more (blogs). Second, experts in this field working in financial services are being trained and certified. I think the full training would be too much but perhaps we can ask partners to develop a tailor made corporate program. As the users know, a data terminal is easily €2,000/month. The type of investments should be managed by knowledgeable staff.

Thank you for your replies,

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

Treasurer – So what is it that you do exactly?

| 11-10-2017 | Lionel Pavey |

A few weeks ago I took my daughter Charly to the Scouts on a Saturday morning – she goes every week and really enjoys it. I get a couple of hours to myself and normally do the weekend shopping in that time. 2 ½ hours later I went back to pick her up and whilst waiting I got talking to a couple of the parents from the other Scouts, about work, whilst enjoying cups of coffee and hotdogs. They asked me what I did and I explained my vocation as a Treasurer and Cash Manager.

“Yes” one said, “so you are the same as a bookkeeper really. What makes you different? What do you bring that others do not? What makes you special?”

Advantages and benefits of Cash Management

  • Cash is King – profit is an opinion. I can not make you more profit, but I can improve your cash flows and your understanding of them.
  • I can speed up the operations your company uses to administer its cash.
  • I can help you stay solvent.
  • I can address your working capital issues.
  • I can spot fraud.
  • I can estimate your cash position for any time in the future based on your data input.
  • I can obtain better terms and conditions with debtors and creditors.
  • I can warn you when trouble will be ahead if nothing is done.
  • I can analyse the best loan deals for your financing operations.
  • I can make detailed cash flow forecasts that you can show to your banks when negotiating with them for loans or banking facilities.
  • I can reduce costs.
  • I can pay your bills more quickly.
  • I can improve your liquidity.
  • I can reduce your administrative work flows.
  • I can enable you to recycle your cash more quickly.
  • I can reduce your inventory holdings.
  • I can let you know when your future financial commitments have to take place.
  • I can help you maintain good relationships with your creditors.
  • I can optimize your cash at all times.
  • I can reduce your borrowing costs.

You need to generate enough cash from your activities to pay your suppliers, repay shareholders and/or investors and have money left over to invest and grow your business. Be honest, to do all that you need professional support and guidance allowing you to concentrate on growing your business.

They looked at me and said “So you are not really a bookkeeper then.”
I looked at them and smiled – mission accomplished!
“Now you know what a cash specialist can do for you and your company. So, give me a call when you think you need help with any of these issues.”
It is a good feeling when you positively change someone’s perception about what your job actually entails.

I told them what I can do, but did not say how. Are you interested in the how? Go to Rent a Treasurer.

 

Lionel Pavey

 

Lionel Pavey

Cash Management and Treasury Specialist

 

 

Derivatendossier sleept zich voort

| 09-10-2017 | Simon Knappstein |

Eind deze maand stuurt de AFM weer een voortgangsrapportage inzake de uitvoering van het Uniform Herstelkader Rentederivaten naar de Tweede Kamer. Volgens berichtgeving vorige week in het FD zal daar in staan dat de banken vrijwel geen voortgang geboekt hebben. Het blijkt dat “van de bijna 20.000 gedupeerde MKB’ers er slechts een handjevol een schadevergoeding heeft gekregen en pas enkele tientallen een voorstel voor schadevergoeding[1]”

Bij de publicatie van het Herstelkader in december vorig jaar werd er door de minister nog van uitgegaan dat de compensatieregeling per 1 juli jl. voor alle klanten zou zijn afgerond. De kans dat de banken daar überhaupt voor het einde van dit jaar nog in slagen lijkt ondertussen zeer klein.
Belangrijkste redenen die genoemd worden voor deze vertraging zijn, ondanks alle goede bedoelingen en hard werken, 1) dat toepassing van het Herstelkader zeer complex blijkt te zijn, en 2) dat banken, externe dossierbeoordelaars en de AFM elkaar nu, om maar geen fouten te maken, ‘gevangen’ houden.
Door de goedbedoelde pogingen om het kader, de uitvoering ervan en de controle er op helemaal dicht te timmeren is er een ‘over-engineering’ ontstaan die verlammend werkt op de voortgang. Terwijl als er een zekere variatie en onzekerheid in de uitkomst per dossier voor lief zou worden genomen dan zouden 150 man met gemiddeld 10 uur per dossier die 20.000 dossiers in 8 maanden hebben weggewerkt. Mijn ervaring is dat, hoewel toepassen van het herstelkader inderdaad complex is en ook  de documentatie niet altijd direct compleet aanwezig is, het bepalen van de schadevergoeding toch heel goed te doen is.  Helaas is er nu driekwart jaar voorbij en lijkt het proces geheel vastgelopen te zijn.

Die over-engineering is iets wat ook door Patrick van Gerwen, die met zijn bedrijf Cadension ondernemers bijstaat in de relatie met hun bank, is vastgesteld. Hij pleit ervoor dat de minister van Financiën weer ingrijpt, en wel snel, om dit dossier vlot te trekken. Want de klanten wachten al sinds 2012 op de oplossing van dit probleem.
Als de voortgangsrapportage van de AFM eind deze maand naar de Tweede Kamer gaat zal er wellicht net een kabinetswisseling hebben plaatsgevonden. De nieuwe minister van Financiën kan dan direct aan de slag met dit dossier.

