07-06-2023 | treasuryXL and Kyriba would like to invite you to join us for an exciting live session on the topic of: “𝐓𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐄𝐯𝐞𝐧𝐭𝐬 𝐨𝐧 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭.”
31-05-2023 | The first 180 days in a job as a treasurer are full of excitement. They are filled with getting to know the company and its current working methods, positioning your role, and promoting the desired changes.
28-11-2022 | treasuryXL | Nomentia | LinkedIn |
Recently, we had a panel discussion about a few major treasury trends for 2023 together with Nomentia and experts Pieter de Kiewit, Patrick Kunz, Niki van Zanten, and Huub Wevers. If you didn’t get the chance to attend the webinar, you can find the recording here.
During this interactive live discussion we covered some of the following topics:
10-11-2022 | treasuryXL | Nomentia | LinkedIn |
A friendly reminder that next week at 11 AM CET (November 17th), we’ll be collaborating with Nomentia.
Participate in our live panel discussion regarding 2023’s predicted treasury trends. We invited industry experts to join us and have an open debate about the issues that treasurers would need to think about in 2023. Additionally, there is the option to ask questions.
Date & Time: November 17, 2022, at 11 AM CET | Duration 45 minutes
November 17 | 11 am CET | 45 minutes
Pieter de Kiewit, Owner of Treasurer Search (Moderator)
Patrick Kunz, Independent Treasury Expert (Panel member)
Niki van Zanten, Independent Treasury Expert (Panel member)
Huub Wevers, Head of Sales at Nomentia (Panel member)
25-10-2022 | treasuryXL | Nomentia | LinkedIn |
Join us on our live panel discussion about treasury trends for 2023. Together with Nomentia we invited industry experts who will have an open discussion on the things you need to consider as a treasurer in the year 2023. There’s the possibility to ask questions as well.
November 17 | 11 am CET | 45 minutes
Pieter de Kiewit, Owner of Treasurer Search (Moderator)
Patrick Kunz, Independent Treasury Expert (Panel member)
Niki van Zanten, Independent Treasury Expert (Panel member)
Huub Wevers, Head of Sales at Nomentia (Panel member)
We analyze the results of the most recent treasuryXL poll on today’s corporate treasury concerns in this third edition of the newsletter. We’ll show you how treasurers voted to express their opinions on a current issue, and a few treasury experts will explain their positions.
We talked about whether treasurers should be concerned about the present trend in the Dollar-Euro exchange rate in last month’s poll. 38 people participated in the poll, and the results are shown in the image below. Thank you to everyone who voted.
The results indicate quite clearly that the Corporate Treasurer is, of course, very much aware of the current trend. The exchange rate remains volatile, as the euro has even currently fallen to a new two-decade low. A number of treasuryXL experts have expressed their views regarding the current trend and how it may or may not affect treasury activities.
Patrick voted for the option to keep a close eye on the current trend
“The main reason for keeping an eye on it is so a treasurer can estimate what the impact of a falling Euro or stronger USD will be on the company’s financials.”
Keeping an eye on the Euro-Dollar rate is not necessarily to know what the current rate is. The main reason for keeping an eye on it is so a treasurer can estimate what the impact of a falling Euro or stronger USD will be on the company’s financials. Both in the field of FX hedging (not all companies hedge 100% of their exposure but have a rolling hedging policy) and higher hedge costs (forward points have increased due to larger interest rate differences with the US).
But also the sensitivity of the exchange rate on profits and sales is important. For example, if you sell in USD, you suddenly earn more in EUR and you probably sell more. On the other hand, if you buy in USD, it becomes more expensive while your EUR price is fixed. Is it perhaps cheaper to buy elsewhere? What is the impact on the cost price and total demand and turnover of the product? Do the prices need to be adjusted? All questions that the treasurer does not have to answer but that he can signal to his colleagues (CFO, Procurement, Sales etc.).
Harry voted for the option to keep a close eye on the current trend
“Currency risk aside, treasurers have other headaches to contend with when currencies exhibit high volatility and/or experience a large directional shift (trend) in value.”
