Safety of payments

| 3-1-2017 | Lionel Pavey | GT News

Fraud and cybercrime protection is of major importance for corporate treasurers. In the past year a new risk had to be added to the list: connectivity. Reports of banks being hacked and losing millions through unauthorised payments appeared more and more frequently and since protecting payment connectivity workflows was not a high priority item on the list of treasurers, it created damage in the industry.
GT News deals with the topic of how to protect payments in their article’ ‘Five tips for keeping your payments safe‘ on december 21st, 2016. We asked our expert Lionel Pavey to comment on the article and give us his own view on how to protect payments.

Safety of payments

As even medium size companies can easily have over 100,000 bank transactions per year, it is imperative for a company to ascertain the validity of all payments so that no fraudulent payments take place.

Authorisation Matrix

It is necessary to embed a clearly defined matrix within the company. This should follow a six-eye principle and be traceable within the payment system – invariably a bank payment system. The matrix should include the names of all those authorized; the amount they may authorize; the distinct legal entities they may represent etc. This data also needs to maintained and secured away from the payment centre (IT or legal department). If a new person needs to be added to the list who implements the procedure – Treasury or IT?

Types of payments

There are various workflows that will generate payments and these should be mapped and a complete process should be designed for each one – procurement system and creditors in the book keeping; financial obligations from the existing financing operations (loans, bonds etc.); tax on wages; social premiums; Value Added Tax (BTW); manual payments normally arising from expense claims and incidental purchases outside the normal procurement channel.

Validity of payments

Normal payments relating to creditors are relatively easy to follow – authorization has taken place in 2 different areas (procurement and book keeping). VAT requires data from book keeping for both debtors and creditors. Tax on wages and social premiums are normally presented just once a month either through the administration/controller channel or directly from HR. The biggest area of concern relates to manual payments.

Manual payments

These generally relate to purchases (normally one-off). The obvious question that arises is why is there a need for suppliers that are not in the existing procurement system? It is not impossible to ensure that there are preferred suppliers for all normal desires. Another source is repayments to debtors that are not balanced off against outstanding balances. If a company does not have dedicated software relating to the financing operations who, beyond the Treasury Department, can verify the amounts and dates? The area that requires the greatest vigilance relates to expense claims. Just because a line manager authorizes an expense claim does not mean that it is always compliant with company policy – this is an area where the onus should be on the controller to validate the integrity of the expense claim. Is the expense a genuine expense made in direct relationship to working for the company? An employee away on business and staying in a hotel is entitled to a meal at the expense of the company, but what is the policy towards alcohol and entertainment? Is the amount being claimed excessive and work related?

Integrity of bank systems

How secure is the bank system? When a batch is prepared for payment and an authorisation code produced, how is the code produced – what are the underlying factors that generate the code? Is it possible to alter the beneficiary’s account number after the batch has been produced? Would an alteration be seen by the system, resulting in an incorrect authorisation code? Banks generally do not provide a lot of information as to how their system generates codes.

Reconciliation

Who can extract data from the bank systems? Does this occur daily? Are all entries processed the following day in the book keeping system? What happens to items that are not immediately reconciled?

Conclusion

With regard to standard procurement, it should be easy to construct a solid working system that can be followed at all times. Manual payments are a weak link and a serious amount of time and effort has to be used in constructing a strong framework that has to be enforced and maintained at all times.

Lionel Pavey

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Blockchain: What happened during my stay in South Africa? (Part II)

| 30-12-2016 | Carlo de Meijer |

chains-iiIn the past three weeks I travelled throughout South Africa. My main focus was on the country, the people, the safaris, the Big Five and not on blockchain! Now being back home I was curious to learn if there were developments in the blockchain area. 

A number of interesting reports were launched, amongst others by Euroclear and Deloitte. And there has been growing blockchain and distributed ledger activity in the financial industry from start-ups, to banks, central banks, the market infrastructure and consortia. But also from advisory companies, central government bodies and others.

In my first article on treasuryXL, earlier this week, I  wrote about two reports and startups. I want to focus on banks and consortia in this second article about blockchain developments.

BANKS

BNP Paribas completed its first blockchain-based live cross border B2B payments

BNP Paribas has completed its first live cross-border B2B payments between corporate clients using blockchain technology. The transactions, conducted on behalf of packaging outfit Amcor and trading cards group Panini, were cleared in various currencies between BNP Paribas bank accounts located in Germany, the Netherlands and the United Kingdom. For the ‘cash-without borders’ project, the payments were fully processed and cleared in a few minutes. This highlights the potential of the technology to eliminate delays, unexpected fees and processing errors, and pave the way for real time cash management. The bank has strong commitment to follow closely and further accelerate their participation in a number of market initiatives aiming at improving the corporate payments experience using blockchain technology.

Citi backs blockchain startup

Citi has invested in blockchain venture Cobalt DLT, ahead of what the company expects will be a second round of funding in 2017. Cobalt DLT is a blockchain startup aiming to bring distributed ledger technology to the processing of foreign exchange trades. Transactions in the FX market are notoriously inefficient and costly. Currently, foreign exchange trades need multiple records for buyer, seller, broker, clearer and third parties and then reconciliation across multiple systems.   Cobalt is now building a post-trade processing network based on distributed ledger technology. The Cobalt DL solution has the potential to significantly improve post-trade services by cutting costs and reducing risk for our industry. Cobalt DL’s FX solution is set to launch in 2017, with 15 institutional participants committed to using the service.

