Making the most of excess cash: The optimal balance between safety, availability and profitability

| 9-3-2017 | Pieter de Kiewit | TreasuryXL|

We came across this article from our expert Pieter de Kiewit in co-operation with a candidate on De Kiewit Treasurer Search and thought it interesting enough to share it with you.

To get inflation to its target of close to 2%, the ECB has launched an unprecedented package of measures. It cuts borrowing costs, expanded its QE programme and reduced bank deposit rate into negative territory. Interest rates are expected to remain at present low levels for an extended period of time. Great for those who need to borrow money, but depressing for the return on savings or excess cash.

Many commercial banks effectively already charge a negative interest rate on checkable deposits. They charge fees in excess of interest payments (if any). The new Basel rules may involve certain costs or risks, some banks may choose to pass these to their customers. Regulatory shift will have wide-reaching implications on cash pooling, cash deposits (distinction between operating and excess cash deposits) and Money Market Funds (liquidity fee and redemption gates will be imposed). The Basel Committee postponed the meeting scheduled for Jan. 8 on new capital standards. The good news is that it will take some time (2018/2019) before new regulations become fully operational.

Many companies now hold larger cash balances due to their growing sensitivity to the economic cycle and continued need for operational funding. Excess cash is a luxury and isn’t always a problem. However, keeping it on the book is often not the answer for a company’s long term health. Excessive non-earning cash balances create opportunity costs and decrease the rate of return on equity and the firm’s value.

What are your options after minimizing the cash balance in non-interest-bearing accounts? Each business has its own goals and financial outlook. The best thing to do with excess cash is manage it appropriately in line with strategic objectives and for the best risk-adjusted return possible, without sacrificing liquidity. You can sit on it, use it to buy property or assets, or invest it in commercial paper, money market funds, other mutual funds, bonds or stocks—or some combination of these things. Whatever you may choose, the process of investing excess cash should be integrated in overall cash management, with the same fundamental principles of keeping risk low and having the right amount of cash on hand for short-term and long-term needs.
Companies tend to have very low appetites for risk when it comes to investments. It’s not their business. Their primary objective is capital preservation and maintaining liquidity, and yield is third on the priority list.

Are you looking for investment solutions spanning a range of currencies, risk levels and durations, designed to suit specific operating, reserve and strategic cash management needs? Whatever your investment goals may be, a treasurer might be able to assist you in making the right decision with your excess liquidity. If hiring a treasurer is one step to far for your organisation, you might want to consider a Flex Treasurer. TreasuryXL can bring you in contact with treasury professionas of different disciplines.

Pieter de Kiewit

 

 

Pieter de Kiewit

Owner at Treasurer Search

 

Fintech Recruitment Considerations

| 3-3-2017 | Pieter de Kiewit |

Last week one of my clients started an unscheduled brainstorm session about recruitment for Fintech companies. We ended up having quite an interesting discussion. Within Treasurer Search we see an increase in assignments in this market, both permanent as well as interim. I would like to share the result of the discussion and what our experience taught us so far.

Fintechs are interesting beasts. They are a mixture of innovations in marketing, technology and finance. Very often they are relatively small, flexible and extremely entrepreneurial. Their ownership, funding and organisation structure are non-standard. Finally Fintechs were able to avoid the regulators but do know they cannot escape them forever. The easiest examples of this are the PSD2 introduction and fiscal authorities zooming in on Bitcoin. What will be the exact consequences? Joop Wijn being recruited by Adyen might be a smart response to this.

From a job content perspective, recruitment in Fintech is quite straightforward: we are looking for skills in software, in regulations, new business development and marketing. Where it gets tough is combining skills with a start-up mentality. If you have this mentality, why be an employee and not start your own company? And does the personality of somebody being excellent in a team of five also match when the team is growing much bigger? This often leads to constantly shifting requirements and creative recruitment. I need more personal interviews because the cv is often not the proper predictor of success. All this makes my position more challenging and appealing. Using on-line personality assessments really does add value in processes like these.

I want to wrap up with a remark about bankers making the transfer to Fintech. From a skills perspective they are a good match and often served the proper clients. Hurdles they have to overcome are working within the mentality of a small company, with little support and a very diverse number of tasks. Together with a non-banking remuneration and a non-banking work-life balance the number of hurdles is too high for many of them .

What successful Fintech recruits did you see recently?

 

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

How about these Fintechs?!

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

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

 

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

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

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

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

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

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

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

Uitgelicht: Fintech – investeringen in financiële innovatie fors toegenomen.

Will the European banks strike back?

 

Loopbaan in treasury: een doodlopende weg?

 | 6-1-2017 | Pieter de Kiewit |

man-op-weg Het blijft een terugkerend thema als meerdere treasurers samenkomen of als ik over loopbaanplanning spreek: is blijven in treasury een recept voor vastlopen in je carrière? Bouw je door op hetgeen je hebt bereikt of doe je een stap terug/opzij om er weer twee vooruit te maken? Zonder uitputtend te willen zijn zal ik veel genoemde reacties beschrijven.

Zeker een doodlopende weg!