The euro’s descent from above $1.20 in mid-2021 to below parity with the dollar has been well covered in the financial media, and the impact on European importers is obvious: higher import costs, squeezed margins, and pressure on business performance. Currency risk aside, treasurers have other headaches to contend with when currencies exhibit high volatility and/or experience a large directional shift (trend) in value. Let me name a small sample of potential areas for attention
Hedge Maintenance and Funding Requirements
Managing the currency hedging position, in line with policy, requires maintenance – trading in derivatives such as forward contracts and options, which presents its own challenges when exchange rates change over time. Additionally, FX swaps are used to balance cash positions and manage liquidity: it’s typical for swaps to be deployed to rollover the settlement on a hedging trade, or to bring forward a delivery. A lower EUR/USD spot rate compared to the hedged rate could incur a funding requirement if the position is out of the money when rolling-over or extending (i.e., for a euro-buyer / dollar-seller).
Treasurers as internal Consultants
Treasurers will need to work with the risk team and other stakeholders to manage internal expectations and provide guidance into the business. Preparing commentary, analysis, and forecasts using proprietary research and that of appropriate external sources, such as banking and consulting partners, is a critical area in which treasurers can demonstrate additional value. Business leaders will be aware of the EUR/USD parity story from headlines, but taking advice and information from trusted internal resources could be invaluable.
Collateral and Margin Calls
For European importers, selling the euro to buy the dollar, a move below parity will likely mean their hedging position is in the money, but of course, future hedging trades may well be at less favourable rates. For those firms selling the dollar to buy the euro however, they may find that they are losing headroom on their trading lines and could face margin calls as the sustained fall in the euro erodes their position value. Regular stress-testing of position valuations should give ample forewarning of any calls for additional collateral, and frequent communication with liquidity providers should provide the opportunity to discuss trading terms and spreads, which are liable to be adjusted in times of high volatility.
Currency Options
EUR/USD volatility has risen to multiyear highs, meaning that option premiums are higher. Treasurers will need to manage the impact of higher hedging costs and ensure an appropriate balance of cost-efficiency and hedge effectiveness is achieved. Another way EUR/USD breaking below parity could be a concern for treasurers is regarding option payoffs, and especially for path-dependent trades such as knock in or knock out options. Exotic options and multi-leg “structured” products can return a vastly different outcome in the event of a large shift in the underlying spot rate. Care should be paid to model various scenarios for the impact on the hedging and liquidity position, and to offer guidance on the appropriateness of such transactions.
Paul voted for the option that there is no need to be concerned
“The recent movements in the EUR/USD may seem extreme at first glance, but historically they have in no way gone outside of trends or ranges we have seen before.”
I think treasurers should not be over-worried about the current movement in EUR/USD exchange rate. Let me explain to you why.
Every company should have a sound FX policy. This policy should take into account the possibility of increased market volatility. Some companies believe that their balance sheet is strong enough to deal with fluctuations in exchange rates and therefore will not hedge much, if at all. Others will want to manage their risk by using futures contracts or options. These instruments allow CFOs and Treasurers to hedge at a comfortable level. The only ones who may have sleepless nights are those who have not implemented a coherent hedging policy. But under normal circumstances, any Treasurer will ensure that such a policy is in place and implemented.
Moreover, European importers are concerned about the strength of the USD and the weakness of the EUR. But the current volatility in the market is by no means extreme. Over the past seven years, we have seen prices move between 1.25 and 1.00. In the seven-year period between 2008 and 2015, we saw rates between almost 1.60 and 1.10 . In that period, the euro has fallen twice as much as it has in the past seven years. Or look at the volatility over a shorter period, during the financial crisis between 2008 and 2010, when we saw rates move dramatically in both directions over much shorter periods. The recent movements in the EUR/USD may seem extreme at first glance, but historically they have in no way gone outside of trends or ranges we have seen before.
