Treasury Management & Corporate Finance | Become an official Register Treasurer

23-06-2022 | treasuryXL |  VU Amsterdam | LinkedIn |

Improve your professional practice by taking a broad, conceptual and professional view on Treasury

The postgraduate programme in Treasury Management & Corporate Finance at the Vrije Universiteit Amsterdam is running now for 25 years. In close contact with the treasury community, the VU keeps the curriculum up-to-date and relevant for professionals. Professional relevance is guaranteed by about 10 core lecturers and 20 guest lecturers from our partners KPMG, Orchard Finance Consultants, PWC, Zanders and by other finance professionals.

About the programme

The programme takes a broad view over Treasury Management and Corporate Finance from the of a non-financial corporate. Most graduates have an MSc and at least 3 years of experience in Treasury. Participants with a bachelor degree and sufficient treasury experience are successful in this programme as well

The programme offers participants an 18-month learning environment that stimulates professional development in 2 ways:

(1) Evolve as an academic professional. The goal is to facilitate the development as an all-round treasury professional. This is done by both building a sufficient knowledge base and training skills to apply general knowledge in specific cases. In addition, participants will be challenged to become experts in their own specific field of interest.

(2) Engage in career development and networking within the Treasury community. Increase your insights and expand your network in your treasury network. The programme may inspire participants to take next steps in their careers.

Along these two main lines of benefits, we are planning to give more information and explanation in two follow-up online sessions/recordings which will be posted on this platform in the coming weeks.

Why should I start with the programme?

The most important takeaway from this post is the fact that the TM&CF programme is NOT a long course acquiring just knowledge. It is much much more than that. Apart from just knowledge the programme puts a lot of attention on creative application of knowledge to your specific business situation. It trains you how to become a professional expert to some areas in the field of Treasury you have chosen. The programme helps you to connect with other members of the treasury community and to build your own professional network by connecting with fellow participants.

The programme provides you a substantial boost in your career, as the qualification is acknowledged in the labour market, and/or game-changer in your professional life as a Treasurer. It is a must-follow for all passionate about treasury. Successful completion of the programme results in the title of Register Treasurer, which is highly valued within the treasury community.

Also read: Why becoming a Register Treasurer is so much more than completing a course! (By Pieter de Kiewit)

Online Information Session | Register Today

On the 5th of July, an online information session on the programme will be given in which we also discuss the potential benefits of this program for Treasury professionals. You can sign up here.

Best regards,

Herbert Rijken
Programme director

Visit the website for more information.

For more info contact @[email protected]

LinkedIn page of the programme

GTreasury Adds Victoria Blake as Chief Product Officer; Ashley Pater Becomes General Manager at Hedge Trackers

21-06-2022 | treasuryXL | GTreasury | LinkedIn |

The product leaders bring veteran experience into their new roles, as GTreasury expands its treasury and risk management solutions and services for treasury teams and the office of the CFO

CHICAGO, Ill. – June 21, 2022 – GTreasury, a treasury and risk management platform provider, today announced that it has named Victoria Blake as GTreasury’s Chief Product Officer, and Ashley Pater as General Manager at Hedge Trackers. Recently acquired by GTreasury, Hedge Trackers is the global leader in accounting, consulting, and software services that protect clients against financial risk.

Victoria Blake joins GTreasury with more than 20 years of experience and success in product leadership roles across several SaaS and technology companies. Blake comes to GTreasury from Zapproved, where she served as the Vice President of Product. During her tenure at the e-discovery software provider, she led high-level strategy development, product definition, and market-facing thought leadership and vision. Before Zapproved, Blake was responsible for defining next-generation cloud services offerings as the Vice President of Product Management at Metal Toad, an AWS Consulting Partner. Blake has also held product management and leadership positions at WebMD Health Services, Jive Software, and Walker Tracker.

As GTreasury’s Chief Product Officer, Blake will lead the company’s global product and UX teams in developing and delivering innovative new solutions for GTreasury’s customers and partners. From modern automated treasury and transaction management to AI-powered SmartPredictions™ cash forecasting and visibility, GTreasury’s SaaS platform empowers treasury teams and the office of the CFO with the future-proof technology and capabilities required to drive confident financial decision-making. GTreasury has also continued to expand its broad ecosystem of connected partner technologies, via API integrations with ERPs, banks, and other external providers where instant data connectivity maximizes customer efficiencies.

“GTreasury has built its reputation as a leading treasury and risk management platform by harnessing innovative cloud, AI, machine learning, and emerging technologies that move our industry forward,” said Victoria Blake, CPO, GTreasury. “Just as importantly, GTreasury has always focused on product usability and ensuring that its powerful tools are always easily accessible and seamlessly connected for the teams that rely on them. I look forward to building on what GTreasury has created over the past three decades, and delivering even more next-generation tools to make CFOs and treasury teams more successful.”

Ashley Pater is now the General Manager of Hedge Trackers after more than a decade of leadership roles within GTreasury. Pater most recently served as GTreasury’s Chief Product Officer, where she was responsible for aligning product vision and strategy to the company’s business objectives. Pater previously held leadership positions in GTreasury’s marketing and account management functions, focusing on building global brand awareness, lead generation, event management, and cross-sell programs.

Pater will oversee daily business operations and lead growth strategy around Hedge Trackers’ FX, interest rate, and commodity price risk management services and consulting. Pater will also ensure alignment and integration opportunities within the broader GTreasury organization. Hedge Trackers offers best-in-class expertise and technical depth in meeting today’s unprecedented demand for effective hedging strategies, identifying exposure, managing risk, and meeting compliance and audit requirements. Under Pater’s leadership, Hedge Trackers will focus on bolstering its risk management expertise and bringing new solutions to market across the company’s risk product suite.

“Combining the strengths of GTreasury and Hedge Trackers makes us the clear market leader when it comes to both our treasury risk management products and our consulting acumen,” said Ashley Pater, General Manager, Hedge Trackers. “Today’s CFOs and financial leaders understand that risk management and hedging capabilities are critical to navigating volatile markets and achieving larger business goals. I’m excited to further our solutions and insight to equip customers with the solutions required for effectively and cost-efficiently managing their risk.”