 CONSORTIA

While the number of consortia in the blockchain arena are further growing, the bank-backed R3CEV sees some cracks in the consortium. Some of its biggest founding members parted ways. Big names like Goldman Sachs and Banco Santander are leaving the R3CEV consortium. And new reports are surfacing suggesting that others such as JP Morgan, Morgan Stanley, Macquiries, US Bancorp and National Australia Bank may follow soon.

The R3 consortium has its first Spanish-speaking Latam member

But there is also some good news. Creditcorp, a Spanish-speaking Latin American financial institution, has joined the R3 consortium to design and apply distributed and shared ledger-inspired technologies to global financial markets. The bank provides corporate and personal banking, brokerage services, and other financial services across its six principal subsidiaries in Peru, as well as other South American countries including Bolivia, Columbia and Chile, and is listed on the Lima and New York stock exchanges.

R3 and Calypso to develop blockchain trade confirmation system

Blockchain consortium R3 continues to press ahead with new initiatives, partnering with Calypso Technology to develop a multi-party trade confirmation system running on its Corda distributed ledger-based smart contract platform. Calypso will be the first application partner to adopt the R3 platform, utilising the technology to enable counterparties to see all trade tickets on the distributed ledger so they can be sure they are matching against the correct trade.

JPX to form Japanese blockchain consortium

Japan Exchange Group (JPX) is to form a consortium of financial institutions to run trials of the use of blockchain technology in capital markets infrastructures. The exchange will seek participation from a wide range of Japanese financial institutions in order to gather broad industrial expertise ahead of testing in spring 2017. They will consider a structure for efficient information sharing between the DLT engineer community and financial institutions through efforts such as training on DLT technology. The Tokyo Stock Exchange together with the Osaka Exchange and Japan Securities Clearing Corporation (JSCC) will lead the coalition which intends to create a test environment for Proof of Concept (PoC) using Hyperledger fabric, the open source DLT platform, in cooperation with IBM.

Blockchain applications, consortium for Malta Stock Exchange

Malta Stock Exchange (MSE) has announced plans to research and develop into the blockchain technology, and to establish its own consortium. MSE’s committee will be run by MSE board members, blockchain experts and its chairman. The consortium will be sharing knowledge and establishing connections or joint-ventures with each other to assist fintech companies based on the blockchain technology, to grow by supporting them in designing and implementing blockchain applications. Furthermore, with this consortium, the Malta Stock Exchange could be planning its first blockchain application. It is very likely their first application on blockchain will replace standard stock exchange platforms.

South Korea rolls out blockchain consortium

The Korea Financial Investment Association (FIA), along with 21 financial investments and five blockchain companies, have teamed up to form a blockchain consortium. The group has signed a memorandum of understanding (MoU) to collaborate on projects and share their expertise on blockchain technology. Moreover, the group aims to create business opportunities for the consortium as well as establishing a platform with the member companies. Its future research projects include the establishment of a common platform for personal authentication due in 2017, researching into clearing and settlement automation in 2018 and 2019, and a platform for over-the-counter trading for 2020.

Microsoft creates Asia’s first blockchain consortium on Azure

Microsoft has teamed up with AMIS and the Industrial Technology Research Institute of Taiwan (ITRI) to form Asia’s first and the most advanced consortium blockchain network on Azure. The consortium includes members such us: Ubon Financial, Cathay Financial Holdings, MegaBank, KGI, Taishin, and CTBC Bank. Aim is to further develop blockchain opportunities in the Taiwan financial market.

The pilot blockchain project is developed using ITRI’s technology (to create an internal application program interface (API)) and Microsoft Azure. AMIS chose Ethereum, to develop a permissioned blockchain, an infrastructure specific to the needs of Taiwan’s financial market. As part of the project, ITRI provided its advanced technology to create an internal application program interface (API), while Azure provided high-speed cloud computing to ensure high security and efficiency for the blockchain infrastructure.

XBRL and ConsenSys work on deploying blockchain tokenization standards

XBRL US, a US non-profit consortium for business reporting standard, has teamed up with Consensys, a blockchain technology company, to work on deploying blockchain tokenization standards. The working group aims to establish a standardized method to represent a token across all blockchain networks in order to eliminate transactional friction and reduce processing costs; enable automation and provenance tracking; and allow interoperability of transactions on a global scale.

The working group will establish goals and action steps by early 2017, and is requesting participation from individuals representing technology, finance, and accounting to provide their expertise in developing tokenization standards that can be used worldwide, for all asset classes.

Source: LinkedIN/Carlo de Meijer

carlodemeijer

 

Carlo de Meijer

Economist and researcher

 

 

Blockchain: what happened during my stay in South Africa? (Part I)

| 28-12-2016 | Carlo de Meijer |

chains-ii In the past three weeks I travelled throughout South Africa. My main focus was on the country, the people, the safaris, the Big Five and not on blockchain! Now being back home I was curious to learn if there were developments in the blockchain area. 

A number of interesting reports were launched, amongst others by Euroclear and Deloitte. And there has been growing blockchain and distributed ledger activity in the financial industry from start-ups, to banks, central banks, the market infrastructure and consortia. But also from advisory companies, central government bodies and others.