[1] Uit ‘Schadeherstel in derivatendossier loopt zoveelste vertraging op’ door Wouter Keuning in FD van 2 oktober jl.

Simon Knappstein - editor treasuryXL

 

 

Simon Knappstein

Owner of FX Prospect

 

 

Lees ook: Uniform herstelkader rentederivaten mkb

TIS & FX Treasury Webinar: Corporate Payments Optimization

| 06-10-2017 | TIS | 2FX Treasury | Sponsored content |

TIS and 2FX Treasury organize a webinar that we would like to bring to your attention. On October 19th between 04:00 and 04:45 PM TIS and 2FX Treasury will host: Corporate Payments Optimization: How to reduce complexity in your business. An interesting session for treasury professionals. 

Complexity is not your friend. Whether in your finance, treasury, shared services or IT departments, improved processes help to reduce risk.
How do the most efficient and effective businesses in today’s world manage a multi-region, multi-bank, and multi-ERP environment? How have leading finance, treasury, and IT professionals gained visibility across their corporate payments landscape?

Join the optimization discussion in this webinar where we discuss business cases based on:
  • Current challenges
  • Standardization and automation of corporate payments through pre-built bank connectors and formats
  • Reduced operational and financial risk due to increased transparency and straight through processing (STP)
  • Enhanced security and compliance

Flex Treasurer: Who needs a treasurer?

| 05-10-2017 | Olivier Werlingshoff |

 

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

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

 

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

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

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

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

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

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

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Owner of Werfiad

Indian Rupee remains very vulnerable

| 04-10-2017 | Rob Beemster |

The Indian rupee has suffered in September severely. In our report we name the issues resulting to the weakening. International companies in India and those trading with India face severe danger from these currency moves. This article will give you an insight how to handle this.

What has changed India in recent months?

It seems latest macro-economic data in India have changed the outlook on its currency. The country is well-beloved due to its place under the economic and international sidelines. Apart from drastic measures taken by the government on monetary and fiscal front, the country is usually not on the forefront of economic papers like other BRICS partners.

What has caused the different outlook on the rupee?    

A, a rise in CPI inflation ( to 2.4% for July from 1.5% in June )

B, a meagre April-June, 2017 GDP report showing a three year low in growth of 5.7% YoY ( 6.1% in the previous quarter ) This is the fourth consecutive quarter with slowing growth

C, signals of a fiscal deficit above the 3.2% GDP target in the running fiscal year

D, almost a year after demonetisation, M3 and bank lending growth remain well below pre-demonetisation levels, a sign of tight liquidity conditions are hurting businesses

Investors and other members of the financial communities dislike a combination of factors A and B. This has resulted in the fall of INR against euro and dollar in September. Although INR is still one of the most popular Emerging Market currencies, a continuation of disappointing economic data might change this international feeling towards INR.  According to RBI data, the recent depreciation is in partly due to equity and bond portfolio outflows.

What to do?

Be aware of a volatile INR. The currency has lost some of its popularity, due to the facts named above. Future is always insecure, take North Korea vs. Trump, how will Brexit change Europe etc. These issues will most certainly have an impact on the dollar and Euro, so may affect the INR as well.

An international trading company, during these unsteady times, should take care of international currency flows. From Sept 8 till Sept 27, INR lost 3 % against the USD. This could be a big stake of the profit margin!

We can help you designing the right structure, whereby a strategy will protect you from harmful currency moves. A lower INR can slam your profit, we help you avoiding this. We know the Indian market. Call us on +31228528579 or mail us via [email protected] and we will help you to solve your currency risk.

 

Rob Beemster

Owner of Barcelona valuta experts BV

 

Regulation of ICOs: the end or beginning of a healthy market?

| 29-9-2017 | Carlo de Meijer |

One of the hottest – and also one of the most controversial – things in the crypto currency environment are so-called Initial Coin Offerings or ICOs. ICOs, which employ the use of crypto currencies, have become a popular means of fundraising for start-ups in recent months. The increasing need of blockchain technology and the lack of regulation allows them to raise money quickly in return to so-called tokens (also described as digital certificates). This hype has driven a steep rise in this sector’s market value, reaching a high of $177 bn.

The latest cryptocurrency boom however is beginning to stall as a growing number of regulators worldwide turn their attention to the ICOs world and have decided to come into action. China recently decided even to ban these ICOs. And others such as the US SEC, Singapore, Hong Kong, Russia and others followed soon though in a more lighter variant.

Is this the end of fundraising via ICOs or should it be seen as the beginning of a healthy market?

ICO hype

ICOs have become highly popular. In the past months there has been a complete hype around ICOs. ICOs have allowed digital currency start-ups, to raise millions of dollars quickly, in many cases from ordinary investors. The ICO fever is especially triggered by the success of Ethereum, the platform that invented the digital currency Ether. Already in 2014 Ethereum arranged a very successful ICO.

More than $1,6 billion has been raised worldwide from these ICOs up till now. China for example has seen 65 ICOs and 2.62 billion yuan ($400 million) raised from more than 100.000 individuals so far in 2017.

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

 

Carlo de Meijer

Economist and researcher

 

Hot topics in corporate treasury, the survey results

| 28-09-2017 | treasuryXL |

Last month we organized a small survey, one question, to find out which treasury topics are highest on the to-do the list in corporate treasury. In cooperation with Treasurer Search we reached out to our network. Due to the set-up of the survey I want to describe the results in two separate lists. We asked one question: “make a list with a maximum of five topics”. As this was a free text survey, there was a variety of answers. In total, we had to digest a list of roughly 125 topics mentioned. I want to emphasize that the scientific methodology for this survey would not have been approved by my graduation professor.

The first list is based upon key words only, with a very narrow read on topics:

  1. IFRS and other regulatory affairs;
  2. Risk management (policies and procedures);
  3. FX;
  4. TMS;
  5. Bank relations;
  6. 3rd party risk;
  7. Development of USD and GBP, based upon political developments;
  8. Cash flow forecasting.

Bear in mind that topic 1 has been mentioned 11 times, topic 8 is mentioned 5 times. This list gives you an indication but compares strategic with operational. And both FX as well as the USD & GBP topic in one list feels suboptimal.

After some internal discussion, we decided upon a different approach. Based upon what we encounter in corporate treasury every day, we decided to cluster topics on the same abstraction level and came upon the following list, in order of how often topics were mentioned:

  1. Markets & Risk, including political developments and their impact on both FX and IR (34 times);
  2. Liquidity management and cash flow forecasting, including relevant cash management topics (21);
  3. TMS, banking systems and fintech relevant for corporate treasury (18);
  4. Bank relationship management, including banking costs, risk and bank regulations (14);
  5. Regulatory affairs (IFRS) (11);
  6. Corporate finance and funding specifically (10);
  7. 3rd Party risk (6);

Here the difference between the difference between topic 1 and topic 7 is almost a factor 6. This list, in my opinion, paints a clearer picture. I am a bit surprised how prominent topic 1 is, how low funding is on the list and about 3rd party risk being on the list.

We will use the list to gather extra content and the students of the Hogeschool Utrecht will write blogs, using this list as input.

We look forward to your response on the results of this survey. See also https://www.treasuryxl.com/treasuryxl/hu-treasury-papers-digging-into-the-treasury-hot-topics/

 

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Lessons to learn: a higher euro threatens corporate Europe; how to handle this

| 26-9-2017 | Rob Beemster |

Do you run a business in Europe and the world is your market? Then you must face jitters due to the currency developments in the US and UK. The huge impact of Brexit on the sterling has seen a devaluation of around 30% against the Euro. The US dollar has weakened some 15% compared to early 2017.

These currency moves will be welcomed when you are importing from the US and/or UK. However, when you are exporter, than you don’t feel jitters but the pain will seriously hurt you. Many exporters see their UK/US  market share diminish, or maybe even disappear.  Normally, when a currency of an export market drifts down ( so the own currency gets more expensive ) we see price adjustments of the exporter.

First he will decrease his own margins, then he seeks price adjustments of his suppliers. After that , the whole chain will be analysed to look for improvements and cutbacks.

The Chinese have a saying that every crisis offers new chances. What chances would a weaker sterling and weaker dollar offer European exporters?

A, analysing the whole value chain, may offer new insights whereby you can create higher and/or cheaper production Most probably, these insights can give opportunities to improve your sales to other markets as well. Improving  your chain, constantly, is a very wise technique to stay ahead of your competition.  Before the introduction of the Euro, Germany worked on  this strategy for years. Bundesbank was a strong supporter of a firm German mark, so German exporters had to be aggressive and innovative to keep their business alive.

B, doing business outside the Euro territory brings currency risk. This is a component of your business you have to face. However, currency risk on new and running orders can be hedged. By doing so, you will protect your cash flow ( read profit ).  When profit margins are low, it is extremely important to have a good currency strategy. But even when margins are fairly high, a long currency move may take off your market share. Sterling has gone down for almost 2 years now. So a “safe market” should be hedged with a currency strategy too. A lucrative market may drift away by an ignorant behaviour of exporters.

Barcelona valuta experts can help you installing a decent currency strategy. We do not look for the cheapest way of doing your transactions but we look to your whole currency process. In the graph, below, you will notice that currency risk is present during the whole process. We can help you from the first step:  the offer to prospects till last payments are done.

We have a very interesting proposition for you, a free currency scan. After answering six easy questions, we can judge your currency overall / risk position. We will discuss the result with you, all without any obligation. Are you interested?  Call us on +31228528579 or mail to [email protected] and we will pass you the questionnaire.

 

Rob Beemster

Owner of Barcelona valuta experts BV