“Both Victoria and Ashley possess the clarity of vision required to advance our GTreasury and Hedge Trackers products to meet our customers’ evolving needs today and well into the future—and both bring relevant, experienced, and proven leadership to accomplish those goals,” said Renaat Ver Eecke, CEO, GTreasury. “I’m glad to welcome Victoria and Ashley into their new roles and look forward to what’s to come from GTreasury and Hedge Trackers.”

About GTreasury

GTreasury is committed to connecting treasury and digital finance operations by providing a world-class SaaS treasury and risk management system and integrated ecosystem where cash, debt, investments and exposures are seamlessly managed within the office of the CFO. GTreasury delivers intelligent insights, while connecting financial value chains and extending workflows to third-party systems, exchanges, portals and services. Headquartered in Chicago, with locations serving EMEA (London) and APAC (Sydney and Manila), GTreasury’s global community includes more than 800 customers and 30+ industries reaching 160+ countries worldwide. Visit GTreasury.com

Perfecting the Cash Forecast

21-06-2022 | treasuryXL | Kyriba | LinkedIn |

 

By Bob Stark, Global Head of Market Strategy

Source

The number one treasury issue that causes CFOs the most potential concern is unreliable cash visibility and forecasts, according to a Nov. 2018 CFO Publishing survey, “3 Key Areas Where CFOs Say Treasurers Need to be More Strategic.”

Every organization talks about forecasting more effectively, but few allocate sufficient people, time, and technology to build an effective program. Understanding the importance of an accurate cash forecast that can be relied upon for key financial decisions is critical to making the right investments in forecasting. While there are many reasons to forecast, such as protecting against currency volatility, there are a few key areas that should be addressed to help CFOs and treasurers further make the connection between accurate cash forecasting and bottom-line financial performance.

So, what is cash forecasting? Cash forecasting, when performed accurately, enables greater certainty of projected cash balances. Longer term investing, reduced borrowing costs, more effective hedging programs and better mobility of global cash, cash positioning is concerned with today and often the next five business days. The purpose is to manage daily liquidity to ensure shortfalls are covered and surpluses are concentrated to earn some yield on excess cash. 

Cash budgeting is performed by finance teams such as FP&A and is more focused beyond one year – although with increased emphasis on free cash flow guidance, the reconciliation of indirect budget-based forecasts with direct cash flow forecasts is increasingly managed quarterly. 

Cash forecasting typically extends cash positioning with horizons anywhere from one week to one year. Forecasting leverages multiple data sources to increase confidence in the projected cash balances so that better cash decisions can be made. The value of forecasting is based upon the value of those better decisions.

So why forecast? Ineffective cash forecasting costs money and impacts shareholder value. A poorly executed program drives a number of negative consequences so it is critical to understand the link between effective cash forecasting and bottom line financial performance. Excuses such as “we’re cash rich” or “interest rates are too low” no longer satisfy investors who demand that cash be deployed or returned to them. Without adequate visibility of forecast cash and where cash needs to be deployed to meet growth targets, CEOs and CFOs risk looking foolish in front of shareholders and analysts. 

The volatility in global currencies shows no signs of abating, meaning that the pressure on CFOs to maintain the value of foreign cash inflows and outflows persists. Companies can experience earnings per share losses from unexpected and unhedged currency impacts or have difficulty in maintaining (let alone increasing) return on cash in a post-Basel III environment. 

Forecasting cash will allow segregation of operational and non-operational cash into time buckets as well as deliver the needed accuracy to allocate cash to longer duration investment strategies. This will help preserve previously realised investment returns or help to find an alternative for cash balances that are no longer wanted by your bank!

Certainty in projected cash balances drives the CFO’s ability to anticipate and prepare for corporate actions and strategic investments. For example, without confidence in cash forecasts, the CFO and treasurer are not relied upon to contribute to key M&A decisions such as providing guidance on the components of cash, debt and equity to calculate a total acquisition cost.

When cash is held globally, share buybacks or dividend hikes are a challenge. Often CFOs find it cheaper to borrow cash domestically than repatriate funds – yet this analysis requires certainty into projected cash balances. Confidence in the forecast is critical to optimize business value; CFOs need an effective cash forecast in order to make commitments on how to reinvest cash to meet organic growth targets. Lack of confidence will lead to unnecessary borrowing or equity financing.

Consolidation of data – Finding the right information and determining the most efficient (i.e. automated) way to integrate it into a consolidated forecast system is key. 

While automation is important, data quality is also paramount to success. When building the forecast, each line item may be sourced in different ways. The source of the information will determine the best way to build the forecast for each line item. For example, many treasury teams prefer to import accounts payable data directly from the ERP while for receivables information they may wish to extrapolate historical data and model using a linear regression. For treasury teams to be effective, it is important that all methods be fully automated and secure so that initial setup, maintenance, and daily execution to build the forecast are easy and can be maintained by the user (and not require re-programming).

Collaboration – Making decisions on the best data to build the forecast also requires determining who to collaborate with to smoothly access that key information. In many cases, treasury does not have direct authority over the people that own systems and/or business responsibilities that offer that data Yet, treasury relies upon this outside information to build a comprehensive forecast, so good internal communication skills are critical to receiving quality information in a timely way. Accounts Payable, FP&A, IT, Regional Controllers all forecast projections for decentralized organizations. Many treasury teams plan, with their CFOs, a top-down collaboration model that builds effective cash forecasting into the team’s objectives and compensation. This draws attention to the forecasting objectives and motivates each team to fulfill their roles.

Measurement – The most important – and often overlooked – step is the measurement of forecast accuracy. Implementing a process to measure forecast accuracy at a detailed level to identify the source of variances is critical to improving quality and ultimately reducing forecast variances. Equally important is implementing a feedback loop – to systems and to people – that ensure that forecast data is improved based on variances that were identified. The feedback loop is especially important when non-treasury resources are contributing to the forecast to ensure that the right behaviors and cash forecast numbers are positively reinforced while opportunities for improvement are well communicated. This is especially effective when feedback is aligned to KPIs and quarterly objectives of those outside of the treasury team.

