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Flex Treasurer: The life of an interim treasurer

| 16-2-2017 | Patrick Kunz |

An interim treasurer is just like a normal treasurer. The difference is that he has a flexible contract and changes “jobs” more often. Assignments can be to replace the existing treasurer due to leave or sickness. This means that he gets to take an operational role and be part of the normal organization, often until a “permanent” solution is found. I did several of these roles, which often last between 3-6 months and 1 year.

Treasury Support

Another option is to provide support to an existing team/treasurer/CFO on a treasury related project. These can be short term or longer projects. Often the projects cannot be filled with the existing capacity of the team and hiring a permanent FTE for this is not an option. Another reason can be to finish the project quicker due to nearing deadlines. These projects are often several weeks to a couple of months. For example I helped a big semi-profit organization from Rotterdam to investigate into embedded derivatives in the firm to comply with new regulation. The project was finished in several weeks and the accountant accepted my conclusions in the annual report. Also I build a RAROC model for one client to periodically rank their banks based on return versus risk adjusted capital. A powerful tool to compare banks and their profitability compared to their lending.

Treasury Expert

An interim/flex treasurer does not have to be a fulltime position. At big corporates and multinationals this is often the case but smaller firms often don’t have fulltime treasurers. Sometimes the controller or the CFO fulfills the treasury position “parttime”. A part time (external) treasurer could potentially add value here. The controller/CFO has extra time for his “normal” activities and an expert is hired for the treasury task. This can be from a couple of hours a day to several days. For example I helped a real estate company with the valuation and (weekly) margin calls on their interest rate derivative portfolio, their cash management optimalisation, treasury reporting and ad hoc work. 8 hours a week.

Treasury Scan

Are you not sure if treasury is optimal at your company? A treasury scan might be a solution. A ‘quick and dirty’ scan is possible in 1 day if treasury data is collected beforehand. The costs of a treasury scan are therefore limited and often earned back from treasury savings which were identified by the scan and later realized by either the flex treasurer or the company itself; often in combination.

Do you recognize one the above situations? Do you want to know more about an (interim) Flex Treasurer?
Please click on this link or visit my expert page on treasuryXL.

Patrick Kunz

Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV & Flex Treasurer

Treasury and regulations: A changing environment

| 15-2-2017 | Theo Paardekoper |

Companies need to comply to their regulatory framework in their industry. For the treasury department a regulatory framework is applicable which is basically linked to the financial industry and not linked to the industry of the company. Because regulations in the financial industry are changing it is important for the treasurer to update.

Regulations

Important regulations and rulings for treasurers are EMIR, MIFID and MIFID II/MIFIR.

Other regulations that are applicable for the financial industry, like UCITS and AIFM (regulations for investments funds) and CRD rules (capital requirement directive as a result of BASEL III) do not effect the corporate treasury directly, but the side effect of these rules can have effects on pricing and product offering by financial institutions.

Anti Money Laundring regulations (MOT-melding in The Netherlands) are not only applicable for banks. Also corporates are mandatory to register these transactions at the Finance Intelligence Unit of the Dutch Tax autorities.
The regulations mentioned above are all linked to the European regulatory framework and are valid in addition to local laws, like the WfT (Wet Financieel Toezicht) in the Netherlands.

EMIR (= European Market Infrastructure Regulation)

This regulation is valid since August 2012 and was initiated after the Lehman Brothers bankrupty in 2008. The main goal of EMIR is to improve transpancy of the OTC market to create a clear overview of all the derivative positions. This was one of the main problems that became clear after the Lehman bankrupty. It was totally unclear to get a view on the derivate positions and risk of a counterparty. Emir also introduced a solid clearing member (named CCP) and Trade Repository members to register your OTC derivates. To register your positions a LEI (Legal Entity Identifier) can be obtained at the Chamber of Commerce.
EMIR is not (yet) applicable for small pensionfunds.

MIFID (= Markets In Financial Instruments Derivatives)

Main objective of MIFID is to increase competition in the investment industry and to protect consumers. The well-known 40/20/2 rule to define a professional or non-professional counterparty is one of the items to protect consumers and force financial institutions into a duty of care. One of the results is a direct view on the Market-to-Market pricing of the companies derivates and monitoring of margin call obligations.
Also the classification based on knowledge is an important item and can be part of discussion during a lawsuit.
Mifid increased the number of trades in the OTC market what caused a more fragmented view on market pricing. Financial institutions are forced to provide the 5 best quotes in the market to their clients.