In this first article I will focus on two reports and on startups.

 REPORTS

  1. Euroclear Report: Blockchain Settlement – Regulation, Innovation, and Application 

A new report by Euroclear has looked at the regulatory and legal aspects of the use of blockchain technology in post-trade settlement in a European context. The report found that central securities depositories (CSDs) would play an important role in a blockchain-based settlement system. It also stated that regulators should not fear the use of smart contracts and distributed ledger technology any more than any other automated computer-based process prevalent throughout the settlement industry.

As ‘custodians of the code,’ CSDs could exercise oversight of, and take responsibility for, the operation of the relevant blockchain protocol and any associated smart contracts. CSDs may continue to perform an important role as trusted, centralised FMIs (financial market institutions), providing gatekeeping services and oversight of the relevant blockchain.

With the implementation of a DLT-based settlement process there is no need to change the existing regulatory architecture. The authors believe that a blockchain-based settlement system would not present a weaker cybersecurity proposition than any present system, which is not immune to cybersecurity. By allowing regulators to participate as a node in the blockchain system, they could have complete oversight of all the transactions occurring within the settlement system and receive transparent transaction data in real time.

  1. Deloitte Survey: Corporate Executives Having Hard Time Wrapping Heads Around Blockchain

According to a recent Deloitte online survey of more than 300 senior executives at large US companies in order to find out about corporate sentiment towards blockchain technology, understanding of the technology is uneven and many senior executives (39 per cent) still know little or nothing about it, while others place it among their company’s highest priorities.

The survey revealed that blockchain investment and adoption patterns may be more complex than many observers believe. For instance, despite the relative immaturity of the technology, 21 percent of Blockchain-informed senior executives across a wide range of industries indicated that their firms have already brought blockchain into production, and 25 percent plan to do so within the next year. Key findings from the survey showed that 28 per cent of respondents had invested $5 million or more in blockchain technology, while 10 per cent had invested $10 million or more. Looking forward, 25 percent of respondents expect to invest more than $5 million in Blockchain technology during the next calendar year.

Many of these blockchain-informed executives (more than a quarter) see the technology as crucial for their company and their industry. Fifty-five percent of this group said their company would be at a competitive disadvantage if it failed to adopt the technology. Forty-two percent of those surveyed who claimed some knowledge of Blockchain believe it will disrupt their industry.

 

STARTUPS

Goldman, JPMorgan take a stake in blockchain startup Axoni

Goldman Sachs and JPMorgan Chase have announced finalizing an investment that is said to be in a range of USD 15 million to USD 20 million) in blockchain startup Axoni. The Axoni deal represents the latest Wall Street effort to gain traction with blockchain technology. Axoni is a New York-based technology company that helps banks and other institutions develop blockchain software to run capital markets processes. Furthermore, other financial institutions including inter-dealer broker ICA,  Plc’s venture arm,  are also interested in investing in the startup.

Over the past six months, Axoni has run a number of high-profile experiments with some of the financial industry’s largest players, in areas such as post-trade processing of credit default swaps and foreign exchange.

Digital Asset rolls out blockchain platform allowing confidential trades

Blockchain startup Digital Asset Holdings (DAH) has developed a platform to allow traders use blockchain technology without giving out confidential information on their trades. The new platform provides a solution to confidentiality issues holding back adoption of the blockchain technology in financial markets. They solve the privacy issue by dividing the distributed ledger of transactions into two components: one where participants can confidentially store their transactions data, and another that is shared by all participants without the confidential data.

Moreover, the new platform will form the basis of the technology that DAH is building for financial institutions including Australian stock exchange ASX and US post trade services provider the Depository Trust and Clearing Corporation (DTCC).

Manifold Technology rolls out easy-to-use blockchain platform

Manifold Technology, a US-based fintech, has made its patented blockchain platform available allowing non-technical developers to build enterprise-ready, blockchain-enabled applications. The platform has already been used by the Royal Bank of Canada for a rewards program, and by R3CEV consortium member banks to demonstrate instant trading of fixed income assets. The fintech’s platform can handle more than 10,000 transactions per second in operational environments, surpassing the largest credit card companies that can handle between 2,000 and 8,000 transactions per second.

Stellar’s blockchain powers ICICI Bank’s money transfers in India

Stellar, the open blockchain platform and non-profit payment protocol has partnered with ICICI Bank to bring low-cost, near instantaneous remittance solutions in India, the Philippines, Africa and Europe. Besides the bank, other three new partners in some of the largest remittance markets in the world were revealed by Stellar including: Philippines-based financial inclusion-focused fintech startup Coins.ph, pan-African fintech company Flutterwave which is notably plugged into the popular M-Pesa network, and French remittance provider Tempo Money Transfer, a licensed money transfer operator in Europe. This will allow Stellar customers be able to move money from France to Nigeria to Kenya to India in real-time and securely.

Overstock Issues Shares Using the Bitcoin Blockchain

Overstock.com, the online retailer, has become the first publicly-traded company to issue stock over the Internet, distributing more than 126,000 company shares using the blockchain technology. The company announced in October that it would allow its stockholders to purchase shares of its preferred stock. The company is making the offering to demonstrate its tØ platform, while providing its stockholders the opportunity to participate and trade exclusively using the platform.