Key to success – A forecast variance analysis should be detailed with multiple ‘snapshots’ taken. If only a summary picture is reviewed (e.g. how effective was forecasting over a 3-month period) then a lot of the variability is hidden within that timeframe. Measuring daily, weekly, or bi-weekly will help uncover the ups and downs between forecast and actuals that might otherwise go unnoticed. Fortunately, the business intelligence features of a TMS such as Kyriba offers the data visualization and analytics required to offer this level of detail. Cash forecasting is especially important if you are “cash rich” with a high percentage of non-operational cash deposits. Multinationals with significant foreign revenues must forecast better, so they can hedge effectively and deliver cash predictability to their stakeholders. The key to forecasting is flexibility so that you have many options to model the different streams of forecast data. The accuracy of your data will determine if importing, regressing, extrapolating, or other methods of calculations are needed to build your forecast effectively. 

Without measuring forecast accuracy, it is impossible to know if you are good at forecasting. Data visualization helps focus on important variances – whether by category, time bucket, or geography – and isolate what data needs to be improved for future forecasting. ROI of cash forecasting is very high.

In summary, the value of forecasting is driven by what your organization can do with additional cash. The value of cash can be measured by investing longer with higher returns on cash, repaying debt, earning yield from early supplier payments, or investing in new organizational projects. Perfecting the cash forecast means freeing up cash from working capital and directing towards these higher value uses.

Click here to view all blogs by Kyriba

Treasury & Banking in India

20-06-2022 | treasuryXL | ComplexCountries | LinkedIn |

This call took place against the background of the war in Ukraine – but it was a useful chance to catch up on the ever-improving situation in India.

India has always been complex, with many regulations and poor clarity. This is clear from the comments below, where participants often have different experiences on the same topic. But, overall, the economy is working well, people are making profits (this was not always the case), and regulations are becoming more user-friendly, even if they remain challenging.

Source

Business structure: most participants have one legal entity which faces customers, and a different one which acts as an international shared service centre, invoicing other companies in the group on a cost plus basis. This can lead to inefficiencies in cash management: everyone struggles with domestic cash pooling and intercompany loans, while the shared service centre has guaranteed profits and cash generation. One participant has all activities in the same legal entity, which makes life easier.

Intercompany loans within India create transfer pricing and tax challenges: there is a required or recommended interest rate of 8%, compared to deposit rates of 4% to 4.5%.

Cross border cash pooling and intercompany loans are generally very difficult: many approvals are required. Dividends are subjected to withholding tax of 15%, which is sufficient to deter some, but not all, participants from paying dividends. However, this is an improvement on the previous 22% dividend tax, which was often not creditable against tax in the receiving country.

Netting of intercompany invoices is not allowed. However, one participant is using an Indian entity to centralise all invoices within the country using a POBO/ROBO process, and limiting the transactions to a single, large, gross in/gross out settlement. They are also looking at a non resident INR account.

Participants mostly use deposits for investing their excess cash. One is using the TIDE deposit: the bank automatically sweeps fixed amounts of cash above a defined threshold into deposits. These receive a higher rate if they remain for more than two weeks, but can be released if needed, with a lower interest rate being paid.

Most participants use international banks, mainly Citi and BNPP. Most complained that Citi are reluctant to use automated FX platforms, and are behind on the electronic transmission of import documentation – but one participant had a more positive experience. JPMorgan again received positive comments for their approach.

The participants who use local banks generally had positive comments about them, and found they were a big help with pricing, especially on loans and letters of credit.

Tax remains complex and challenging.

 

Bottom line: the – excellent – report below reflects the significant complexity of doing business and managing treasury in India. But it is an important market, and one which is improving. So it is definitely worth the effort!

To access this report:

Access to the full report is available to Premium Subscribers.
Please contact us to find out about our subscription packages.

TIS acquires Cashforce, an AI-powered provider of cash management and forecasting solutions.

17-06-2022 | treasuryXL | Cashforce | TIS

 

Revolutionizing Global Liquidity Management for Treasury and Finance

 

Treasury Intelligence Solutions (TIS), a global leader in enterprise payment optimization, today announced their acquisition of Cashforce, an AI-powered provider of cash management and forecasting solutions.

This acquisition will see Cashforce’s leading cloud solution – currently deployed at many of the largest and most sophisticated corporate treasuries in the world – become integrated with TIS’ SaaS payments platform. This unified solution will provide enterprises with an unmatched suite of capabilities for cash management, global payments, and fraud mitigation along with superior connectivity, workflows, and reporting functions.

Over the past few years, TIS and Cashforce have collaborated closely to provide a complementary offering for treasury and finance teams. These efforts were met with immediate success in the market as demand for improved cash management and forecasting tools has risen sharply. Now, TIS’ acquisition of Cashforce presents the perfect opportunity to integrate both products together as part of a more complete offering.

For the thousands of enterprise treasury and finance practitioners who currently use TIS, this acquisition provides access to faster and more accurate cash reporting, forecasting, and working capital management. To date, cash positioning and forecasting are still being performed manually by many treasury groups, which represents a major pain point for CFOs and business leaders when attempting to make strategic financial decisions. However, the robust capabilities provided by Cashforce eliminate many of these inefficiencies and ultimately enable companies to gain quick and accurate insights into their financial position based on reliable payments and liquidity data.

According to Erik Masing, Group CEO of TIS, “Cashforce has been a premier partner of TIS for several years and has contributed significantly to the cash forecasting and management capabilities we offer clients. The acquisition is a natural extension of our business and will allow TIS to further integrate Cashforce’s solution with our platform in order to offer advanced forecasting and data management capabilities to all our clients. This means enterprises can significantly reduce complexity in their global payments and cash management tech stacks by leveraging standardization and transparency afforded by a single, elegant solution.”