MIFID II

In January 2018 this new set of regulations is applicable. Mifid II made Mifid regulations also applicable for commodity and CO2-rights traders. Also market data suppliers must be registered to comply with MIFID II. Structured deposits (return is not interest based but linked to an other ratio link EUR/USD or oilprice) will also fall under the scope of Mifid. Change of classifications on behalf of Mifid II classifies local governmental entities as non-professionals. Health Institutions governmental education and housing associations are not clearly excluded as non-professional.

Mifid II will mainly “change the game” of manufacturers and distributors of financial services, but this regulations will give corporates more tools in case of a conflict about a trade. The negative side effect of new regulations is that pricing in the market will increase because of reduced competition as a result of higher entry barriers in the market.
Any action required for a corporate treasurer?

It is up to your bank to comply to MIFID II. So I would say “no”. The bank will inform you with new legal documentation and product information in the near future.

Theo Paardekoper

Independent treasury specialist

More articles of this author:

Treasury education and training: what’s next?

Managing treasury risk: Commodity Risk (Part IV)

| 14-2-2017 | Lionel Pavey |

There are lots of discussions concerning risk, but let us start by trying to define what we mean by risk. In my fourth article I will write about commodity risk, what the strategies around commodities are and how to build a commodity risk framework. More information about my first three articles can be found at the end of today’s article.

Commodity Risk

Commodity risk occurs due to changes in price, quantity, quality and politics with regard to the underlying commodities. This can refer to both the commodity as a whole and an input component of a finished good. Commodity risk usually refers to the risk in a physical product, but also occurs in products like electricity. It can affect producers, suppliers and buyers.

Traditionally, commodity price risk was managed by the purchasing department. Here the emphasis was placed on the price – the lower the price, the better. But price is only one component of commodity risk. Price changes can either be observed directly in the commodity or indirectly when the commodity is an input in the finished product.
Availability, especially of energy, is crucial for any company to be able to undertake operations. Combining commodity risk over both Treasury and Purchasing allows these 2 departments to work closer and build a better understanding of the risks involved. It also allows for a comprehensive view of the whole supply chain within a company. A product like electricity is dependent on the input source of production – gas, petroleum, coal, wind, climate – as well as the price and supply of electricity itself.

There are many factors that can determine commodities prices – supply and demand, production capacity, storage, transport. As such it is not as easy to design the risk management model as it is for financial products.

General strategies that can be implemented

Acceptance
Avoidance
Contract hedging
Correlated hedging

Acceptance
Acceptance would mean that the risk exposure would be unchanged. The company would then absorb all price increases and attempt to pass the increase on when selling the finished product.

Avoidance
Avoidance and/or minimizing means substituting or decreasing the use of certain input components.

Contract hedging
Contract hedging means using financial products related to the commodity, such as options and futures as well as swapping price agreements.

Correlated hedging
Correlated hedging means examining the exposure of a commodity – the price of crude oil is always quoted in USD – and taking a hedge in the USD as opposed to the crude oil itself. The 2 products are correlated to a certain extent, though not fully.

Commodity risk framework

Commodity price speculation – most contracts are settled by physical delivery – affects the market more than price speculation in currency markets.
To build a commodity risk framework, attention needs to given to the following:

Identify the risks
Measure the exposure
Identify hedging products
Examine the market
Delegate the responsibility factors within the organization
Involve management and the Board of Directors
Perform analytics on identified positions
Consider the accounting issues
Create a team
Are there system requirements needed

Problems can arise because of the following:

Relevant information is dispersed throughout the company
Management may not be aligned to the programme
Quantifying exposure can be difficult
There is no natural hedge for the exposure
Design of reports and KPI’s can be complex

It requires an integrated commitment from diverse departments and management to understand and implement a robust, concise policy – but this should not be a hindrance to running the policy.

Lionel Pavey

Cash Management and Treasury Specialist

More articles of this series:

Managing treasury risk: Risk management

Managing treasury risk: Interest rate risk

Managing treasury risk: Foreign exchange risk

Payment fraud – how companies can protect themselves

|13-2-2017 | Joerg Wiemer | sponsored content |

Information about the opportunities and risks of digitalization is widely spread. In general, risks occur when there is a chance of losing a competitive advantage or falling behind. However, one of the biggest risks is without doubt cybercrime. Attacks on IT systems worldwide increased yet again by 38 percent in 2015, according to the consulting firm PwC in their “Global State of Information Security Survey 2016”. If these attacks are aimed at the payment transactions of a company, the entire existence of the organization is easily threatened. Therefore, security measures in treasury and payments processes should be at the very top of the agenda. Jörg Wiemer, CSO of TIS, explains how companies can ensure increased security.