01-03-2022 | Patrick Kunz | treasuryXL | LinkedIn |
We are happy to interview treasuryXL expert, Patrick Kunz.
With Patrick’s impressive career within the World of Treasury, you can really say that he lives and breathes Treasury.
Patrick is performance driven. He is an open minded, outgoing, rational person who is comfortable communicating and convincing on all levels of management.
Patrick is owner of Pecunia Treasury & Finance with several independent treasury and finance consultants and founder of treasuryabonnement.nl. Furthermore he owns an online FX trading and payment platform with a connection to a big FX broker.
Patrick has worked with both international corporates from all fields of business as well as national non-profit organisations.
We recommend to visit Patrick’s LinkedIn profile to see his stunning career and activities. But first….
During my study at Maastricht University I knew I wanted to work in the “world of finance” and more specifically trading or investment banking. In my 3rd year of university I got the opportunity to work as an intern for a Swiss Investment bank in Zurich which was a great first experience into wealth management and client exposure with high net worth clients. It also showed me that the client comes first, even though the client was not always right. This made me wonder if it was more fun on “the other side” at the buy side. It slightly frustrated me that a bank would not always provide the best solution.
After graduation I left on a trip around the world backpacking for 1,5 years. Enjoying ultimate freedom and fun before starting a career. When I came back to the Netherlands I applied for treasury roles at multinationals and landed my first job as cash & treasury manager at the German multinational Metro Group (the wholesaler, not the Dutch free newspaper). This was the start of my treasury career which until now I would never leave.
It’s the core of a company. In the end its all about the money. Independent on what products you are selling and how you are selling them. Cash in vs Cash out. Without cash a company has a problem. Cash is king and profit is an opinion so in my opinion managing cash is very important and therefore fun. The more complex the more fun. Managing a multinational company with hundreds of bank accounts in different currencies around the global; finding the optimal treasury setup and solutions is great fun. Lastly, treasury teams are smaller compared to accounting or controlling, which make the lines shorter and the team tighter.
I started in cash management and FX trading which are great basic skills for every treasurer. My first company also had very short treasury lines and I quickly was involved in global treasury solutions, financing solutions and group companies corporate finance. When I moved on to my second role as group treasurer of a regional housing association, I also got exposure to interest rate derivatives and guarantee management. Afterwards when I started my own consultancy and interim management company 8 years ago I got to do the full spectrum of treasury. So without arrogance I can say in treasury I have done it all. The last years I am doing a lot of TMS/Payment hub implementations, which I enjoy doing. After finishing an implementation it is nice to look back and compare the old way of treasury processes and the new and see how it improved after a couple of months. Very rewarding.
Building a treasury from scratch is most rewarding and fun to do. 2 years ago I got the opportunity to build the treasury role at the Dutch born AEX company Takeaway.com. There were treasury processes in place but scattered in different departments. Also some of them were sub-optimal. My role was to bring them together and optimize them. Besides increasing the reporting and importance of treasury to management this also brought significant cash savings on bank and FX costs. A couple of months into the rule, the merger/acquisition of Just Eat was approved and the integration with the existing treasury team in London could start, making the team suddenly 400% bigger. After 5 months my work was far from finished but it was time to hand it over to the existing/new team. Looking back what was done in this short time this was one of my greatest experiences in treasury. And a great company to work for.
Nowadays: Opening a company bank account in a short timeframe without difficult KYC questions, especially for companies with difficult or complex structures. I was with a client last year, a scale-up, that moved fast in several countries in Europe. Treasury processes needed to be implemented from scratch in each country while operations was much further ahead but legal and treasury still needed to start. Working with this fixed go live we had to make sure we could receive payments from day 1 onward. In one country we were actually live on day -1 with no room for error. Stressful but successful.
As a consultant I sometimes face tight deadlines or difficult projects that need to be delivered but are dependent on other stakeholders. That is not always easy but this gives me energy to make it happen.