 

 

For Cashforce, the acquisition means that existing clients can now supplement their robust forecasting capabilities with TIS’ industry-leading payments and bank connectivity features. As explained by Nicolas Christiaen, Founder and CEO of Cashforce, “Giving businesses complete visibility over their cash and liquidity data has always been the core objective of Cashforce. While we have spent years perfecting our capabilities in this regard, TIS has been strengthening their suite of payments, bank connectivity, and cash management tools. When combined, these two sets of capabilities form the ideal solution for global treasury and finance teams to achieve full control and visibility over their entire payments and liquidity architecture – including all entities, back-office systems, and banks.”

With the added capabilities of Cashforce’s solution, TIS now offers a single, scalable cloud platform for clients to address needs in the following areas:

  • End-to-end payment processing and bank statement management
  • Global bank connectivity and financial messaging
  • Real-time cash positioning and liquidity management
  • Multifaceted cash forecasting, cashflow analytics, and working capital management
  • Bank account management and bank documentation management
  • Payment compliance and sanctions screening control
  • Treasury security, regulatory compliance, and fraud mitigation tools

For more information on TIS’ acquisition of Cashforce and the advantages our combined solution will provide to enterprise treasury, finance, and executive teams, contact us at [email protected] or by using the information found on our website.

 

About TIS

TIS is reimagining the world of enterprise payments through a cloud-based platform uniquely designed to help global organizations optimize payments, manage cash visibility, and mitigate risk. Corporations, banks, and business vendors leverage TIS to transform how they connect global accounts, collaborate on payment processes, execute outbound payments, analyze cash flow and compliance data, and improve critical outbound payment functions. With $2 trillion in payments processed annually, the TIS corporate payments platform helps businesses improve operational efficiency, lower risk, manage liquidity, gain a strategic advantage – and ultimately achieve enterprise payment optimization.

Visit us for more information at https://www.tispayments.com.

 

 

 

 

The Relentless Rise of Real-Time Data


16-06-2022 | treasuryXL | Refinitiv | LinkedIn |

 

Demand for real-time data is growing fast as financial firms face regulatory, trading, operational and competitive challenges. Rob Lane, head of real-time feeds at Refinitiv, discusses the changing data needs of banks and buy-side firms and how the cloud is helping improve access to a key source of competitive advantage in pursuit of more informed and agile decision-making.

Read more

Build vs Buy: How Should Treasury Teams Upgrade Their Bank Connectivity & Payments Stack?

15-06-2022 | treasuryXL | TIS | LinkedIn |

This blog highlights the primary considerations that treasury and IT teams must make when determining whether to build custom in-house bank connectivity and payments solutions or contract the services and software of a specialized 3rd party vendor. After evaluating the main benefits and drawbacks of each option, we provide a list of helpful questions for practitioners to consider as they decide whether building or purchasing a solution best suits their needs.

Source

How Does the “Build vs Buy” Debate Typically Surface Within Organizations?

In today’s remote and digitally operated business environment, it’s no secret that organizations have grown deeply reliant on technology to manage and automate their core treasury and finance functions.

Realistically, a “modern” company operating in 2022 will be doing business through a myriad of banks, accounts, currencies, and entities. They will also likely have hundreds or thousands of vendors, partners, and customers within their network. As a result, digital payments and cashflows are moving in and out of the business constantly, and every movement must be monitored and controlled by treasury teams that often consist of just a few employees.

Because of treasury’s limited personnel bandwidth, any issues with adopting the right bank connectivity and payments stack to automate their core operations almost always lead to excess complexity and manual strain. It can also result in significant security and compliance gaps, along with general inefficiency across crucial processes like transaction processing, liquidity management, balance reporting, and cash forecasting.

But while most treasury and IT groups today can agree that developing a robust connectivity and payments stack is critically important, each internal stakeholder will likely have their own idea regarding what the “best-fit” version of this technology stack actually looks like.

Why is this?

As companies grow over time, the systems they use to manage payments and connect with their banks must evolve accordingly. Because managing a few bank accounts and transactions in a single country and currency is a fundamentally different task compared to managing dozens of banks, hundreds of accounts, and thousands of payments across numerous countries and currencies, companies cannot rely on the same solutions and structure they’ve always used to sustain them as they scale.

Instead, in order to maintain compatibility with new payment formats and channels like ISO 20022 and SWIFT GPI, connect with regional payment networks like NACHA and EBICS, or accommodate custom bank connectivity protocols (Host-2-Host / SFTP, APIs, etc.), growing enterprises will inevitably reach a point where their existing payments and banking architecture must undergo a significant overhaul.

Complexity grows as you scale. Scaling from just a few bank accounts, back office systems, and funds transfers being executed in a single country to managing dozens of international banks and systems, hundreds of accounts, and thousands of payments globally requires a drastically different tech stack for treasury.

However, as this evolution occurs and internal stakeholders recognize the need to upgrade their connectivity architecture, disagreements often arise over which vendor or “type” of solution is the best fit. Given that there are hundreds of available 3rd party solutions that could potentially address treasury’s requirements, as well as a variety of internally developed applications that could be created and deployed by IT teams, it is common for different stakeholders to have contrasting views over which option is the smartest choice.

This is where the “Build vs Buy” technology argument most frequently comes into play.

 

Understanding Both Sides of the Build vs Buy Argument

As organizations recognize the need to upgrade their payments and connectivity capabilities, there are two main approaches they could leverage to address the issue. The first is to use internal IT resources and expertise to build a customized solution for treasury, and the second is to purchase a specialized solution from a 3rd party provider.

But which option is the best choice?

Let’s quickly review the key benefits and drawbacks of each option.

The Pros and Cons of Building vs Buying a Treasury Solution

Building an Internal Connectivity Solution

Organizations that prefer to create their own custom connectivity solutions internally using IT resources and expertise will likely have a greater ability to customize the offering in a manner that best addresses all their needs. To date, several prominent ERPs offer modules or plugins that give  IT staff the ability to build custom formats and configure their own connectivity protocols. However, this option requires a significant amount of bandwidth and maintenance from treasury and IT teams, as well as a high degree of expertise and technical prowess to support the solution over time. The below pros and cons list highlights this reality in more detail.

PROS

  • IT and Treasury teams know firsthand what the main requirements and preferences are.
  • Support and maintenance for the solution can be handled internally.
  • The solution can be customized to fit the exact needs of the enterprise.
  • Complexity and redundancy regarding unnecessary features are kept to a minimum.

CONS

  • IT and treasury teams may not have the bandwidth to build their own internal solution.
  • Fixing bugs and patches requires internal support, which is not always readily available.
  • Not all internal teams have the expertise required to build complex connectivity solutions.
  • Supporting the need for new formats and connectivity protocols requires more custom work.
  • Scaling over time requires constant upkeep and maintenance from internal resources.

Adopting a 3rd Party Connectivity Solution

Compared to building an internal solution, adopting a 3rd party connectivity and payments solution usually requires less of treasury and IT’s time, and there is less effort required to develop, implement, and maintain the solution. However, there is also the chance that this solution will require the purchase of redundant or unnecessary features. At the same time, improper or incomplete implementation of a 3rd party solution can cause severe integration, security, and compliance issues over time. More about these pros and cons are highlighted below.

PROS

  • IT and Treasury teams have a minimized role in the solution’s implementation and upkeep.
  • Dedicated customer support staff can help resolve issues and requests.
  • Updates and patches are normally handled externally by the vendor.
  • Specialist functionality is pre-packaged to address best practices in connectivity and payments.
  • Liability on the company to maintain, host, and secure the solution is largely outsourced.

CONS

  • Specific customization of the product for treasury teams cannot always be assured.
  • Reliance on 3rd party vendors for support and upkeep may result in delayed responses and feedback.
  • Tech complexity can quickly escalate if companies start adopting numerous 3rd party solutions to manage various functions, especially if they do not integrate well with one another.
  • Using external solutions for data and payments can create additional security risks and compliance issues.

 

As showcased by the above bullets, a company’s decision to build or buy its payments and connectivity solutions should always depend on its unique circumstances. For instance, a company with sufficient IT personnel and internal expertise might have the bandwidth to create and maintain a solution on its own. However, if treasury and IT teams are already exasperated with their current list of responsibilities and don’t have the time or expertise necessary to create and maintain their own solution, it probably makes more sense to begin evaluating the services of a 3rd party provider.

For treasury teams who are presently evaluating their options and need help deciding on the best course of action, the following considerations will help provide more clarity during the decision-making process.

Elements to consider when evaluating build vs buy

 

A Checklist to Walk Through When Deciding to Build or Buy Your Next Connectivity Solution

1. Validate the Need for New Technology

Many organizations have their eye on new technology before identifying any legitimate business need. Sometimes this “cart before the horse” approach is due to rigid business processes, lack of technical knowledge, or pure product hype. Decision-makers are very often awed by product suite success stories, dynamite product demonstrations, and industry analysts’ evaluation of technology—even when they haven’t formally identified a need for the technology.

To avoid these pitfalls, treasury and IT teams need to first validate the need for upgraded connectivity and payment protocols, prior to even beginning to evaluate which solution makes the most sense.

Last, but not least, tech leaders need to provide an estimated return on investment (ROI) for any new solution, along with a description of how ROI will be measured. It is surprising how many programs are initiated without considering ROI or added business value upfront. Many of these projects consume a lot of budget and time before leaders realize that either the solution will not add value or there is not a legitimate business need.

 

2. Identify Core Connectivity & Payment Requirements

In large organizations, pinpointing core connectivity requirements is often easier said than done. Still, it is a critically important step to take before deciding to implement a new solution. A core business requirement is one that must be supported by the solution to continue functioning as intended. For multinational organizations, core connectivity requirements may involve compatibility with numerous format types (EDI, BAI, SWIFT MT, ISO 20022, etc.) as well as numerous bank channels (SWIFT, H2H, EBICS, etc.) and back-office integrations (APIs and plugins for ERPs or TMSs).

Although determining treasury’s exact connectivity requirements may be difficult, it is extremely important to identify these core functional requirements first—not technology or design requirements. This is the only way to ensure unnecessary or redundant functionality is not purchased erroneously, and also ensures that critical requirements are never accidentally overlooked and unaddressed through whatever solution is ultimately chosen.

 

3. Consider Your Technology Architecture Requirements

Going a step further than the above point, it’s safe to assume that organizations are already using technology to enable other business processes. To reduce the cost and liability of this technology, your organization has also likely adopted standards related to how internal solutions are implemented and maintained.

As such, it is extremely important to identify any architectural requirements or standards that a solution must adhere to before determining if a 3rd party solution or an internal solution is the best choice. Some factors that may restrict the solution choice are as follows:

  • Information security strategy, compliance policies, and privacy standards (SOC 1 & 2, GDPR, etc.)
  • The state of current / planned systems with which the solution will be interfacing
  • What the preferred hosting structure is for the new solution (on-premise, SaaS, etc.)
  • Type and complexity of integrations that must be supported by the solution
  • Operating systems in use by the organization and their partners/banks/customers/entities

 

4. Examine & Evaluate Existing Solutions FIRST

At this point, a business need has been pinpointed, ROI has been estimated, and both core business and architectural restrictions have been identified. Leaders should now take a good look at existing systems.

It is not uncommon that different departments or entities of a large, global organization are not aware of what systems exist in other areas of the company. As a result, businesses will often implement multiple versions or forms of the same technology, only to discover that another system within the organization could have supported treasury’s new requirements with little to no modification. Thus, before deciding on the “best-fit” solutions approach, you should determine if any existing system(s) within the organization can be easily scaled or extended to meet your business need.

 

5. Compare In-House Expertise & Bandwidth Relative to Current AND Future Capabilities Required

One major factor that can significantly reduce the ROI of a custom-built solution (and in many cases, ultimately causes the project to fail) is the lack of available personnel with proper skill sets. In reality, the process of designing and deploying custom connectivity solutions that are both scalable and extensible is a massive undertaking for both treasury and IT. Unless one of your business areas is product development or you have an abundance of available IT support, there is an extremely high probability that your operations and maintenance technology resources will not be able to build, sustain, and support an internal solution, especially as new needs and requirements arise over time.

