Episode 3 of a series of educational videos on URDTT (Uniform Rules for Digital Trade Transactions) is now available. Please take a look and let me know what you think. Episodes 1 & 2 are, of course, still available on our YouTube channel.
Trade Advisory Network Limited and treasuryXL Trade Finance experts launched their third episode of a series of free, educational videos on URDTT. There will be 6 episodes in total covering all aspects of the development, interpretation, and application of URDTT in the context of a digital trade strategy. In the upcoming months, you can expect one educational video per month.
What can you expect in the third episode?
In this session, we look at the parties involved in a Digital Trade Transaction (DTT). We start with the principal parties – the seller and the buyer – and then move on to the financial services provider, and finally cover any other parties that might be involved.
Safety of employees and delivery of salary payments are the highest priorities of treasurers responsible for Russia and Ukraine who also shared their experiences approaches to sanctions compliance, local operations and FX hedging. This report is based on an emergency 90-minute peer call with participation from 15 major companies.
Today’s call was very somber. Two weeks ago (Report: Russia Treasury & Banking Update 21st Feb), members were looking at contingency plans, but the consensus was that most of what was happening was posturing, and that the worst would not happen. Today, there was no discussion of how long hostilities might last – most people agree that there is no easy or rapid solution in sight. Instead, the main priority of most participants is making sure their teams are safe, helping them leave Ukraine if they wish, and making sure salary payments get through in both countries. We all send our best wishes to the many people whose lives have been shattered by this conflict.
The actions and approaches were remarkably consistent across all the participants. Topics discussed and actions taken:
The main priority is the safety of the local teams. Nearly every participant has taken extra steps to make sure local staff have cash, including prepaying salaries by up to three months. This is being done in both Russia and Ukraine, as MNCs cannot be sure of being able to remit cash to Russia in the future.
Most participants have either exited, suspended, or slowed down their businesses in Russia. Those who are importing goods into Russia for sale locally are continuing business as long as inventories last, but they are not shipping new inventory into the country.
There were a few questions about the sanctions, but the general view is that these are clear. Even if a company wants to ship goods into Russia, it is proving very difficult to find logistics companies that are prepared to undertake the shipment.
Payments continue for the time being. In Ukraine, the banking system continues to function, and some participants have sent cash into the country to make sure salaries are paid. Paying cash out of Ukraine is no longer possible, but payments continue to be made out of Russia, even if they can be slowed down due to additional sanctions checks.
The main sanctions-related discussion was about the extent to which local payments within Russia can still be made using sanctioned banks. The general feeling was that this is allowed, though there was some confusion. Participants have received conflicting advice about whether there is an effective carve-out in the sanctions for salary payments.
Foreign banks are registered under local law in Russia, so they can, and do, continue to operate. As usual, some are providing better service than others.
One issue raised with sanctions is that they can cause issues for the local staff: it may be illegal under local law for them to apply the sanctions, or it can cause them personal issues. This is usually being monitored closely with HR and Legal.
Most companies are re-evaluating their hedging programs:
Hedging the rouble has become a lot more expensive, and there is unlikely to be much underlying business to hedge, so most programs will probably stop.
In many cases, it is proving difficult, or impossible, to roll existing hedges
For NDFs, the reference rate used for settlement is no longer being quoted *(see note below), so it will be necessary to negotiate with the banks about what alternative rate to use
No participant was concerned about forwards which require them to deliver roubles outside Russia. However, companies to whom this applies are advised to discuss this situation with their banks: if they find themselves unable to deliver the roubles on the due date, the situation can become messy and potentially expensive.
Some participants have bolstered local liquidity in Russia by taking out local bank loans, which continue to be available – though there is some nervousness about how long lines may be available. Many have sent in cash via intercompany loans to make sure salaries and taxes can be paid. Several participants have also bolstered the liquidity of their Ukrainian operations by sending in intercompany loans.