You can go fast on your own but you go far together. Sounds cliché but it is especially true in treasury as the treasury department is dependent on data from other departments to make it function. You cannot run risk analysis if you have no exposure data. Same for FX. Doing cash flow forecasting? You need data from procurement, AR and FP&A.
Also visibility and transparency is key. Even the other financial departments accounting and controlling sometimes see treasury as this special people that they have no idea what they are exactly doing. Make sure they understand (and vice versa) what each department does and how you can work together and what data can be shared. Also to avoid duplicating work. So leave the ivory tower and go out there and collaborate.
The speed and amount of information has increased and is increasing. Also the complexity of treasury departments. Luckily also the solutions available to manage them has improved. Next to swift solutions we now see advanced TMS solutions or payment hubs that can be implemented within a couple of months giving you full visibility. A treasurer nowadays needs some tech skills to be able to understand the information to implement the TMS or hub. Because the tool will be only be as good as it is being used; garbage in is garbage out. During the many implementations that I have done I have learned a lot about technical connections (sFTP, h2h, API), information exchange formats, XML file types, swift messages etc. This knowledge now helps me a lot in implementations and supporting the IT department determining the information needs and sources.
Instant payments are a big thing in treasury which is cool but will not necessarily bring much added value to the treasury. Instant information processing is more important especially in e-commerce. Clients expects instant service. If they pay online they expect to get the service or goods asap. Treasury can help with this by connecting their PSP’s or bank information to their systems. Not necessarily linking the payment to an invoice which is an accounting reconciliation process. More importantly linking the positive acknowledgment (the customers has paid) to the sales. Customers start demanding this more and more and treasury has to adapt to this instant world. This means more automation.
Clients also demand more payment options, some of them are not available at banks. This means that treasurers will have to move away from the traditional model of banking partners for cash management but to a more hybrid model of cash at bank, cash in transit at PSP’s, virtual credit cards, wallets etc. Maybe even crypto or CBDC deposits/balances. This will all add to the complexity of the cash and risk management.
Isn’t treasury the best department to be in? 😊 I already get excited saying this.
Get in touch with Patrick
Click here for his Expert Profile
Join Patrick and experts from Kyriba and Deloitte at the Panel Discussion: How Can Treasurers Overcome Today’s Security Challenges?
When? March 9
Start: 4.00 pm CET
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL
| 06-09-2019 | by DACT |
Masterclass Succesvol Pitchen en Presenteren
Kunnen we nog afkicken van 8 jaar monetaire morfine van de ECB?
Trends in Export financiering
De DACT nodigt je uit voor de volgende PIT-bijeenkomst op dinsdag 10 september 2019 op een bijzondere locatie: De Beurs van Berlage (Beursplein 5) , waar de DACT gast is bij AFS Group. Je bent vanaf 17:30 uur welkom, de bijeenkomst start om 18:00 uur en zal rond 21:00 worden afgesloten. Broodjes en drankjes worden door AFS aangeboden op de beursvloer.
PIT is een DACT Netwerkgroep gericht op de Treasury professional die niet in vast dienstverband zijn beroep uitoefent, maar op basis van tijdelijke (arbeids)overeenkomsten. PIT wordt bestuurd door Ingmar Bergmann, Peter Heymans, Patrick Kunz, Dennis Schmidt en Bart Steens. Tijdens de periodieke PIT-bijeenkomsten wordt er niet alleen vakinhoudelijk met elkaar van gedachten gewisseld, maar ook worden er thema’s behandeld die specifiek zien op de rol als interim professional. Zoals altijd wordt een actieve participatie van alle deelnemers gevraagd. Met name de Masterclass Succesvol Pitchen en Presenteren kan niet zonder die actieve deelname!
Voor de bijeenkomst op 10 september a.s. hebben wij het onderstaande programma samengesteld.