Gemiddeld genomen maken academisch opgeleide treasurers sneller carrière dan collegae die niet naar de universiteit gingen. Zij zien hun studiegenoten parallel starten in accounting, control of audit en hiërarchisch gelijk met hen opgaan. Tot de treasurer het plafond bereikt en de anderen stappen blijven maken. De treasurer ontdekt dat hij niet wordt betrokken in zoekprocessen voor andere financiële beroepen waarvoor hij wel in aanmerking wil komen. Op een DACT bijeenkomst van enkele jaren geleden gaf 80% van de treasurers aan, volgens eigen inschatting, te kwalificeren voor de positie van CFO. Persoonlijk vind ik dat dit wel getuigt van enige zelfoverschatting. Feit is wel dat treasures gemiddeld genomen smallere skills in de financiële discipline hebben maar ook bijvoorbeeld in peoplemanagement. Veel van hen komen in een situatie waar ze geen gevoel voor de business kunnen opbouwen. Feit is dat veel eindverantwoordelijk treasurers momenteel al lang in hun functie zitten. De weg lijkt dood te lopen!

Doodlopende weg is onzin!

Voor elke treasurer die lang op dezelfde stoel zit, is er wel één die een doorgaat met loopbaanopbouw. De belangrijkste assen waarlangs dit lukt zijn de functionele en de branche as. Functioneel verbreedt treasury zich nog steeds. Traditioneel zijn balansfinancieringen en geldlogistiek dominant, momenteel zijn werkkapitaal, project, trade finance en treasury technologie sterk groeiend in onze portfolio. Bij het verder volwassen worden van de discipline hoort ook de meer branchespecifieke treasury. Albert Heijn, de Gemeente Amsterdam en de BAM kunnen tegenwoordig specifiekere eisen stellen aan de treasurers die zij aannemen. Verder is er een grote groep die, al of niet in het kader van een management traineeship, een tour door treasury maken. Deze laterale stappen of stappen vooruit kunnen overigens over het algemeen alleen binnen dezelfde onderneming worden gemaakt. Maar komen zeker wel voor! Het afdwingen hiervan vergt vaak wel bewuste planning, bijvoorbeeld in opleiding of in relatiemanagement.

Mijn mening?

Mijn mening is dat het gedeeltelijk een semantische discussie is. In de top van een organisatie zijn minder stoeltjes te verdelen dus ook voor andere disciplines geldt de doodlopende weg. Ik zie dat er voor elke 9 controllers 1 treasurer is en dat deze treasurer minder loopbaankansen heeft dan elk van de controllers. Treasurers zouden, als ze willen, harder kunnen klagen. Anderszins zie ik dat een aantal, vooral jonge, mensen meer hiërarchiegedreven zijn en pas later ontdekken hoe belangrijk de inhoud van het werk voor hen is. En de aantrekkelijkheid van treasury wordt door een meerderheid van mijn gesprekspartners gezien. Het is een mooi vakgebied! Mijn mening is dat, ondanks de realiteit van de huidige arbeidsmarkt, ieder die een goede volgende stap in zijn treasury loopbaan zoekt, deze kan vinden.

Ik sta open voor brainstormsessies!

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

Afscheidsrede van Professor Theo van der Nat

| 5-12-2016 | Pieter de Kiewit |

2ce3f92Mijn eerste ontmoeting met Theo zette de toon voor al onze verdere contacten. Het was aan het einde van de DACT Treasury Beurs 2009 in Noordwijk. Velen waren al gestart met hun weekend, ook de standhouders waren al aan het afbreken. Ik was net gestart met mijn onderneming. Theo en ik raakten in gesprek. De mooiste gesprekken in mijn vak zijn met mensen met een passie. Dat ik hier te maken had met de Nederlandse treasury goeroe was me al snel duidelijk. Hij leidde me langs de belangrijkste topics in treasury in die tijd. De Register Treasurer opleiding bleek één van zijn passies. In ons beider enthousiasme hebben we serieus onderzocht of ik de studie zou oppakken. Voor alle betrokkenen was het goed dat dat plan niet is doorgezet en dat de kwaliteit van alumni hoog blijft.

Het bijzondere aan Theo is dat hij een aantal kwaliteiten heeft die je meestal niet in één persoon ziet. Zo is hij wetenschapper, ondernemer, docent en bankier. Het aantal potten dat hij gelijktijdig op het vuur heeft is altijd bewonderenswaardig, zijn ideeën onbegrensd. Agendamanagement wordt daarin weleens lastig. De consequentie is dat alleen de hele goede en belangrijke meetings overblijven. Onze gezamenlijke initiatieven, bijvoorbeeld rond de voorganger van www.treasuryxl.com, bleken in deze werkwijze terecht te worden “afgetest”. Prettige en goede gesprekken waren het fundament van betere plannen. Meestal op bijzondere tijden en plaatsen.