There was little discussion about how to continue making payments despite the sanctions. It was pointed out that, even if a bank is barred from SWIFT, payments can still be made using paper instructions – though delays may occur due to the need to implement new correspondent banking relationships and apply additional sanctioned party checks. In any case, the feeling is that sanctions will limit the amount of business giving rise to payments.
A couple of participants are being impacted by the removal of international credit cards: this impacts Russian staff currently outside the country on short-term assignments, and those receiving payment by credit card from inside Russia.
Bottom line: the main concern is the safety of local staff and making sure they have enough cash to survive. Business in Russia is basically on hold, but cash is still flowing where it is required, especially for salary payments. Participants are being very careful to adhere to the new sanctions.
Again, we all hope that the bloodshed will soon come to an end.
*Note: 10th March we have subsequently heard that the central bank is providing a daily fix against the USD at a rate that is lower than the market rate (105 – 115 compared to 130-140).
Jermal is an accomplished Finance practitioner with over 16 years of Treasury operations and Finance experience.
Jermal is an innovative visionary who utilizes a “Think Tank” methodology to generate ideas and action plans designed to streamline and automate manual processes to facilitate department efficiency.
How did his career in Treasury start and what is his best experience working in Treasury?
We asked him 8 questions, let’s go!
INTERVIEW
1. How did your treasury journey start?
My Treasury journey started when my agency recruiting career ended in 2003. I did not set out to be a Treasurer, I kind of found myself in the Treasury field and I am blessed to still be a part of the Treasury Community.
2. What do you like about working in Treasury?
I love the sense of urgency, the attention to detail, and the camaraderie/synergy needed to be a successful Treasury department. I often tell my staff that Treasurers are not born, they are made, and if you are detail-oriented, can work well under pressure, and are timely and accurate, I can give you the rest of the tools to be successful.
3. What is your Treasury Expertise and what expertise gives you a boost of energy?
My Treasury experience is Mortgage-related. When studying for the CTP it gave me a lot of insight into FX transactions, Short Term liquidity investments, and optimal Debt vs Equity financing philosophies for Firms, but my expertise is in managing all aspects of Treasury including Banking relationships and building well run cross-functional Treasury Teams.
4. What has been the best experience in your treasury career until today?
My best experience has been seeing a few of my former employees take the knowledge and guidance that I have given them and parlay that into Sr. Manager and Director of Treasury roles.
5. What has been your biggest challenge in treasury?
Data mining, and consistently getting timely information reconciled and into a useful form for Senior leaders to use for decision making.
6. What’s the most important lesson that you’ve learned as a treasurer?
You cannot perform all of the Treasury functions on your own and if you do not have a cross-trained Treasury team, there will be a high probability that important transactions will fall through the cracks tarnishing the reputation of your team and the department.
7. How have you seen the role of Corporate Treasury evolve over the years?
I am excited to see that Firms are really beginning to value what a good Treasury department means to the Firm. As the stewards of the Cash, making sure that there are enough funds to satisfy all of the financial obligations is Paramount to the success and reputation of the Firm.
8. What developments do you expect in corporate treasury in the near and further future?
There is a big push to bring on more Fintech resources to help with recording and reconciling all of the day-to-day cash movements. Treasury Management Systems are helping to streamline cash forecasting and reconciling by becoming a “Single Source of Truth” where information can be accessed by all of the Stakeholders making everyone involved more self-sufficient.
Get in touch with Jermal Click here for his Expert Profile
How is your Treasury knowledge? Today we investigate your Treasury Expertise and ask you an example question that you might face when taking the Treasurer Test…
Give up your time-driven rules for pricing with an FX rate and go for a data-driven approach instead!
In this article, we are going to highlight the challenges faced by treasurers as they seek to manage pricing risk. According to Toni Rami, Kantox’s co-founder and Chief Growth Officer: “Understanding pricing is perhaps the most crucial element in order to design a great FXRM program
Click on the image above for the corresponding episode of CurrencyCast
Pricing risk
Pricing risk is the risk that —between the moment an FX-driven price is set and the moment it is updated— shifts in FX markets can impact either a firm’s competitive position or its profit margins.