In general, when does a risk exist for companies during payment transactions?

JW: In principle, in any situation that involves a lack of transparency across bank relationships and activities. In these cases, cash positions and liquidity are not clear. Let’s assume that a branch transfers ten million dollars at the beginning of the month. If these bookings rely on manual processes and the balance is only checked once at the end of the month, it takes a full thirty days until the fraud is detected. Time is literally money. By monitoring treasury in real time, it is possible to detect these procedures much earlier, thereby solving them in many cases.

It can take a lot of time until the head office of the branch gains knowledge about such cases.

JW: This is the heart of the problem: The prevailing regional division of labor makes it easy for fraudsters. If the account statements in paper are collected locally in each branch, it takes weeks until those responsible in the head office notice that an account statement is missing, and with it, the positions written on it. This is exactly why a company should collect all account statements from every bank account worldwide automatically and assess liquidity positions in real time with a software like TIS.

What else facilitates frauds?

JW: Fraud can occur if there is no complete overview of the electronic signing authorities, if there is no dual control principle during payment transactions or during the administration of payment recipients and, in general, during every user administration, which is particularly prone to fraud. These are the typical gateways.

How can I detect that I am at an increased risk?

JW: One reliable indicator of a low level of security in payment transactions is a high amount of manual transactions. Normally, the assumption is that every payment has to be recorded in the accounting system according to the best practices – no booking without receipt, and no payment without a previous booking. Nevertheless, under certain circumstances, there are deviations and exceptions of this principle. The key term here is “exception handling”, which results in a manual payment. An exemption is necessary for these cases, which includes comprehensive process documentation. The possibility of recording and authorization of non-automatic payments should be restricted to certain recipients of the payment and internal user groups. Furthermore, the user should only be allowed to use unchangeable payment templates that have been approved in advance.

How can companies reduce risks?

JW: A general rule is to standardize and and automate processes across the group of companies! Payment related tasks can be executed on local level, however, based on a standardized and automated process. A central directory of every existing account and a payment governance should be mandatory for every company. Security in payment transactions begins with the professional management of the bank accounts. Otherwise, those responsible run the risk of fraudulent payments through accounts that are not registered in the ledger. The next step is to centralize the payment transactions. Digital payment platforms like TIS pool the cash flow and standardize and automate it. This way, payment procedures and the cash flow are controllable at all times.

What has payment looked like in practice up until now?

JW: Heterogeneous and confusing. Companies have a lot of different systems in each part of their organization and they use different e-banking tools to connect to the banks. The SAP system then generates payments. This is complicated and complex and there are many different protocols and formats. This is the reason for high costs as well as increased fraud risk.

In light of this, which solution approach does TIS pursue?

JW: We provide a payment transactions platform especially for medium and large-sized companies in any industry. The platform connects their accounting system with the respective bank. It then operates between the core systems – which the client does not have to change – and the bank. Therefore, the platform is the single point of contact, allowing all automated and standardized payment transactions to be combined in a uniform way for the entire company. This makes the management, monitoring and assessment of payment transactions tremendously easier.

The TIS solution runs completely in the cloud. What about the topics of control and secure data storage?

JW: A server as such is either secure or not secure, no matter if it runs in the cloud or in your own house. It is also possible to dial into an in-house server with the banking tools of a company from anywhere as long as the person has the appropriate authorization or the right amount of criminal energy. This is why the server has to be permanently protected from non-authorized access with a high level of modern technology. The big data centers, with which TIS also cooperates, have totally different possibilities than a single company. Let me say a few words regarding the topic of online banking: the idea that banking tools on a private notebook which runs offline are somehow more secure is an illusion. This computer provides a much bigger gateway for viruses and Trojans than any e-banking solution that runs in the cloud. It speaks volumes, that the Swiss Reporting and Analysis Centre for Information Assurance (MELANI) has recently started receiving a much higher amount of reports from the general public regarding e-banking frauds.

The right software is one part, but what can be done to ensure risk is handled correctly and that the right methods of payments processing are put into place?