Op 9 december houdt Theo aan de VU zijn afscheidsrede voor de universiteitsgemeenschap, studenten, alumni en de treasury community. Ik hoor natuurlijk niet bij de organisatie, maar ben er wel bij en kan me niet voorstellen dat hij vanaf dan uit beeld is.  En natuurlijk verheug ik me, waarschijnlijk met vele aanwezigen bij de rede, op doorlopende contacten.

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

Why seems TMS market leadership to be a relay race?

| 23-11-2016 | Pieter de Kiewit |


geen-naamThe number of treasury management software brands I read about in resumes since 1996, the year of my first treasury placement as a recruiter, has continuously grown. In other markets market dominance has been more stable, BMW, Microsoft and Calvé have been able to keep long market leadership. What is so different in the TMS market? Without comprehensive research I can think of the following reasons.

TMS technology reasons

Technology is moving forward very quickly. Solutions are often based upon the possibilities new technology offers and not developed based upon client needs. Different backbone technology often comes with other providers, hence other TMS suppliers.

Integration after take-over

There is a number of small solutions that grew to be successful over time. The founders of the companies that offer these solutions often choose to sell after a number of years. This because they are technology driven and cannot handle the marketing and operational hassle. Or the other way around: after successful sales they have to build a better product and do not have the technological staff. Or they just want to cash. The bigger companies that take over are not capable to absorb the smaller without losing the warm connection with the clients. Service and flexibility go down, prices go up. Sales staff is demotivated after a setback in remuneration. Support does not know the application. The clients go to the next supplier.

Marketing reasons

Last but not least, successful start-ups that work with partners in various countries are not able to share the wealth of success. Discussion over equity, profit sharing and ownership are often deal breakers. In this market there is not one dominating expansion strategy that has been the success formula: own staff is not strong enough or too expensive, partner sales is often not based upon enough commitment or lacks a proper contractual basis.

What do you see in the market of TMS suppliers?

Pieter de Kiewit 

 

 

Pieter de Kiewit
Owner Treasurer Search

 

Funding Planning & Execution with your Bank, a Consultant, an Interim Manager or DIY?

| 14-10-2016 | Pieter de Kiewit |

fundingIn my work as a treasury recruiter I speak with financial managers on a regular basis about their funding. Both in the funding strategy as in the execution hereof, it can be noticed that entrepreneurs and their CFO’s intensify their search for the proper partner. This is what I hear so far:

Funding has been the primary trade of the bank, they do have wide and broad knowledge. Over the last years they have lost their credibility due to scandals, but also because they did not supply when the need was high. The banks themselves also struggle with increased regulation and are trying to adjust their business model to changing market circumstances. Can the advice of a supplier be fully objective?

The objectivity of consultants depends upon their business model. There is a portion that is on the broker side that is paid upon success, either by the supplier or their client. They will be deal driven and will not only have the interest of the client in focus. At the same time, without them quite often, there will be no deal, no funding. The consultants that are paid a fixed fee or hourly rate can be expected to be more impartial. They often have the knowledge base, but will not take responsibility. Also their rate can be steep.

The third solution is an interim manager who has been responsible for funding in the past. Often his rate is more acceptable and he will better speak the language of the entrepreneur. Also he is an obvious candidate to do much of the operational work. Of course he will not have an organisation to fall back upon and will not accept any liability. I notice interim managers are getting a bigger market share.

Finally a CFO and entrepreneur can do the funding planning and execution themselves. At first glance this may be the cheapest option.

What questions did you ask before funding your company? Who did you chose to accompany you?

Cost, expertise, success, liability, gut feeling….. So many variables, no easy answer. I look forward to your input.

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

Che Guevara, Musk and 0%. Whose story do you listen to?

| 02-09-2016 | Pieter de Kiewit |

cheguevaraIn 2015 the Dutch writer Joris Luyendijk published his book “Dit kan niet waar zijn” about the workings of financial markets. An interesting read for all treasuryXL followers and by now, quite well-known. In my perception one of his earlier works is even better. “Het zijn net mensen” describes the public opinion about the situation in the Middle East and how we are all influenced by governments, media and our cultural backgrounds. For me this was a true eye-opener.

I remembered the book during my recent vacation in Ireland. Apparently Che Guevara has Irish roots, his forefathers are from Galway. Locally he is portrayed as a revolutionary hero. During this vacation I saw an US television series in which he was described as a terrorist….

Recently our Dutch media describe the negative interest and quantitative easing as disastrous. I do not read Italian, Greek or Spanish newspapers but can imagine they write different stories. And today Elon Musk is in the news. Tesla, the company he founded, is buying one of his other companies Solarcity, where two of his cousins are in the board. He did not mention this transaction when, a few months ago, Tesla sold stock worth $1.4 billion. One has to play by the rules… Companies that are making the world a better place by developing environmentally technology should be stimulated in their actions and Musk is creating advancement. Should this part be included in the articles?

The media do not offer a balanced story, the media consumers (read: we) do not have the time or patience to listen to nuance. Should they/we?

Pieter de Kiewit

PS Without broadcasting an opinion, how can it be that almost 100% of the Dutch think Trump is unacceptable as a president of the US and a substantial portion of US citizens consider him their next president? What media do we listen to?

 

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search