The natural way to reduce it is to increase the frequency of price updates. After all, the price itself is a potent hedging mechanism. But that is not an option for companies that wish to keep steady prices during a campaign/budget period or during a set of campaigns/budget periods linked together.
We will discuss this situation in further articles. Today we want to highlight the shortcomings of the most widely used criteria for pricing updates: time-driven criteria.
Shortcomings of time-driven criteria
A time-driven rule to manage pricing risk consists in setting a time frame between the moment an FX-driven price is set and the moment it is updated. It can be every 24 hours, every week, every month. Quite obviously, the longer the time to the update, the higher the risk.
At Kantox, we are convinced that this approach is arbitrary, that it doesn’t protect you against FX risk, and that it does not reflect the business or financial needs of the firm. Take the 24-hour rule. Why not 23 hours or 25 hours instead? A time-based approach does not eliminate risk: a sharp move in markets can well take place inside a very short time span before prices are updated.
Another way to see this is that it makes it more difficult for the firm to react to favourable moves in FX markets. Take the case of a firm that prices and sells in EUR and buys in USD, using the EUR-USD currency rate as a key pricing parameter. A rise in the EUR could allow it to outsmart the competition by pricing more competitively without hurting its budgeted profit margins.
Failure to take advantage of this type of opportunity is a serious shortcoming in terms of pricing strategies, at a time when —according to consultants McKinsey— pricing is becoming a key strategic element in today’s competitive landscape.
The alternative: data-driven criteria
At Kantox, we believe that such arbitrary time-driven rules should give way to a data-driven approach that consists of setting boundaries around an FX reference rate, such that prices are updated only if the market moves beyond the upper and lower bounds of those boundaries. The system then serves a new reference rate and dynamically adjusts the upper and lower bands around it.
If FX markets remain relatively stable, then the firm can keep steady prices, something that is attractive in many B2C setups. This approach also allows treasurers to take advantage of favourable moves in currency markets while protecting budgeted profit margins, independent of when these movements occur.
How far or close to the reference rate these boundaries are set reflects risk managers’ tolerance to FX risk. In addition, the pricing configuration can be adjusted according to the goals of management in terms of:
Setting the pricing markups per client segment and per currency pair that the business strategy requires.
Selecting the tenor of the FX rate used in pricing. Do you wish to price with the spot rate? Or with the three-month or six-month forward rate instead? If your company is based in a strong currency area such as North America or Europe, and it sells into Emerging Markets, pricing with the forward rate will protect it from adverse interest rate differentials. Firms that lack this possibility may be tempted to apply too drastic markups, thereby unnecessarily damaging their competitive position.
While most Treasury Management Systems lack what we call a ‘strong FX rate feeder’, Currency Management Automation solutions —working alongside your existing systems— allow finance teams, among many other things, to set up an efficient data-driven solution to manage all the aspects of pricing with FX rates, including pricing risk.
Worried about your FX risk health? Take our free assessment and get a personalised insights report in minutes.
https://treasuryxl.com/wp-content/uploads/2022/03/kantox-9e-200.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-03-09 07:00:362023-03-03 12:12:40The Do’s and Dont’s of Pricing with an FX Rate
When entering into a financial transaction you need to be aware of the settlement dates. If you have a contract that states that you must pay on the 1st day of every month what do you do when that date is a non-working day? Furthermore, to be able to calculate the interest owed on a loan, you also need to know what the denominator is – the number of days in a year for the particular product and contract. When a payment cannot take place on a particular date – because it is not a recognised business day, you need to know the convention that the bank uses to adjust the payment date. Here is an overview of the most commonly used business day conventions (which determine how non-business days are handled) and calculation bases.
Business day conventions | Modified Following
Preceding – the first preceding day that is a business day Following – the first following day that is a business day Modified Following – the first following day that is a business day, unless the days falls in the next calendar month, in which case the date will be the first preceding day that is a business day
Furthermore reference will be made to the applicable currency calendar for determining non-working days. For EUR this would mean TARGET, for GBP this would mean London, for euro USD this would mean London and New York.