Fintech Firm Wyre Raises $5.8 Million for “Fastest Blockchain Cross-Border Payments Platform”

San Francisco-based Fintech startup Wyre has launched its blockchain remittance platform alongside a successful $5.8 million funding round. Wyre intends to add its blockchain solution as a layer on top of existing blockchain-based platforms adopted by payment giants around the world. Fundamentally, the Wyre platform works by taking deposits from large payment companies via an API. These transactions are sent over Wyre’s ledger. Wyre then delivers the funds as per the transaction’s instructions, “typically in less than six hours”. Wyre’s focus lays in the cross-border payments corridor between China and the United States.

Sources: Euroclear Report: Blockchain Settlement – Regulation, Innovation, and Application, Deloitte Survey: Corporate Executives Having Hard Time Wrapping Heads Around Blockchain, Carlo de Meijer/LinkedIN article

 

carlodemeijer

 

Carlo de Meijer

Economist and researcher

 

 

Will the European banks strike back?

| 27-12-2016 | Hans de Vries |

europe Last November The European Payments Council (EPC) launched the single euro payments area (SEPA) instant credit transfer (SCT Inst) scheme. The scheme will be live in November 2017 and allows the European banks to propose innovative, digital, and fast payment solutions to their customers. The EPC describes the SCT Inst scheme as “a world first, enabling individuals, businesses, corporates and administrations to make instant euro credit transfers between accounts across an international area that will progressively span over 34 European countries. This new scheme is a revolution for the traditional 9 to 5/ weekdays only operating banks. Will it also block the way to relative newcomers like Paypal? Will the banks seize this opportunity and strike back?

As a result of the internet experience, banks had to deal with the fact that their systems were not able to cope with the subsequent demands of the 24/7 demands of the retail market. Paypal attacked the weakspot of the banks by introducing their worldwide internet banking solution. Downside of this approach is of course the fact that the consumer had to first open and credit their Paypal accounts, before they were able to use  this payment method. And of course the merchants had to support this payment method as well and find ways to collect their funds. As an alternative creditcard payments were implemented and local solutions like I-Deal in the Netherlands, Mister Cash in Belgium etc. All these alternatives had their ups and downsides looking at costs and reachability. Most important value of these solutions were that the Merchant was to some extent sure that he received the funds before delivering the goods. And it worked both ways, the consumers were also sure that the goods would be delivered as soon as the transaction was finished.

With the upcoming introduction of the SEPA instant credit transfer scheme, as announced by the EPC last month, this whole picture is about to change. The EPC describes the SCT Inst scheme as “a world first, enabling individuals, businesses, corporates and administrations to make instant euro credit transfers between accounts across an international area that will progressively span over 34 European countries. This implicates that the consumers can directly debit their accounts and instantly transfer their funds to their beneficiaries all over Europe with the same effect as the current local schemes like I-Deal. This means that Internet Merchants all over Europe are by now reachable for the total European consumer market. Of course it will take some time before all banks are able to support this service and are also able to provide the consumers as well as the Merchants with the tools to obtain the information real time. However, the PSD2 regulations will certainly support this development and the FINtech industry will make sure that the information flows are connected to allow for flawless operations. By implementing the SEPA instant credit transfer scheme the European banks are able to recover lots of grounds they lost uptill now to external parties like Paypal: the banks will strike back! And they will have to in order to survive in today’s world.

hansdevries-150x150

 

Hans de Vries

Treasury/ Cash Management Consultant

 

4 financiële problemen die bedrijven in gevaar kunnen brengen – Deel II

| 21-12-2016 | Jan Meulendijks | Olivier Werlingshoff | FM.nl |

bankrupcy

 

Maandag plaatsten wij  het artikel ‘4 financiële problemen die bedrijven in gevaar kunnen brengen‘  waarin twee experts een reactie gaven op het artikel, dat op 12 december op FM.nl geplaatst is. Naar aanleiding van dit artikel hebben we nog meer reacties mogen ontvangen, die wij jullie niet willen onthouden. 

 

 

De 4 problemen nogmaals op een rij:

1. Acuut probleem (illiquiditeit)
Bedrijven gaan vaak failliet, omdat ze geen cash meer hebben. Het gaat mis als er onvoldoende cash is om aan kortlopende financiële verplichtingen te kunnen voldoen.

2. Chronisch probleem(organisatie is onrendabel)
Een onderneming kan jarenlang verlies lijden, maar toch blijven voortbestaan zolang er maar geld is.

3. Structureel probleem (insolvabiliteit)
Van insolvabiliteit spreek je wanneer er iets mis is met de vermogensstructuur van een onderneming.

4. Strategisch probleem (toekomstplannen)
Een onderneming heeft een strategisch probleem wanneer het management niet goed in zicht heeft hoe de markt veranderd en hoe de onderneming haar toekomstplannen daarop moet aanpassen.