JW: Good governance must be established and implemented. Companies need globally valid rules for their payment transactions with detailed guidelines on the following: how accounts are managed, who can open new accounts, who must give permission for this, and the documentation necessary to do so. There are always bad examples for what can happen if the company does not follow the guidelines. Remember the case of the automotive suppliers Leonie mid-2016? Cybercriminals acquired documents and assumed somebody else’s identity. They were then able to divert 40 million euros from accounts of the company to accounts abroad.

My advice on how to minimize risk? Establish governance guidelines and use a central platform for the management of bank accounts and payment transactions. Through automated and standardized processes, companies can protect themselves against manipulation and fraud and, ultimately, the loss of money.

If you are interested to read more about this topic please click on security in payments

Joerg Wiemer

CSO and Co-Founder of Treasury Intelligence Solutions GmbH ( TIS)

To be or not to be a treasurer

|10-2-2017 | Jan de Kroon |

Recent berichtten de (social) media over een Treasury initiatief van enkele hogescholen onder regie van de Hogeschool Utrecht. Het initiatief behelst een praktische minor Treasury Management waarin de masterstudenten aan de hand van praktische casuïstiek en tooling worden voorbereid op een mogelijk treasury carrière. Het interview met de initiatiefnemers maakte melding van de moeite die sommige studenten hadden met het inleven in de problematiek.

Gastlezing over treasury management

Het doet me denken aan een gastlezing over treasury management die ik zomer vorig jaar gaf aan trainees van een detacheerder die vooral actief is in de zorg. Ter voorbereiding had men zijn best gedaan om zoveel mogelijk kennis en inzicht te vergaren. Tot praktijkcases uit de klantenkring aan toe. Groot was de verbazing toen men ontdekte dat het daar die middag eigenlijk nauwelijks over ging. Althans, niet in eerste instantie.

Een initiatief om in het hoger onderwijs een goede basis te leggen voor het treasury management dat men later in de carrière tegen gaat komen juich ik zonder meer toe.
Wat daarbij echter van groot belang is, en niet altijd voldoende aandacht krijgt, is beleidsmatige en organisatorische ordening die vooraf gaat aan ieder vorm van treasury en überhaupt ieder onderdeel van de financiële functie. Daar vinden we immers de kaders waarbinnen informatie en financiële techniek tot resultaten moeten leiden.

De treasury functie

De treasury functie zorgt voor toekomstige financierbaarheid, voor bescherming van vermogen en resultaat tegen financiële risico’s en regelt de financiële logistiek. Maar dat kan alleen in functie van wat het kernbedrijf van de organisatie in kwestie van plan is. Op de korte maar ook op de langere termijn levert de treasuryfunctie, net als de controlfunctie, randvoorwaarden die aantoonbare toegevoegde waarde bieden. Mits goed ingevuld heeft de financiële functie een positieve invloed op de concurrentiekracht. Net zoals een goed geëquipeerde HR functie dat overigens heeft.

Net als de controller zal ook de toekomstige treasurer zich met het kernbedrijf moeten kunnen verbinden om zich te profileren als de leveranciers van toegevoegde waarde. Inleven in wat de business doet, financiële risico’s zien nog voor ze zich voordoen en net als de moderne controller in zekere zin navigator zijn. Dat vraagt van betrokkenen het vermogen om schijnbaar complexe financiële vraagstukken terug te brengen tot de essentie.

Het vraagt ook om ‘buy in’ en een zeker financieel-economisch bewustzijn van lijnmanagement. Ook van de treasurer-to-be vraagt dat om een meer generalistische kijk op de bedrijfsvoering en wat daarbinnen gebeurt alvorens hij als specialist de kanonnen in stelling kan brengen. Je kunt immers briljant zijn in je visie op financiële markten en meester in financiële techniek; als je geen grip hebt op de onderliggende posities ben je toch gedoemd te falen. En laat daar nou juist de grootste uitdaging zitten!

Jan de Kroon

Owner & Managing partner of I mprofin Groep

How about these Fintechs?!

| 9-2-2017 | Pieter de Kiewit | treasuryXL

In August 2016 our expert Pieter de Kiewit wrote an article about Fintechs and we thought it might be interesting to publish it on treasuryXL. Since then Fintechs have become a major subject in the financial world. What has changed since the article was written? Are the new solutions a reality now? What further developments do you see? Please feel free to share them with us.