Calculation basis
Actual/360 (Money Market) – the coupon payment is calculated using the exact number of days in the period divided by 360. The start date is included in the calculation, but not the last day.
Actual/365 (Fixed) – the coupon payment is calculated using the exact number of days in the period divided by 365. The start date is included in the calculation, but not the last day
Actual/Actual (ISDA) – the coupon payment is calculated using the exact number of days, with the portion of days belonging in a non-leap year divided by 365 and the portion of days belonging in a leap year divided by 366. The start date is included in the calculation, but not the last day.
Actual/Actual (ISMA) – the coupon payment is calculated using the exact number of days divided by the length of the year, where the length of the year is equal to the number of days in the coupon period multiplied by the number of coupon periods in the year.
30/360 (Bond basis) – the coupon is calculated over 30 days for every full calendar month and the actual number of days for the remaining fraction of a month, divided by 360.
30/360E (Eurobond basis) – the coupon is calculated on the basis of a year of 360 days with 12 30-day months, unless the end date is the last day of February, which is not lengthened to a 30-day month.
Coupon calculation conventions
Adjusted – Interest is calculated on the effective payment date adjusted for the business day
Unadjusted – Interest is calculated on the theoretical payment date, regardless of the effective payment date.
If you are interested to know what the effect of these changes can be on a coupon payment and calculation, please contact us for more detailed information.
https://treasuryxl.com/wp-content/uploads/2018/03/Calculate.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-03-07 09:00:492023-05-15 15:31:01Interest payments – How to calculate the days
https://treasuryxl.com/wp-content/uploads/2020/08/Refinitiv.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-03-07 07:00:262022-03-04 15:58:10Your new home for fixed income
03-03-2022 | treasuryXL | Treasury Delta | LinkedIn | Treasury Delta, our Irish fintech partner, recently formed an alliance with Blokken, a Dubai-based fintech aggregator. This strategic partnership will bring further innovation and digital technology deployment to the corporate treasury ecosystem within the Middle East. Credits: Blokken Source
Ensuring manual payments are secure is a common concern for treasury, internal controls teams, and accounts payable process owners. While for some companies, manual payments cases are few and far between, others perform regularly and in large amounts and thus are at high risk of mishandling funds. In this webinar we will present:
Some of the most common use cases for manual payments.
Fraud risks associated with manual payments.
End-to-end software solution to safeguard manual payment process.
What are manual payments?
Manual payments are often required for one-time vendors, where they are not set up in your ERP system, but a payment needs to be made. Whilst these tend to be infrequent in nature, the process still needs to be carefully managed to ensure internal controls are applied, and the risk of errors or even fraud is minimised.
The Aico solution provides a Manual Payments module to fully support this process, and in this Webinar, we will show you:
A configurable template to raise the request with defined workflows to be followed.
The ability to validate and approve the payment request, and add all relevant supporting evidence.
The ability to automatically create the appropriate PAIN file which can be sent to the bank for processing.
Automation to create and post the appropriate journal entries to your ERP system following successful payment.
Webinar presenters:
Sarah Bellerby, Solutions Consultant at Aico
As a qualified accountant with a background in Audit, Sarah started her career working in organisations with extremely manual and fragmented processes. For the past 10 years, Sarah has been driven by her passion for identifying and implementing intelligent solutions to streamline financial processes, mitigate risk and increase compliance. For the past 2 years, Sarah has been working specifically in the Record to Report arena, supporting customers in their Finance Transformation projects to implement intelligent financial close automation solutions.
Shivam Dosa, Head of Service Delivery at Aico
An ACCA qualified accountant with a passion for RPA and improving productivity in the workplace by utilising technology. Shiv has a broad background, spanning from working in Corporate Finance to Financial Control to Project Implementations, This experience has given him a solid foundation for Financial Close Automation within Aico.
About Aico
We help enterprises simplify financial close and record-to-report (R2R) accounting processes. The result is less manual work and faster period-end financial reporting with the assurance of compliance and data accuracy.