It is never profitable to let personnel gain these skills and experience by developing business-essential systems. Yet, more often than not, decision-makers see the short-term cost differences between an internally-built vs 3rd party solution and decide to try and build their own in order to save money. However, unless you’re supremely confident in the skillsets and bandwidth of both your treasury and IT teams, this option is not recommended.

 

Why TIS is the Ideal Provider for Global Payments, Liquidity Management, & Bank Connectivity

Ultimately, any organization evaluating whether to build or buy its next solution will have to closely analyze its own operations in order to make the best decision.

In cases where organizations require support for a complex array of payments and bank connectivity protocols and are open to considering a 3rd party vendor, they should closely evaluate the capabilities provided by TIS.

The cloud-based, fully-supported platform provided by TIS offers a global, multi-channel, and multi-bank connectivity ecosystem that streamlines and automates the processing of a company’s payments across all their global entities and systems. By sitting above an enterprise’s technology stack and connecting with all their back-office, banking, and 3rd party solutions, TIS effectively breaks down department and geographic silos to allow 360-degree visibility and control. To date, the ~200 organizations that have integrated TIS with their global ERPs, TMSs, and banking landscape have achieved near-100% real-time transparency into their payments and liquidity. This has benefitted a broad variety of internal stakeholders and has also enabled them to access information through their platform of choice since the data that passes through TIS is always delivered back to the originating systems.

 

TIS Simplifies Global Payments & Liquidity

Because of the deep connections that TIS maintains with internal systems such as ERPs or TMSs, external banks, and 3rd party vendors, the process of managing payments is simplified for every internal stakeholder. C-suite executives, treasury, accounting, AP, legal, HR, and other key personnel can access whatever financial data they need, exactly when they need it. And by automating this flow of information for both inbound and outbound payments, TIS provides the control and flexibility that enterprises need to function at their highest level.

Finally, with the global payments data we have amassed and the decades of experience our team has in orchestrating enterprise payments, we are uniquely equipped to help enterprises accurately benchmark their payments performance and provide tailored advice on how to optimize, grow, and mature. Ultimately, this rich data and deep experience are what enable us to continually provide industry-leading payment solutions and support to our enterprise customers.

In the digital world of enterprise payments, TIS is here to help you reimagine and simplify.

For more information about how TIS can help you, visit our website or browse our latest resources!

4 ways to optimise currency management in times of crisis

14-06-2022 | treasuryXL | Kantox | LinkedIn |

Did you know that CurrencyCast season 2 of Kantox is now available? In the first episode of the season, we look at four must-have tools to help you optimise your currency management and protect your business from risk in times of crisis. To see all episodes of CurrencyCast, click this link.

Credits: Kantox
Source

This week’s CurrencyCast looked at the four Currency Management Automation tools you need to navigate 2022’s predictable unpredictability. Here are our key takeaways:

(1) Put cash and currency management on the same page

The tool? The first Currency Management Automation tool is automated swap execution.

Why? Because, in times of pandemic and war, “Cash is King “. A recent risk treasury survey by HSBC finds that as many as 82% of CFOs say that cash management has been the most crucial issue during the last three years—and that is unlikely to change any time soon. The point is that cash management and FX risk management need to go hand in hand, especially in the current context.

How? By automatically executing the swap transactions that are necessary to adjust hedging positions to the settlement of the underlying commercial transactions, as cash flow moments do not always coincide. Failing to automate these cash adjustments properly hinders the whole risk management process. Yet, in FX risk management, cash management related tasks need as much attention —and as much automation— as other tasks of the FX workflow, like pricing with an FX rate, collecting and processing exposure information, or executing hedges.

(2) Optimise the impact of shifting interest rates 

The tool? The second Currency Management Automation tool is a robust FX rate feeder that enables commercial teams to price with the appropriate exchange rate, whether it’s the spot or the six-month forward rate, with all the required pricing markups per client segment and currency pair.

Why? Because interest rates are shifting in many places as we speak. As interest rates change, so does the difference between exchange rates with different value dates, also known as forward points. On the one hand, if your company is based in a strong currency area like Europe or North America and you are selling into Emerging Markets, your commercial teams may need to price with the forward rate to avoid unnecessary losses on the carry. On the other hand, you can take advantage of ‘favourable’ forward points to price more competitively without hurting your budgeted profit margins.

How? Most Treasury Management Systems (TMS) are not equipped with what we call at Kantox a ‘strong FX rate feeder’ that would enable commercial teams to quote with the appropriate exchange rate, in this case, the forward rate. For that, you need a software solution that, working alongside your existing systems, provides your commercial teams with all the FX rates they need for pricing purposes.

(3) Prepare for disrupted supply chains 

The tool? The third Currency Management Automation tool is an FX hedging program that allows you to delay —as much as possible, and according to your own tolerance of risk— the execution of hedges.

Why? Right now, as we speak, global supply chains are in turmoil. Commodity prices are seeing wild swings, and the economic outlook remains uncertain. This may lead to lower visibility regarding your cash flow forecasts and your forecasted exposure to currency risk.

How? One of the most fascinating tools that we have developed at Kantox —about which we will devote a future episode of CurrencyCast— allows treasurers to create a buffer from a ‘worst-case scenario’ FX rate that you wish to protect, if your aim is to keep steady prices during an entire campaign/budget period, and you can reprice at the onset of a new period.

This buffer, created by means of conditional FX orders, provides the flexibility to leverage information from incoming firm sales/purchase orders that are hedged. Forecast accuracy is usually correlated with time. As the campaign progresses, that flexibility allows you to gain more visibility into what is typically considered the less visible part of your exposure.

Delaying hedge execution also will enable you to:

(1) Create savings on the carry if forward points are not in your favour

(2) Set aside less cash than would otherwise be the case in terms of margin and collateral requirements

(4) Protect your profit margins and cash flows

The tool? Last but not least, the fourth Currency Management Automation tool needed to tackle 2022’s predictable unpredictability is —quite obviously— a strong FX hedging program.

Why? Because you need to protect your budgeted operating profit margins and company cash flows from currency risk. You may also desire to reduce the variability of your performance as measured in your financial statements. By allowing your firm to confidently buy and sell in the currency of your suppliers and customers, you take advantage of the margin-enhancing benefits of ‘embracing currencies’.

There is an additional benefit that may prove particularly relevant these days. In the event of a sharp devaluation of your customer’s currency, if you only sell in a handful of currencies such as EUR or USD, your customer may be tempted to unilaterally wait for a better exchange rate to settle their bills. You don’t want to be in that position — and you do it by selling in local currencies in the first place.

How? With the help of a family of automated hedging programs and combinations of hedging programs designed to systematically protect your firm from currency risk. These can be personalised whatever the pricing patterns of your business — whether you face dynamic prices or you desire to keep steady prices during an entire campaign period, or you wish to keep prices as stable as possible during a set of campaign periods linked together.

Treasury in transition – explore the agenda for EuroFinance International Treasury Management

13-06-2022 | Eurofinance | treasuryXL | LinkedIn

 

Featuring keynote speakers, Guy Verhofstadt and Göran Carstedt…

The 31st annual EuroFinance International Treasury Management returns in-person this September 21st-23rd in Vienna. With treasury changing like never before, join more than 2000 attendees, including 150 world-class speakers for transformative insights and the year’s best networking.

  • Inspirational headline speakers– including member of European Parliament, Guy Verhofstadt and and one of the world’s top business minds, former head of IKEA, Göran Carstedt
  • Practical insights from case studies across 5 streams– explore the latest innovations driving change and how to apply them to your treasury
  • The new Future of Money Stage– a dynamic experience for disruptive ground-breaking ideas from crypto to the token economy
  • Meet with more than 100 banking and tech partnerson the exhibition floor and  join forces to innovate and shape the future

Learn from the experiences of more than 150 best-in-class treasurers including:
– Abraham Geldenhuys, VP and group treasurer, Kongsberg Automotive
– Yang Xu, SVP, corporate development and global treasurer, Kraft Heinz
– Alex Ashby, Head of treasury – Markets, Tesco
– Debbie Kaya, Senior director of treasury, Cisco Systems, Inc.
– Daniel Melski, VP finance and treasurer, Church & Dwight Co., Inc.
– Angel Cheung, Assistant treasurer, John Lewis Partnership

For more information and to register, visit: https://www.eurofinance.com/international

 

Read more

TreasuryXL contacts can claim a 10% discount with code: MKTG/TXL10 on top of the early-bird price which expires on July 29th – a combined saving of over €2000.  Register here today.

We hope to welcome you in Vienna.

The EuroFinance Team

About EuroFinance

EuroFinance, part of The Economist Group, is a leading global provider of treasury, cash management and risk events, research and training. With over 30 years of experience, our mission is to bring together the brightest minds and most influential voices in treasury. Through in-depth research with 1,000 corporate treasury professionals every year, we have a unique insight into the trends and developments within the profession and an unrivalled global viewpoint.

Contacts

Marianne Ford
Senior Marketing Manager
EuroFinance

Economist Impact
[email protected]

Navigating emerging markets with a corporate treasury hat

09-06-2022 | Vasu Reddy | treasuryXL | LinkedIn |

 

Unlike many developed markets, like the US, which has 50 states, a single currency, single banking platform, one government, one central bank and monetary policy with no cash and currency restrictions, a developed global banking footprint and infrastructure Sub-Sharan Africa has the inverse, 25 countries, 25 different currencies and banking platforms, 25 different Central banks including monetary policies, 21 of which has strict Exchange control rules requiring prior approvals and document submissions for repatriation.

Article written by Vasu Reddy

 

What makes Corporate Treasury difficult in Africa

Doing business in Africa is an extremely long marathon and not for the faint-hearted. When your day-to-day activities are always faced with different risks and complexities, unforeseen and uncertain changes, and challenges in regulation and commercial environments with moving targets, one needs to be focused on the bigger picture about survival and growing the business and investment in the long term growth.

Overseeing a region spanning 25 countries with the Finance hubs being South Africa, Nigeria, Angola, Ghana, and Kenya and the latter being a Centre of Excellence for the rest of Sub-Saharan Africa, my main responsibilities included providing strategic and operational Treasury leadership with a focus on developing cash, liquidity and banking strategies, Developing and maintaining Banking relationships, Funding/capital and Debt structuring, Bank negotiation, Bank facility/documentation finalization, foreign exchange and Exposure management, Credit and Market Risk, Trade and Transaction solutions, Commercial/Project financing and Exchange Control and bank regulatory/compliance. Reporting into Corporate Treasury offshore with a dotted line into Africa CFO based in Kenya.

Apart from resilience and grit, one must operate adopting the “Lean” principles to ensure that the Leader navigates with focus, inclusiveness, integrity, transparency, and collaboration leveraging on operational excellence, world-class fit for purpose innovative solutions, technologies, and relationships leading the cross-functional diverse teams across multiple geographies and cultures across the different business verticals and functional areas operating in complex and challenging markets within a matrix organization that is impactful and exceeds business objectives.

 

Vasu joined GE from Chevron Oil Inc, South Africa where he was the Senior Treasury Manager, covering South & Central Africa for 7 years, and before that was at Land and Development Bank of SA before spending 6 years at Woolworths Holdings Ltd in various Treasury and Accounting roles. He is a highly experienced professional with 25 years’ Treasury, banking and Finance experience having worked in Multinational companies in Retail, Banking, Oil & Gas sectors, and diversified industries and capital.