In the late ’70s Sony introduced the Walkman. My marketing professor told me that, without market surveys, Sony hit the jackpot. Everybody wanted to have one. Snapchat, my niece, who is 17, understands what they offer, started in May 2012, the company was recently valued at $22 billion. This is beyond what my headhunter brain can digest.

Yahoo was bought by Google for a fraction of what the company was valued at a few years ago. In august 2016 Randstad Holding bought Monster (Monsterboard in The Netherlands) for €400 million. A decade ago Monster, then a multi billion $ company, told everybody they would dominate the recruitment industry forever and they tried to buy every available recruitment company.

How about these Fintechs? The market potential is huge, new solutions will pop up that will change our everyday life. In my opinion it is an extremely diverse group of companies. This market is extremely fragmented and in my perception many Fintechs have, in my perception, a hard time reaching their potential clients. What I notice is that the language of the Fintechs is not the language of the clients they want to sell their business to. The language they do speak is the capital raising language. When this capital staff is hired, product offerings are developed as well as marketing material. The banking industry observes, invests, initiates and wonders what to do. Companies like Google, Facebook, Amazon and others join in this Fintech jungle. Who will dominate in a few years, I can not predict.

Perhaps I am cynical, but I do not see any Snapchats or Yahoos. I hope this will change, because I think, next to banks, there is room for more innovative financial services companies. There are many good ideas out there. I wait for a finance Monster to step up and change market dynamics. Later on we will see if a Randstad will step in and if they will have a sustainable future. Time will tell…

Pieter de Kiewit
Owner Treasurer Search

Do you want to read more articles about FinTech on treasuryXL?

B2B Fintech: Payments, Supply chain finance & E-invoicing guide 2016

Uitgelicht: Fintech – investeringen in financiële innovatie fors toegenomen.

Will the European banks strike back?

The Five Cash Management Initiatives Treasurers Should Consider

|8-2-2017 | Jan Meulendijks | iTreasurer |

In October 2014 iTreasurer published an article ‘The Five Cash Management Initiatives Treasurers Should Consider‘ about how treasurers keep focus on ways to keep cash management in their organisation efficient and cost effective. As this is always an important issue and also relevant in 2017, we asked our expert Jan Meulendijks to comment on the article.

Five initiatives

iTreasurer stated in their article that treasurers should spend their time on five initiatives and that they should be part of a treasurers’ overall budget and resource planning process.

Going beyond SEPA

iTreasurer stated: ‘Initially rolled out as an approach for risk mitigation for commercial payment transactions in Euro, SEPA adopters have found that SEPA, or the Single Euro Payments Area, provides a more efficient way to transfer and collect funds across borders without managing all the different legal payment frameworks of each country. But despite the many bright spots of SEPA, “reconciliation in 2014/2015 was still a challenge,”

According to Jan Meulendijks the development of reconciliation tools has now become an issue for ERP/General ledger software developers and that the banks do not need to focus on it any more. Processing digital account information/account statements are a well established feature of financial software programs and also include the processing of open accounts receivables.

Global Account Rationalization

‘The SEPA initiative has acted as the catalyst for other global projects, with high priority placed on account rationalization. By reducing accounts across Europe, many large US multinational corporations are realizing significant savings in both hard- and soft-dollar costs. “In the SEPA environment, all corporates needed was one account for payments and one account for receivables across the SEPA landscape,’ said Mr. Brieske, Regional Head of Trade Finance and Cash Management Corporates Global Solutions Americas, Global Transaction Banking, Deutsche Bank in the article. At that time keeping every bank happy was a tough job, if not impossible. Being able to spread the wallet across fewer banks was one of the positive by-products of a bank consolidation.

‘Nowadays it is remarkable to see that “wallet sizing” has turned around completely,’ says Jan Meulendijks. ‘Today it is the companies that determine how much of their wallet will be handled by which bank and the banks no longer have influence on the amount of transactions with a company.’

In-House Bank Structures

Treasurers had continued to find ways to alleviate the growing cash balances that had become strategically more important to their organizations. Structures like in-house banks (IHBs) were becoming more commonplace as organizations took the next step to further enhance their global liquidity models. The practical considerations for the evolution of the IHB could be directly attributed to global expansion and increased revenue mix overseas in addition to complexities related to time zones, language, growth of regional shared services and decision execution.