Onze experts reageren als volgt:

Jan Meulendijks:
Volgens mij leidt een strategisch probleem op kortere of langere termijn ook tot de andere 3 problemen, waarbij ik het “chronisch” probleem min of meer gelijk stel met het strategisch probleem.
Geen visie of een verkeerde visie zal een onderneming onherroepelijk ten onder doen gaan tenzij er bijsturing plaatsvindt. De auteur van het artikel legt sterk de nadruk op cash genereren, meer nog dan op winst genereren. Cash is inderdaad het belangrijkste om in leven te blijven, maar die cash moet dan wel voortkomen uit de bedrijfsactiviteiten en bijvoorbeeld niet uit verkoop van activa simpelweg omdat er geen andere cash genererende mogelijkheden meer zijn.
Investeerders/financiers kijken ook vooral naar het cash genererend vermogen van de investeringen die met hun geld worden gedaan. Gaan die zoveel cash genereren dat minimaal de aflossing en rente op de additionele investeringen gedaan kunnen worden? Liefst natuurlijk nog beter dan dat, zodat er ook nog een bijdrage aan de winst/vermogenspositie wordt gedaan.
Het voorbeeld van Blokker zal inderdaad een praktijktest zijn, zijn die 200 miljoen inderdaad cash genererend?
Een veel voorkomend praktijkvoorbeeld van een strategisch probleem is de aankoop van een bedrijfspand, zeker in tijden van hoge rente; hiervoor gaan ondernemingen vaak grote leningen/financieringen aan, terwijl er nauwelijks tot geen extra cash mee wordt gegenereerd t.o.v. een huurpand. Het pand is dan een blok aan het been.
De treasurer zal als eerste de acute problemen signaleren, en kan van daaruit naar control en commercie waarschuwen. Hopelijk is dat tijdig…

Jan Meulendijks

 

Jan Meulendijks

Cash management, transaction banking and trade professional

 

 

 

Olivier Werlingshoff:
Wat ik met name heb gemerkt tijdens opdrachten is dat bedrijven die momenteel (nog) geen liquiditeitsprobleem hebben dit onderdeel ook geen aandacht geven.Tenminste onvoldoende aandacht. Liquiditeiten zijn er genoeg en hierdoor bestaat er onvoldoende belangstelling voor cash bij zowel de directie en hierdoor ook bij de medewerkers in zijn geheel.
Liquiditeitsplanningen zijn een “verplicht nummer” die snel ergens binnen de organisatie, meestal door de Control afdeling wordt opgesteld op basis van de V&W rekening. Andere bedrijfsonderdelen worden daarbij niet of nauwelijks betrokken. Afwijkingen worden vaak niet gerapporteerd of kunnen niet worden verklaard.Je zou denken dat het dak gemaakt moet worden wanneer het niet regent!

Een directeur vroeg mij een keer, toen ik hem sprak over debiteuren die te laat betaalden, “hebben wij nu, op dit moment een probleem?” Liquiditeit technisch niet, dus wist ik gelijk waar ik op de prioriteitenlijst stond, onderaan dus! Ik werd vreemd aangekeken toen ik vroeg of hij problemen zou hebben als zijn salaris een keer drie maanden later betaald zou worden. Doel van mijn opmerking was om het geheel te vertalen naar de persoonlijke sfeer. Wat gebeurt er wanneer gelden niet of niet tijdig binnenkomen?
Kortom er wordt inderdaad vaak pas ingegrepen wanneer de liquiditeiten een probleem vormen en meestal is het dan te laat of net niet maar moeten er rigoureuze maatregelen getroffen worden.
‘Cash awareness’ promoten door verschillende afdelingen te betrekken bij het opstellen van een liquiditeitsplanning is naar mijn weten de eerste actie die kan worden opgezet om meer ‘feeling’ te krijgen bij wat er binnen een organisatie speelt. Het ‘under control’ krijgen van de organisatie.

Olivier Werlingshoff - editor treasuryXL

 

Olivier Werlingshoff

Managing Consultant at Proferus

 

 

 

 

How the ‘Cloud’ empowers treasurers

| 20-12-2016 | Kasja Reinders | GT News |

cloud‘The term ‘Cloud’ has become the buzzword for organisations interested in simplifying and transforming technology over the past several years. ‘The Cloud’ is used to describe a process or system of sharing technological resources to gain scale, efficiencies and reduce cost – or more simply put, using a network of computers to manage and process information, rather than a single computer or machine.’ According to GTNews in their article about how the ‘Cloud’ empowers treasurers.

Apparantly ‘Cloud’ adoption rates have been growing over the past several years in virtually every industry and in all parts of the world. How about the financial world and treasury in particular? Are treasurers reluctant to use the ‘Cloud’ or not? GT News states that ‘the endeavour of installing hardware and software is viewed by treasurers as too costly, resource-intensive and as leading to a longer overall implementation timeline. The cost effectiveness of the ‘Cloud’ is a major reason for treasurers to seek the cloud. Security is an issue of course. Treasurers are moving toward either private or public cloud deployments. ‘Some treasurers view private ‘Cloud’ environments as more secure than shared, public ‘Cloud’ environments; others are comfortable with recent developments in public ‘Cloud’ security’, according to GTnews.

 4 major reasons to use the cloud

To summarize their reasons, the 4 most important are:

  • Minimal internal treasury and IT support required for setup and maintenance.
  • The option of faster, more standardised implementations.
  • Significantly lower overall total cost of ownership.
  • Minimal upgrade effort and cost.

But how and to what extent does the ‘Cloud’ really help treasury departments to innovate and improve? GT News: ‘The ‘Cloud’ allows treasurers to move further away from operational, non-value added tasks such as those related to the maintenance of technology (implementing, upgrading, supporting), to more analytical and strategic initiatives. Frequent and seamless updates and enhancement of the technology allows treasurers to utilise the latest functionality without the need for a significant upgrade process. This is key, because it allows treasurers to consume new and innovative technologies as quickly and easily as possible.’

GT News concludes: ‘Corporate treasurers should demand that vendors in the treasury technology space stay ahead of the cloud curve, by providing the most secure, functionally powerful and innovative ‘Cloud’ solutions.’

We asked our expert, Kasja Reinders, to comment on this topic:

The ‘Cloud’….. some consider it ‘something untouchable’,  others really love it.
My opinion… for some companies the ‘Cloud’ is not really interesting because they have their own IT department with a good back up system and employees who will take care of it and know what they are doing.
If you are working in the ‘Cloud’ it is actually nothing else then putting your information on another server which is managed by a different company. That means that you are outsourcing your IT servers and you will miss the control on it.  The problem is that you aren’t sure if the company that will take care of your information is doing this in the way you want it.
But I imagine that for a lot of companies this will work well and that is why they are using the ‘Cloud’.
For treasury departments I think it won’t be usefull. Treasury managers as I are working with confidential information and therefore I would rather not work in the ‘Cloud’.
It is this feeling I have that tells me it is not save, but maybe we treasurers need to keep pace with times and start using the ‘Cloud’. The future will tell us if it is save or not.
Kasja ReindersKasja Reinders – Treasury/Cash Manager

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4 financiële problemen die bedrijven in gevaar kunnen brengen

| 19-12-2016 | Schenkels | Pavey |  FM.nl |

bankrupcyOp FM.nl (Financieel Management) kunt u een artikel vinden over de vier financiële problemen, die de continuïteit van een bedrijf in gevaar kunnen brengen. Dit onderwerp werd uitvoerig besproken tijdens een opleiding risicomanagement van Alex van Groningen.

Het artikel gaat uitgebreid in op de vier problemen. Hier volgt een korte samenvatting:


1. Acuut probleem (illiquiditeit)

Bedrijven gaan vaak failliet, omdat ze geen cash meer hebben. Het gaat mis als er onvoldoende cash is om aan kortlopende financiële verplichtingen te kunnen voldoen. Met het werkkapitaal kunnen zich verschillende problemen voordoen:
● De hoeveelheid vlottende activa als percentage van de balans loopt te hoog op.

● Het probleem van onbeheersbare groei: vanwege snelle groei loopt de debiteurenpost te snel op.

● Wanneer een economische crisis uitbreekt, zoals de kredietcrisis van 2008, wordt liquiditeit schaars.

● Het grootste probleem ontstaat wanneer de cashflow snel daalt bij een achterhaald businessmodel terwijl de kosten/verplichtingen grotendeels hetzelfde blijven.

Je kunt werkkapitaal beoordelen met verschillende kengetallen: current ratio, quick ratio en netto-werkkapitaal. Echter, deze getallen zijn beperkt betrouwbaar omdat het momentopnamen zijn.

2. Chronisch probleem (organisatie is onrendabel)

Een onderneming kan jarenlang verlies lijden, maar toch blijven voortbestaan zolang er maar geld is. Wanneer de geldkraan wordt dichtgedraaid door de kredietverstrekker kan een chronisch probleem ineens een acuut probleem worden. Dit geldt bijvoorbeeld voor veel retailketens op A-locaties, die vanwege de enorme impact van internetwinkelen onrendabel werden. Terwijl de omzet per winkel terugliep bleven de vaste lasten, zoals huur, salaris en afschrijvingen, gelijk.

3. Structureel probleem (insolvabiliteit)

Van insolvabiliteit spreek je wanneer er iets mis is met de vermogensstructuur van een onderneming. Hoe hoger de leverage – het vreemd vermogen – hoe lager de solvabiliteit. Het aantrekken van meer vreemd vermogen is niet per definitie verkeerd. Het kan ondernemingen in staat stellen te investeren en te groeien. Maar omdat het geld kost aan rente en risico’s met zich meebrengt moet er wel meer rendement tegenover staan.

4. Strategisch probleem (toekomstplannen)

Een onderneming heeft een strategisch probleem wanneer het management niet goed in zicht heeft hoe de markt veranderd en hoe de onderneming haar toekomstplannen daarop moet aanpassen. Dit probleem kun je niet uit de boekhouding halen. Volgens docent Jan Vis, een autoriteit op het gebied van waarderingsvraagstukken, is het van het allergrootste belang dat het management zich focust op het vergroten van de toekomstige geldstromen, want waarde ligt altijd in de toekomst en in het genereren van cash (geen winst).