Our software platform includes solutions for the key R2R processes – Account Reconciliation, Closing Task Management, Journal Entries, Intercompany Invoicing and Manual Payments.
Unique real-time integration to multiple ERP systems brings increased automation levels and reduces IT system complexity to our customers.
With teams and a network of partners across EMEA, we deliver high-complexity projects for enterprises with a global footprint.
https://treasuryxl.com/wp-content/uploads/2022/02/Manual-Payments-Webinar-200-x-200-V2-1.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-03-03 07:00:332022-12-29 13:07:40Live Webinar on March 10: A to Z of Secure Corporate Treasury Payments
The partnership is designed to help customers visualize, analyze, and act on their cash positions with automated data integration between GTreasury and Infor
CHICAGO, Ill. – March 2, 2022 – GTreasury, a treasury and risk management platform provider, today announced its partnership with Infor, a global leader in industry-focused business cloud software solutions. The deal enables GTreasury and Infor customers to benefit from new automation and data integration between GTreasury’s digital treasury platform and Infor’s powerful cloud-based ERP platform. The integrated workflow will help eliminate the challenges of relying on various siloed systems to accomplish business-critical treasury and accounting tasks.
With this partnership, the GTreasury platform will utilize an application programming interface (API) to connect data from Infor’s cloud financials ERP solution, Financials & Supply Management. This data includes bank statements, payments (accounts receivable and accounts payable, along with bank confirmations), Positive Pay automated fraud detection, and general ledger (GL) journal entries that encompass applicable treasury management system sub-ledger entries such as cash, financial instruments, treasury payments and settlements, and hedge accounting.
The integrated data visibility and automated command across applicable balances and transactions give GTreasury and Infor customers the ability to analyze and act on cash positions quickly and confidently. Customers can also access all of the treasury, finance, accounting, and risk management products available through the GTreasury platform.
“Infor continues to build on its well-earned reputation as a modern cloud ERP platform that enables a global and diverse customer base to leverage modern technologies,” said Terry Beadle, Global Head of Corporate Development at GTreasury. “As corporate treasurers and the office of the CFO accelerate digital transformation initiatives throughout their departments, Infor and GTreasury deliver an especially compelling cloud-based solution built to add new connectivity and capabilities. We are proud to partner with Infor and look forward to more organizations discovering the efficiency and performance gains that GTreasury’s complete digital treasury ecosystem delivers.”
“We believe the automation and synergy this partnership provides will enable customers to significantly streamline their treasury and accounting operations,” said Joe Simpson, Vice President of Product Management at Infor. “Organizations will have data visibility and workflow tools to help make business-critical decisions based on their cash positions. We’re excited to provide the transformative capabilities offered by this synergistic collaboration with GTreasury, a leader in providing modern digital treasury solutions to organizations around the world, and to see how customers utilize the benefits of our powerful technologies in tandem.”
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
About Infor
Infor is a global leader in business cloud software specialized by industry. We develop complete solutions for our focus industries, including industrial manufacturing, distribution, healthcare, food & beverage, automotive, aerospace & defense, and high tech. Infor’s mission-critical enterprise applications and services are designed to deliver sustainable operational advantages with security and faster time to value. We are obsessed with delivering successful business outcomes for customers. More than 65,000 organizations in 175+ countries rely on Infor’s 17,000 employees to help achieve their business goals. As a Koch company, our financial strength, ownership structure, and long-term view empower us to foster enduring, mutually beneficial relationships with our customers. Visit www.infor.com.
https://treasuryxl.com/wp-content/uploads/2021/05/Gtreasury-logo.png200200treasuryXLhttps://treasuryxl.com/wp-content/uploads/2018/07/treasuryXL-logo-300x56.pngtreasuryXL2022-03-02 13:25:432022-03-02 14:05:07GTreasury Announces New Partnership with Infor to Streamline Digital Treasury Workflow and Data Integrations
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When entering into a financial transaction you need to be aware of the settlement dates. If you have a contract that states that you must pay on the 1st day of every month what do you do when that date is a non-working day? Furthermore, to be able to calculate the 