Jan Meulendijks states that in the chart of the article the first three steps of “in-house bank progression” are no real in-house bank developments, but treasury-related measures, that now also take place in medium-sized organisations. ‘Only if companies have a real ‘payment factory’, I call it a in-house bank.’

RMB Internationalization

As a result of the ongoing RMB regulatory changes, there had been a significant improvement in the ease of making cross-border RMB payments via China. The RMB was a fairly new currency on the international scene then. The RMB internationalization project had begun to pick up steam over the second half of 2014, with many global MNCs looking to launch new cash management strategies in Asia. New structures were thought to be able to unlock China’s previously “trapped cash” challenge, and optimize their cash held in this part of the world where many opportunities lie for them.

Jan sees a tendency today that the more the deregulation of the RMB progresses the more one can treat it as any other currency. However, this is not achieved yet and Asia will continue to be an region where ‘trapped cash’ occurs on a regular basis.

Maximizing Excess Cash

According to Martin Runow, Head of Cash Management Corporates Americas, Global Transaction Banking, Deutsche Bank most MNCs then were still very risk-averse and focused on principal preservation. ‘The dilemma is corporates are looking for yield but there is little appetite to go into risky assets,’ he said in 2014. With the continuation of low yields, cash portfolio asset allocations were heavily weighted toward money market funds, US Treasuries and agency debt, corporate bonds above the single-A threshold and corporate commercial paper and certificates of deposit. Treasurers were thought to be well served to consider implementing an IHB so that their growing levels of excess cash could work harder around the globe versus sitting in a very low-yielding investment asset.

Now in 2017 Jan Meulendijks states that this is what treasury is all about: companies should not aspire the role of banker, but submit their cash into the company’s operating cycle as working capital. In fact they should fall back on effective cash management: receive in an effective way and pay with as little cost as possible.

There is a lot to win for SMEs, too.

Jan Meulendijks

Cash management, transaction banking and trade professional

Source: iTreasurer

Managing Treasury Risk – Foreign Exchange Risk (Part III)

| 7-2-2017 | Lionel Pavey |

There are lots of discussions concerning risk, but let us start by trying to define what we mean by risk. In my third article I will focus on foreign exchange risk. This risk has to be taken into consideration when a financial commitment is denominated in a currency other than the base currency of a company.
There are 4 types of foreign exchange risk.

Transaction Risk

Transaction risk occurs when future cash flows are denominated in other currencies. This refers to both payables and receivables. Adverse changes in foreign exchange prices can lead to a fall in profit, or even a loss.

Translation Risk

Translation risk occurs when accounting translation for asset and liabilities in financial statements are reported. When consolidating from an operating currency into a reporting currency (overseas offices etc.) the value of assets, liabilities and profits are translated back to the reporting currency. Translation risk does not affect a company’s cash flows, but adverse changes can affect a company’s earnings and value.

Economic Risk

Economic risk occurs when changes in foreign exchange rates can leave a company at a disadvantage in comparison to competitors. This can affect competitive advantage and market share. Future cash flows from investments are also exposed to economic risk.

Contingent Risk

Contingent risk occurs when potential future work is expressed in a foreign currency. An example would be taking part in a tender for work in another country where the pricing is also in a foreign currency. If a company won a large foreign tender, which results in an immediate down payment being received, the value of that money would be subject to transaction risk. There is a timeframe between submitting a tender and knowing if the tender has been won, where a company has contingent exposure.

Identifying Foreign Exchange Risk

What risk does a company face and how can it be measured
What hedging or rate management policy should a company use
What financial product, available in the market, should be best used
Does the risk relate to operational cash flows or financial cash flows

Initially we need to ascertain what we think future FX rates will be. Methods that can be used include the Forward Rate Parity, the International Fisher Effect which also includes expected inflation, forecasts provider by banks and international forums, along with VaR. Model analysis can be provided, among others, via fundamental factors, technical analysis, and political analysis.

Different FX rates can then be used to simulate the effects on cash transactions when converted back into the base currency. This will provide different results that will allow a company to determine what level of risk it is prepared to accept. Finally a decision must be taken as to whether the company wishes to hedge its exposure or not. Before the advent of the Euro, both the Netherlands and Germany were members of the Exchange Rate Mechanism (ERM). This meant there was agreed band within which the spot rate could move around an agreed central point – this was NLG 112.673 equal to DEM 100.00 with a bandwidth of +- 2.25%. For some companies, this tight band meant that they took the decision not to hedge any exposure between DEM and NLG.

Financial products that are commonly used to manage foreign exchange risk include Forward Exchange contracts, Futures, Caps, Floors, Collars, Options, Currency Swaps and Money Market hedging.

Lionel Pavey

Cash Management and Treasury Specialist

More articles of this series:

Managing treasury risk: Risk management

Managing treasury risk: Interest rate risk

Flex Treasurer op treasuryXL: nog meer nieuwe diensten

| 6-2-2017 | treasuryXL |

Op 19 januari hebben wij jullie op treasuryXL een nieuw concept gepresenteerd: de Flex Treasurer.
treasuryXL en Treasurer Search hebben de handen ineengeslagen om laagdrempelige en hoogwaardige expertise van ZZP’ers uit de treasury wereld te koppelen aan middelgrote en kleine ondernemingen die geen treasurer of cash manager in dienst hebben. Intussen kunnen wij jullie laten weten dat zich al een aantal experts hebben aangesloten bij dit nieuwe concept en er zijn een aantal nieuwe diensten bij gekomen. Graag presenteren wij de nieuwe diensten.

CASH & LIQUIDITY MANAGEMENT ONDERSTEUNING

Heb je een goed overzicht van je liquiditeitspositie? Is er geen versnipperde cash- en kredietbenutting? Ben je onlangs geconfronteerd met liquiditeitsproblemen t.g.v. onverwachte uitgaven? Word je regelmatig geconfronteerd met manuele verwerking van betalingen? Ben je recent geconfronteerd met fraudegevallen? Is het aantrekken van de financiering een issue?

Een treasury expert kan je helpen in het vinden van de juiste antwoorden op deze vragen. Een Flex Treasurer kan ondersteuning bieden op tijdelijke basis, onder meer voor de volgende aspecten:

Begeleiding opvolging liquiditeitspositie groep en uittekenen processen in dit verband
Assessment van het cash forecasting proces en voorstellen tot optimalisatie
Optimalisatie betalingsprocessen (incluis fraudepreventie)
Advies selectie bankpartners
Nazicht van de bankvoorwaarden
Bepalen van de optimale financieringsstrategie
Automatisatievoorstellen en begeleiding van de implementatie

FX EN IR RISICO ANALYSE

Heb je een goed zicht op de risico’s die je bedrijf oploopt (o.m. valuta en renterisico) en op de impact hiervan op jouw bedrijf? Heb je een politiek in verband met de risicoafdekking? Heb je een zicht op de mogelijkheden om ze in te dekken? Koerswijzigingen in valuta en rente kunnen zeer vluchtig zijn en leiden tot onnodige extra kosten. Als je je wilt concentreren op je ‘core business’, zonder je zorgen te hoeven maken over bv. de EUR/USD wisselkoers of de Europese rente dan is het inhuren van een Flex Treasurer de ideale uitkomst. Hij kan de organisatie helpen eenvoudig en effectief de risico’s af te dekken, alsmede te onderhandelen over betere spreidingen en lagere kosten bij uw bank.

OPTIMALISATIE WERKKAPITAALBEHEER

Kamp je met een DSO (gemiddelde betalingstermijn klanten) die veel hoger is dan het sectorgemiddelde? Heb je een duidelijk afgelijnd acceptatieproces en een politiek voor de betaaltermijnen? Is je facturatieproces optimaal? Heb je een afgelijnde politiek voor de selectie en de betalingstermijnen aan je leveranciers? Heb je regelmatig incassoproblemen? Kamp je met wanbetalingen en afschrijvingen op je klantenportefeuille? Ondervind je regelmatig reconciliatieproblemen bij binnenkomende en uitgaande betalingen?

Een treasury & working capital management expert kan je helpen in het vinden van de juiste antwoorden op deze vragen en het optimaliseren van je werkkapitaalbeheer. Een Flex Treasurer kan ondersteuning bieden, onder meer voor de volgende aspecten:

Advies bij opstelling en de implementatie van een kredietpolitiek (klantenacceptatie, klantentermijn, e.d.)
Afweging eigen risico versus kredietverzekering + bijstand in onderhandeling hiervan
Advies bij de facturatieprocessen en standaardisering procedures
Advies voor optimalisatie en automatisatie van processen
Advies i.v.m. financiering klantenportefeuille (Bv. Factoring, receivables financing)
Insourcing credit management en credit collection
Bijstand in selectie en implementatie van software oplossingen in dit verband (o.m. credit management /control software en software voor de automatisatie van de verwerking van binnenkomende facturen.

In ons actieve netwerk zijn meerdere senior professionals te vinden die ondersteuning kunnen bieden bij deze drie nieuwe diensten en hier meer dan voldoende ervaring in hebben. Daarnaast kunnen zij ook ingezet worden als treasury coach, voor een treasury quickscan, of als iemand ondersteuning nodig heeft bij financiële instrumenten en derivaten. Overigens komen onze Flex Treasurers ook gedeeltelijk uit België, waardoor zij ook daar beschikbaar zijn.

Voor meer details over onze Flex Treasurers verwijzen wij jullie ook naar onze pagina ‘Flex Treasurer‘

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Alle Flex Treasurer zijn op korte termijn beschikbaar en kunnen ingehuurd worden voor specifieke projecten of op regelmatige basis. Neem voor meer informatie en mogelijkheden contact op met

Pieter de Kiewit via [email protected] of + 31 (0) 6-11119783.

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3 easy ways to protect your organization from cybercrime in payments

| 3-2-2017 | Christian van Ledden | sponsored content |

Leoni, a well-known German manufacturer of cables and harnessing has recently made the news through a new type of fraudulent behavior. The CEO-fraud is a technique, whereby scammers act as ‘member’ of the organization and convince the controlling department to transfer funds under the pretense the company was in a financial emergency. USD 2 billion in losses due to CEO-fraud since January 2015.

Leoni is not the first company falling victim to the scam. According to a recent FBI report, CEO fraud has been reported by 17,642 victims amounting up to losses as high as €2 billion (around $2.3billion) in the United States alone. The FBI further reports about an astounding 270% increase in identified victims and exposed losses since January 2015.

CEO-fraud can jeopardize the existence of an organization altogether, as the example of the Austrian lightweight components manufacturer FACC shows. After experiencing losses amounting up to €50million, they were forced to increase their equity in order to continue running.

Rising number of cyberattacks in Europe

According to PricewaterhouseCoopers, the number of cyberattacks in 2015 on finance divisions has increased by a staggering 38%. Root cause for this upsurge lies in the heterogeneous treasury system-landscape, oftentimes including a variety of different ERP systems, eBanking- and accounting tools as well as manual solutions, for instance spreadsheets. Amongst each other, they may communicate via EBICS, HostToHost, SWIFT, ACH or other, even more risky data interfaces. As all these systems operate in silos, the lack of an overarching security process is easily taken advantage of by many criminals.

An additional challenge for finance departments lies in decentralized organizational structures and lacking transparency on bank accounts, daily cash flows and blurred ownerships of workflows and approval processes. The introduction of the four- or six-eye principle will significantly lower the risk of becoming victim to the CEO-fraud as release ownership of financial transactions can be controlled and monitored.

The European Union tightens legislations to protect personal rights

A new legislations released by the European Union will include stricter punishment on organizations for violations on personal rights. The proposed changes include punishments amounting up to €20million, or 4% of global revenue in case of theft of personal data, often found on e.g. bank statements. This change will require organizations to establish more secure mechanisms to protect personal and other sensitive information of their employees.

TIS – Your audit-proof payment transaction platform

3 core topics are crucial for shielding your enterprise from any of these risks: transparency/visibility, workflows and straight-through processing.

Transparency/visibility:

Create global transparency on your banking landscape, including the incoming and outgoing payments as well as the signatory rights of all employees worldwide. Establishing a central overview will enable you to guard your organization against any attacks.

Workflows:

Restructure your workflows and approval processes and include a four-, six-, or eight-eye principle. As no single employee can process a transaction, you actively safeguard your enterprise from cybercrime.

Straight-through processing:

Encryption of your financial data, e.g. from your accounting/ERP-system to your banks and back into your ERP or TMS will minimize your cyber-attack risks and make it harder for criminals.

Together all these methods will help to secure your enterprise from fraudulent behavior and fight the new challenges. These functionalities are a small exert of what the TIS payment platform can offer you.

How do you tackle the challenges of cybercrime and minimize fraudulent behavior? Curious for your thoughts & happy to read them in the comments! Please also visit our website for additional information.

Christian van Ledden

Sales Executive at Treasury Intelligence Solutions GmbH (TIS)