Wij hebben twee van onze experts gevraagd om hierop commentaar te geven:

Boudewijn Schenkels:
De meeste bedrijven in problemen zijn inderdaad afhankelijk van overnames of te afhankelijk geworden van de standaard financieringsproducten van banken. Hoe langer hun financiële crisis voortduurt hoe eerder de bodem van de kas in zicht komt. Er wordt (nog) niet of te weinig gedacht aan de alternatieve onorthodoxe vormen zoals bijvoorbeeld crowd-funding. Banken worden hier steeds creatiever in en er ontstaan steeds meer netwerken. Out-of-the-box vormen die alle 4 de probleemgebieden kunnen tackelen of beheersen. Ook kom ik ook nog steeds bedrijven tegen waar vastgehouden wordt aan oude structuren in het kader van cash management. In het post-SEPA tijdperk zijn lijnen korter en is betalingsverkeer meer transparant en ontstaan er nieuwe producten. Om te komen tot deze nieuwe vormen is een afwijkende strategische visie nodig vanuit management. Streef er constant naar onderscheidend en denk na over hetgeen er verder in de wereld aan de hand is dat er onverwachte wendingen ontstaan. Kijk naar de politiek.

boudewijnschenkels150x150

 

 

Boudewijn Schenkels 

Senior Consultant Payments  bij Payments Advisory Group

 



Lionel Pavey:
Hij reageert op het probleem illiquiditeit: Er zijn 2 stromen waar geld vaak vast zit – voorraden en debiteuren.

Voorraden
1)     Plan de hele cyclus van levering tot verkoop

2)     Hoe lang is de levertijd

3)     Hoeveel ruimte nemen de goederen in beslag en heb ik genoeg ruimte

4)     Zijn de voorraden snel bederfelijk

5)     Hoeveel leveranciers zijn er

6)     Zijn de goederen seizoensgebonden

7)     Implementeren van “just-in-time” methodiek

Debiteuren
1)     Facturen tijdig en correct versturen

2)     Controleren en vermelding van juiste voorwaarden

3)     1 week na verzending controleren dat facturen zijn ontvangen bij debiteur

4)     Bevestig met debiteur dat alle gegevens correct zijn

5)     Bevestig met debiteur dat betaling vindt plaats op afgesproken datum

6)     Alle contact met debiteur ten eerste via telefoon, daarna via email

7)     Implementeren van een solide debiteurenbeheer

8)     Altijd proactief actie ondernemen – niet wachten op debiteur

9)     Laat verkoop afdeling weten de stand van zaken, maar laat verkopers nooit direct met klanten praten/onderhandelen over openstaande posten

10)  Zorg voor alle nodige vaste gegevens van een debiteur – contact persoon, hoofd crediteuradministratie enz.

11)  Uw klant is ook een mens – als een klant wordt op de hoogte gesteld van openstaande posten, dan realiseren zij dat U een goede beheersing hebben van alle organisatorische  aspecten

Lionel Pavey

 

Lionel Pavey

Cash Management and Treasury Specialist – Flex Treasurer

 

 

 

 

 

How can you protect your company against fraud?

| 16-12-2016 | Treasury Intelligence Solutions GmbH (TIS)  | sponsored content |

Dangers lurk in the online banking and electronic payments world for private consumers. However, the risks can be even more devastating for companies that are not properly protected, in some cases even leading to bankruptcy. Have you experienced phishing or “CFO trick” e-mails in your organization? Do you know, prior to the end of the month, how much money has perhaps been transferred out of each of the many subsidiaries in your organization? What happens when an employee has left the company, yet is still active in your systems, in some cases even still being listed with signatory rights?

 “How to protect your company against fraud”, provides insights into how you can gain a clear and central overview of your bank relationships, how you can arrange your cash positions and liquidity in a transparent way, and how you can standardize your electronic signatory authorizations.

To help you maneuver the payments and banking jungle, TIS GmbH reviewed the solutions that enable you to consolidate central processes through a Software as a Service platform. If you want to read more about this subject please click on in this whitepaper.

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Since 2010, Treasury Intelligence Solutions GmbH (TIS) has been combining their treasury management experience and know-how with their cloud computing and virtualisation expertise. The TIS solution is the result of these efforts: comprehensive, highly scalable and extremely secure SaaS solution to process, analyse and document all treasury management processes.

 

 

Beleggen in obligaties met een hoge rente – een bespiegeling

| 15-12-2016 | Douwe Dijkstra – Fastned- Het Financieele Dagblad |

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Hoe interessant is beleggen in bedrijfsobligaties met een hoge rente? Hoe aantrekkelijk is deze financieringsoptie voor ondernemingen? Wij  hebben onze experts Douwe Dijkstra en Pieter de Kiewit om een kort commentaar gevraagd naar aanleiding van de obligatie uitgifte van Fastned.

 

Op de site van Fastned was begin december 2016 te lezen:
‘U kunt nu investeren in Obligaties Fastned met 6% rente’. Later in de maand ging de tekst verder: ‘We zijn verheugd u te kunnen mededelen dat Fastned de inschrijving is gestart voor de uitgifte van obligaties. De obligaties hebben een looptijd van 5 jaar en keren per jaar 6% rente uit. Dit is een mooie kans om (verder) te investeren in de groei van Fastned en een duurzame wereld.’
Vervolgens werden de belangrijkste kenmerken van Obligaties Fastned genoemd.
Dat de obligaties zeer gewild waren blijkt vandaag. Op de site van Fastned verschijnt nu een tekst dat alle obligaties geplaatst zijn. En Fastned vervolgt:
‘Gezien de grote interesse in obligaties Fastned zijn er zeker voornemens om binnenkort nog een uitgifte te doen.’

In het Financieele Dagblad kon men op 6 december een Bartjens commentaar lezen over de Fastned obligaties:  Het principe is simpel: een wankel bedrijf leent geld. Beleggers willen de relatief grote kans op wanbetaling gecompenseerd zien met een behoorlijke vergoeding: dus een hoge rente. In de VS zijn junkbonds populair, hier is het een kleine markt. Maar deze week is er weer een onvervalst speculatieve obligatie uitgegeven. Fastned. Het bedrijf dat een Europees netwerk van snellaadstations voor elektrische auto’s bouwt, leende € 2,5 mln. De lening heeft een looptijd van vijf jaar. De couponrente is 6%. Ter vergelijking: de Nederlandse Staat (superveilig) leent voor vijf jaar tegen 0%, Shell (behoorlijk veilig) leent voor vijf jaar tegen een coupon van 1,25% en Gazprom (Russisch, iets minder veilig) leent in Zwitserse frank voor vijf jaar tegen 2,75%. De 6% van Fastned impliceert dus behoorlijke risico’s. Het bedrijf is klein, jong en verlieslatend. Het heeft geen reserves en een negatief eigen vermogen, zo blijkt uit het prospectus. Maar goed, ‘de cost gaet voor de baet uyt’ en juist nu moet Fastned investeren.’

Expert Douwe Dijkstra vult hierop aan:
Voor beleggen in Fastned obligaties geldt hetzelfde als voor elke andere investering. Het rendement is omgekeerd evenredig aan het risico. Zolang niemand weet of de koers van aandelen Koninklijke Olie omhoog of naar beneden gaan, weet zeker niemand of beleggen in een 6% obligatie van Fastned achteraf wel of geen goede investering zal blijken te zijn geweest. Het lijkt mij enkel aantrekkelijk voor beleggers die wel een gokje durven te wagen met een te overziene inzet die ze wel kunnen missen. Of voor beleggers met een ideologische wereldvisie. Vorige week las ik in een ander artikel nog dat die investeerders met een loep gezocht moeten worden.

En Pieter de Kiewit zegt:
Investeren in start-ups gaat mijns inziens gepaard met een andere investeringsanalyse dan in volwassen ondernemingen. Daarbij is de ‘groene factor’ voor vele beleggers reden anders naar een onderneming te kijken. Dit is bijvoorbeeld heel zichtbaar bij Tesla. Persoonlijk vraag ik me af of een avontuurlijke investeerder in dit geval niet beter een equity investering kan doen.
Vanuit Fastned perspectief kan ik, met hun vertrouwen in hun business case, begrijpen dat ze liever obligaties uitgeven dan nieuwe aandelen..

douwedijkstra

 

Douwe Dijkstra

Owner of Albatros Beheer & Management

 

Working Capital Management – not just a finance issue

|14-12-2016 | François de Witte |

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When looking at the sales, conversion and procurement cycle, we should not only focus on the stated DSO, but also at the hidden DSO. In order to identify this, we must go much further to a complete analysis of the order to cash cycle, as illustrated by the following  6 examples:

 

 

  • Several companies do not manage their inventory efficiently
  • Quite a lot of companies still have a time lag between the moment that the goods and the services are delivered, and the moment that the invoice is issued
  • Several  companies still issue paper based invoices. The postal delay will also increase the collection time. For this reason, I recommend to my clients to move to e-invoicing
  • When I worked with a car dealer, I realised that between the moment that the cars were delivered by the importer, and the moment that they were sold, there was a huge time lag
  • A marketing company struggled with the process of offers, leading to purchase orders, because the various participating units did not provide their time sheet and cost estimation in time.
  • On the inventory side, purchase of spare parts were done, even without having a duly executed purchase order of the client, and clients were not reminded in time to take delivery of the goods, resulting in higher stocks

Hence, when starting an assignment on the working capital management optimisation, one should not only look at the processes within finance, but at the overall processes.in the company. By analysing the detailed processes on the floor, you can better understand the drivers of the cash conversion cycle, and take some actions, such as:

  • Ensuring that procurement only purchase spare parts when they have a duly executed purchase order, with then required the advance payment
  • Making staff aware of the need to ensure a quick invoicing process
  • Understanding the possible resistance to new concepts such as e-invoicing and automated incoming document scanning
  • Identifying the triggers, which will make that the staff cooperates to reduce the order to cash cycle
  • Having a better alignment between the finance staff and the sales department on e.g. the credit risk and the payment terms
  • Make procurement more sensitive to treasury aspects. I have seen several cash risk companies who left aside the possibility of supply chain financing of discounting schemes, because the KPIs of both procurement and treasury were not aligned;

But overall, if you wish to succeed in optimising the cash conversion cycle, you need to ensure that the changes are embedded in the organisation by:

  • Explaining to all the participants the importance of working capital management and their contribution to it
  • Providing to the various participants KPIs in this area, which are monitored on a regular basis. In my recent assignment, we have put joint KPIs for the Sales Administration in prompt invoicing and in DSO terms
  • Ensuring also that there is an internal control on the procedures
  • Ensure that you have the correct tooling (e.g. e-invoicing, credit management, credit collection, etc.)
  • Having a regular review of the processes

We can conclude that an efficient working capital management is a matter for the whole company. Beside hard skills, you also need soft skills and KPIs to ensure that the processes are really embedded in the organisation.

francois-de-witte

 

François de Witte

Senior Consultant at FDW Consult