Vasu’s academic background includes a Bachelor of Commerce (Accounting) degree, an Honours degree in Financial Management from the University of Cape Town, Postgraduate Diploma in Accounting from the University of KwaZulu Natal, South Africa. Vasu has completed the Leadership Executive Program (LEP) at the Graduate School of Business, Cape Town. Vasu has attended Advanced leadership courses at the GE Institute of Management, Crontonville, New York. Vasu is a member of the Association of Corporate Treasurers, South Africa, and a Certified Treasury professional with the Association of Financial Professionals, USA. He has been on various Treasury Community webinars and panel discussions/presentations at the Euro Finance, London.

The move into Treasury from Accounting seemed exciting with each day being different since it is more forward-looking and has external bank collaborations rather than the mere recording of past transactions. Although Treasury could be characterized as a more specialized function to some finance professionals, It entailed being pro-active, forward-looking,  engaging with banks and financial institutions, keeping abreast of market dynamics, and providing advice and information on critical business decision making on a real-time basis which would have major impacts on the future business profitability.

 

Surviving the Challenges

Africa is a tough market to operate in and will always be considered an “emerging market” due to the infrastructure challenges and political climate, however, it would seem lucrative due to its ever-growing population and need for products and services. Many large Corporates including South African listed Multinationals looked to Africa for Growth expansion wanting to grow their businesses and increase shareholder value, to only experience huge challenges ranging from Supply-chain disruptions and delays, slow business responses, High costs of doing business, poor credit rating customers and banks, strict and changing regulation, lack of Foreign currency for repatriation resulting in huge trapped cash, delays with Central bank approvals, poor technology, and manual intervention, lack of global banking presence, lack of customer deal financing, political risks, highly cyclical commodity-driven markets that lack diversification for currency flow and with lots of red tape with no focus on developing policies to encourage and welcome foreign investment.

“A Treasurer needs to always be proactive, thinking consistently “out of the box”, and consistently exploring innovative ways to pivot”


As a Treasurer/CFO, one should understand that these challenges will not disappear any time soon. One needs to always be proactive, thinking consistently “out of the box”, and consistently exploring innovative ways to pivot. When global corporations execute deals in Africa, end-to-end due diligence needs to be performed not just on pure profitability and return on investment but considering the holistic cash repatriation risks and costs including detailed country analysis involved per deal. This is due to the common shortage of foreign currency liquidity that is required to repatriate cash for imports, inter-co loans settlements, dividends, etc. In most markets, the flow of currency and exchange rate is controlled by the Central Bank. In 2015, with the oil price crash, and in 2020 with the Covid 19 pandemic, the trapped cash balances increased due to the US Dollar currency shortage because of poor foreign flows. Corporates needed to work proactively with their multiple banking partners to source foreign currency liquidity, where in some cases we had to ringfence our export proceeds with the banking partner and place orders strategically in the foreign currency queue to secure foreign currency which was used to settle the outgoing foreign currency payments in countries like Nigeria and Angola. Other alternatives involved banking multiple partners who bank the large exporters that have access to foreign currency liquidity in countries such as Mozambique and Ethiopia, however considering that proper credit risk analysis was performed on these banks. Other alternatives in 2015 involved working with Export Finance Agencies to provide a guarantee to the local Government through refinancing of exports from the UK to Angola where this foreign currency liquidity via an inward loan to the Government would be used for repatriation and the Debt with the local government will be sold Offshore with the proceeds being received offshore. Due to its complexity, the local government was not open to execution

Partnership and Playing by Rules

Since reputation risk and compliance is more apparent now than ever with Multinationals, it is paramount to ensure that the rules are strictly adhered to by the regulatory authorities since the operations in Africa were always seen as a long-term investment to grow the current businesses, considering that Africa presented incredulous growth opportunities for the foreseeable future. Regular meetings with Central Banks were held by Treasury and with Governments by Senior leadership to forge a collaborative partnership with a focus on investments in localization through manufacturing and assembling sites, job creation, and help in building infrastructure.

 

Another critical Treasury partnership is the global, regional, and local banks. Large Multinationals have a preferred bank partner list based on their global relationships, balance sheet size, market presence, and risk and credit rating. The challenge is that not all the Global banks have a presence in all African countries, In Ethiopia, the local market is closed to foreign banks. The preferred option was the order to an initial bank with a Global bank, then a regional bank, and lastly a local bank or if required by a localization law. An example in mind is Ghana, where you were required to have an account with an indigenous bank if you wanted to bid for local business.  The advantages of partnering with the Global banks offered multiple layers of contact points for escalation and efficiency, prompt service responses, interest optimization options and economies of scale benefits, universal language on trade finance, guarantees and facilities including bank mandates, negotiable price to book fees, straight to bank processing, access to US Dollar flows, etc.

 

Technology and Digitization    

Digitization and automation are pivotal for the future of Treasury and especially in Africa as this will ensure simplification, efficiency and effectiveness, cost reduction, faster response, and a more controlled and structured banking environment with fewer errors and risk of fraud. This should be coupled with AI to centralize processes as much as possible. Africa’s banking processes and platforms have room for development on technology advancements and the Covid’19 pandemic has forced most countries to rethink investing in technology and upscaling.

 

Ears close to the ground

Due to the diverse and extremely challenging banking operations, one requires strong technical competence, effective communication skills, consistently researching innovative ideas, and close relationships. One will find it challenging to manage the African operations with an “Arm-Chair” Treasurer sitting offshore. You would need to be close to the business operations, and functional teams like tax, legal, and banking teams on the ground. Whether one is researching a structured inter-co loan via a cross-currency swap, local hedge solution mitigating Zimbabwe hyperinflation, securing foreign currency in Mozambique, buying/selling Angolan Government bonds to maximize yield, obtaining Central bank approval on cash pooling arrangements in South Africa, or dividends repatriation or understanding the different Dollar rates offered in the Nigerian controlled market, one needs to have consistent and regular discussions with the banking partners and stay abreast of changes in each local market. One needs to also keep the local and global business leaders in the loop of changes and progress to manage expectations as some folks believe that if it can be done in New York, surely it can be executed in Africa as well.

 

Vasu Reddy

Corporate Treasury, Finance Executive