Alle geïnteresseerde DACT-leden zijn uitgenodigd voor deze nieuwe PIT-bijeenkomst, dus ook de niet interim Treasurers, zolang zij bereid zijn om actief en open deel te nemen aan de discussie; uiteraard is er alle respect voor de vertrouwelijkheid die een ieder op sommige terreinen moet betrachten.
| 09-07-2019 | by Patrick Kunz |
This title makes it sounds like it’s a fight. To be honest: it is! The market for international payments is huge and its lucrative. In a McKinsey report the 2018 market size for payment revenues was close to 2 Billion. Not strange everybody wants a slice of that.
Traditionally the market for international payments was dominated by banks. Recent years and technological advancements has shown that banks are slow to adapt to new technology and market requirements. In some cases it still takes days to transfer money from Europe to Asia, while an email, FB message or picture can be send in seconds. Fintech has tried to fill the gap with innovative tech solutions that solve these problems. Often these companies are lean and mean and adapt to market changes much quicker than the big stable banks. They provide cloud solutions, link to every bank possible and make you more bank independent. Lately we have seen consolidation in the fintech market where players are merging, growing or being taken over by banks. Some banks have started their own fintech. But often fintech only solved a part of the problem and is build on the existing (bank) infrastructure. Banks are also working on innovation: instant payments, swift GPI and PSD2 api’s are helping the customer paying faster and easier. These initiatives are great but have taken years to be implemented.
Then there is a third group of players: big tech. These are the google, facebook and alixpress of our world. These are traditionally IT companies who have a big client base but these companies where not involved in payments (yet). Their edge is size, market access and fast adoption. What happens if they enter the market for payments? Are they likely to win? Look at Alipay, massively successful in China but growing immensely outside Asia to. Why ? because it is easy to use, innovative, low cost and probably most importantly connected with an existing service of the bigtech (alixpress – shopping). The company provides the full customer journey: shopping for product and paying the goods in the most easy way without moving away from the website. Not only via desktop but also via mobile. On the go they make it possible to pay by scanning a QR code, in a grocery store or in a cab. Who needs cash OR a debit card, you only need your mobile phone and an app! Why was this successful? Because the existing customer base was already there they just vertically integrated into the customer journey; easier for the customer and therefore extra revenue for Ali. But also more power for Ali.
Looking at Facebook and their Stablecoin Libra. Digital currency, unregulated, not based on the traditional banking/payment infrastructure. There are big and significant differences with Bitcoin but the idea is the same: sending and receiving money worldwide in an instant as digital currency. There should be no speculation on the Libra-Rate as the rate of exchange is based on a basket of currencies (EUR, USD, JPY etc). Similar to the old tech Special Drawing Rights from the IMF. So what makes libra different to bitcoin and the other coins? I am not going into the technical differences as that is beyond my scope and would bore you. The main difference is the easy of adoption. New to bitcoin and want to use it: you have to open a wallet, trading account and learn have to transfer the BTC to somebody and the receivers also needs a wallet; a barrier for most. Using Libra will be much easier as it is just an extension of the services of Facebook. Libra potentially has 2,4 billion users (the number of facebook accounts). This is a big competitive advantage. Compared with smart marketing (facebook knows that) and combining it with existing products there is a big potential. Sending money to your facebook friends in Australia or Japan? No problem: in-an-instant via Libra. Besides facebook it is also supported by other big players like Visa, Spotify, Paypall, Mastercard, Vodafone. Is there a future without Libra ? And how many facebook users are there without an bank account. There are 2,4 billion facebook users and 1,7 billion people without a bank account in this world. The reach is already huge so there is low barrier for adoption.
Does this mean bigtech will be ‘winning’? In my opinion hard to say. That battle is being fought the coming years. Don’t forgot the power and influence of regulator and governments. Digital payments are unregulated and unknown and could influence the power of governments and the whole banking infrastructure of money regulation, central bank money creation and some even fear de-stabilization of the monetary system as a whole. Regulators could stop/limit the quick steps forward by bigtech.
The coming years will be exiting to see the technological advancements in the battle for payment revenue. The winner will be the consumer; easy of paying will increase further and more importantly the speed will increase. Paying how we want and within a blink of an eye, and this worldwide, will be the new standard within several years.
Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV
| 03-08-2018 | Patrick Kunz | treasuryXL
Per 13 January 2018 we have a new payments service directive (nr. 2) live in the European union, PSD2 for short. One part of PSD2 is the possibility for banks to offer instant payments between banks in the EU. Within max 10 seconds money flows from one bank to the other, also on weekends and on holidays. In this paper I want to discuss the implications for treasurers of instant payments.
Forecasting is an important part of the daily/weekly routine of a treasurer. He/she needs to predict the future to know his cash/risk/financing position. On the ultra-short term spectrum of this forecast a treasurer might use intraday bank statement (MT942) to take into account the incoming funds during the day. These are often updated hourly. With instant payments a treasurer can have a look at their bank account and the balance that is showing is the real-time balance with all incoming transactions being settled. As said before a treasurer might already have intraday statements but there is (1) a time lag in those and (2) there might be transactions not processed yet. Bottom line this difference amounts to several hours lag. Depending on the size of the company and the amount and size of transactions there is some impact but not very sizeable. Furthermore, those treasurers that do not use intraday balances for their forecasting have no impact of instant payments. However, how about the due payments on non-working days? In the future these are normal payments dates. Previously due payments on weekends are either set on Friday or Monday depending on the terms of the contract. These could now be forecasted on the exact day. But that depends, payments are often done during business hours, so it is possible that nothing changes. Depending on the size of the transactions there is importance to check this with your suppliers and clients. This also depends on bank processing of yourself and your client/supplier.
Instant means instant in time but also in days. In the past we were dependent on the opening hours of the banks and later of the ECB. That could mean that if we send money just after close on Friday and there was a public holiday on Monday we would only see the money coming in on Tuesday. The money was “lost in translation” in between. This is not very modern in an age where we send an email from Tokyo to South Africa in minutes but not money. We could literally fly there with cash and be faster. After all banks have implemented PSD2 money flows 24/7. So also in the weekend and on holidays. This has an impact on the processing of your bank statement. You now receive bank statement for Saturday and Sunday. Most accounting/treasury departments do not work on the weekends so there is a chance that these statements are not processed. This means you must process 3 statements on Monday. Some companies have automatic processing of bank statements, so the weekend statements might be processed but not (automatically) consolidated leading to more open positions on Monday. Ok big deal, there is more work to do on Monday due to more bank statements. But there is more: not necessarily for treasury departments. Think about customer services (helpdesk) departments. If a client with an overdue payment calls it would be great if the helpdesk employee is able to verify statements of the customers if the says he has paid or will pay immediately. This however only works if processing is automatic or if the helpdesk employee can access/search the incoming payments on the bank account (which might not have processed in accounting). Not all companies will have this yet. Overdue calculations might be faulty in some ERP systems as only working days are considered. If a payment is due on Sunday, you can pay on this Sunday and not necessarily on the Friday before.
Instant payments are only a fraction of PSD2 which is often not very interesting for most treasurers. They get some information faster but that does not really help them too much. There is however more to it. Since payments can now arrive and be made in the weekends the cash flow forecasting should now contain 7 days in a week instead of 5. Payment can be spread out more but also receipts will be. Bank processing is more work; 7 daily statements per bank account per week instead of 5. Extra processing or extra automation needed. The extra information might be needed by other departments too even though the treasury/accounting department is not working.
Overall the implications could be bigger then you might think and are different for every company and depending on their existing (bank) processing.
Most bank are planning to introduce weekend reporting by H2 2018 while instant payments are due beginning 2019. For business transactions this might even take until H2 2019.
Some time left but a good time to already think about your current processes in comparison to the new reality under psd2. Treasury is moving to a 24/7 information economy. It’s about time.Time will tell if there will be fintech’s stepping in helping with above issues with direct connections to the bank, which is another important part of PSD2 but not within the scope of this article.
If you need help with automating your bank statement processing or with your cash flow forecasting, then look at this author and other Flex Treasurers on this website for answers.
Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV