The value of making timely use of data

04-08-2022 | Cobase | treasuryXL | LinkedIn |

Since the start of the pandemic, the unprecedented financial stresses companies have underlined the potential consequences of underestimating risks and the value of building multiple business scenarios and corresponding options.

In the first in a series of blogs, we outline best practice for reviewing key financial data and look at the value of treasury dashboards and why cash forecasting is being undertaken more regularly, as well as exploring trends in payments.

The phrase ‘time is money’ is highly applicable in treasury environments where there are significant fluctuations in working capital availability. Companies that fall into this category benefit from at least daily reviews of key financial data. In companies where capital is constrained, reviewing existing credit facilities on a weekly basis is a sensible approach.

The pace of economic change at national and global level also demands more regular cash forecasting. With market conditions changing regularly, treasurers need to take a shorter-term view and implement monthly or even weekly forecasts.

This is backed up by research, showing that treasurers have increased their focus on cash forecasting in the last few years and intend to commit additional resources to this area, including investing in tools to generate better information about payments, receivables and forecasting, and technology to integrate cash flow forecasting into day-to-day banking flows.

Visual representation of key data is useful for helping senior management understand corporate cash positions. Treasury dashboards that present historic, current and projected financial information via charts and graphs allow for better decision-making.

They also enable the treasurer to produce user-definable reports on financial transaction data such as receivables and payables, cash on hand, currency exposures and days outstanding. These can be used to inform hedging strategies as well as enabling treasury teams to proactively report on their activities and play a more influential role in their organisation.

Reducing bank account complexity is another key treasury objective, which can be achieved through the use of virtual accounts that support automated receivables reconciliation processes and higher invoice matching rates while lowering banking costs.

One of the key cash flow and liquidity levers available to businesses is delayed payments. Every company wants to receive monies owed on time, but very few have never made a late payment to a supplier – particularly larger organisations with greater bargaining power.

Flexible payment terms are a key mechanism to manage and make the best use of cash flow, but this strategy may not be an option for small businesses. In this context, real-time or instant payments could be the answer, allowing businesses to hold on to cash for longer while paying suppliers and staff or reimbursing customers on time.

In the next blog in this series, we will look at how cash positions can be optimised through the use of specific solutions centred on connectivity and explain the pros and cons of connecting back office functions via SWIFT and how automation, frees up time for the treasurer to focus on higher value tasks.

 

The 7 habits of highly effective treasurers

Why are some treasury teams more adept at managing the financial challenges faced by their enterprises than others? We decided to identify some of the factors that contribute to intelligent treasury management and operational excellence and created an e-book which we would like to share with you. If you follow the habits outlined in this e-book, you will be well on the way to better cash flow and working capital management.

 

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The 7 habits of highly effective treasurers

28-07-2022 | Cobase | treasuryXL | LinkedIn |

Why are some treasury teams more adept at managing the financial challenges faced by their enterprises than others? Cobase decided to identify some of the factors that contribute to intelligent treasury management and operational excellence and summarized it all in an e-book.

To this end, Cobase analysed the market and interviewed and observed our clients and the work we do for them.

Having considered the results of this analysis we came to the conclusion that while there are many factors that impact the ability of treasurers to do their job effectively, there are seven key habits that are continuously practiced by successful treasurers.

Download this e-book now and you will be well on the way to better cash flow and working capital management.

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]

5 solutions how Treasury can add value to the company as a cost center.

30-05-2022 | Zhanna Irgaliyeva | treasuryXL | LinkedIn |

Treasury can act as a profit or a cost center in an organization. Usually, the treasury department is considered the cost center of the business as it is in charge of keeping costs in check and below budget.  However, the revenues and profits contributed by treasury in a cost center will not result directly result in profit within the organization.

treasury as a cost center

What is the Difference between a Cost vs Profit center?

The main function of treasury as a cost center is being responsible for reporting the cost processes of the company, and keeping these costs as low as possible.  The difference with treasury as a profit center, is that it thinks more strategically with the goal of increasing profits rather than cutting expenses. Nowadays, only those companies that manage to earn direct profit from a trade or risk management can classify treasury as a profit center.

Value of Treasury being a cost center

Despite this fact, treasury can make a meaningful contribution by capturing indirect profits and providing additional value to companies. Let’s look at five solutions by which treasury as a cost center can make a meaningful contribution.

 

  1. Money markets

If a treasurer is limited in his time to invest in free funds, then Money Market instruments can be a very suitable solution, as they are highly liquid and can be used to make additional profits for a period of less than a year. The treasurer can choose which instrument is more profitable and appropriate, taking into account the current position of the company, the number of funds available and the location.

 

  1. Risk Management

Key treasury decisions on Risk Management are a second way to bring additional value to the business. Implementation of policies and limitations is the first step for limiting, controlling, and reporting requirements. To avoid various risks in operational areas and maintain strict controls, treasury can be centralized. For managing financial market fluctuations treasury uses hedging which includes forwards, futures, and options with the aim of reducing or eliminating risks of changing interest rates, FX, commodity prices and also efficiently save funds.

 

  1. Accurate forecasting

Collecting the required data and setting up processes for accurate forecasting can not only safeguard the company’s funds and carefully plan its cash, but can also be used to predict future losses and find future cost-effective solutions. Fixed or variable costs can be revised to find the best opportunity for the company’s activity.

 

  1. Fintech Solutions

The rapidly increasing Fintech solutions are becoming even more popular in the world of treasury, which offers financial services the possibility to act as a link between providers and customers.  Currently, the main areas of Fintech solutions are:

 

  • Digital lending > The online disbursal of loans can generate significant growth in the current lending market,
  • Payments > The automation of account payable processes, electronic invoicing, and cross-border payments lead to the shortening of CCC and reducing bank fees.
  • Blockchain > This system of decentralized, distributed digital ledger (database) consisting of digital records called blocks, can influence cash management. It provides the option to reduce the speed of transaction settlement, leading to cost-saving and increasing the effectiveness of cash management.
  • Digital wealth management > The use of robot advisers can lead to effective money management.

 

  1. Transfer Pricing

Intercompany transactions (such as loans, funding, leasing, guarantees, interest rates, or FX) can influence the company’s profits and impact on its cash flow and cash position. Therefore, treasurers should carefully check and understand how transfer pricing should be applied in the company taking into account local laws. Treasury activities can affect the company’s tax revenue, therefore, a proper transfer pricing policy with the treasury will help. Best practices are important for the company’s activity.

Conclusion

All of these treasury cost center activities are to secure the money that was earned directly and provide the company with indirect revenues or cut expenses. So, even if treasury is a cost center, it can be of great value to the company and improve solid profits. Of course, this can only happen when the process is managed by a proper treasury professional.

Thank you for reading!

Zhanna Irgaliyeva

What could be the best solution for your company? Feel free to contact treasuryXL for professional treasury guidance!

 

Zhanna Irgaliyeva

Treasury Manager, CTP

References:

https://www.spglobal.com/marketintelligence/en/documents/an-introduction-to-fintech-key-sectors-and-trends.pdf

https://www.afponline.org/ideas-inspiration/topics/articles/Details/how-will-blockchain-impact-the-future-of-treasury/

https://www.investopedia.com/terms/c/cost-center.asp

https://openlink.com/en/insights/articles/turning-treasury-into-a-profit-center/

Essentials of Treasury Management, 6th Edition

https://www.treasurers.org/transferpricing

Digital rules (URDTT) for Trade Finance: Episode 4

25-05-2022 | Wim Kok | treasuryXL | LinkedIn |

Episode 4 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.  Previous episodes 1 are, of course, still available on our YouTube channel.

 

 

Trade Advisory Network Limited and treasuryXL Trade Finance experts launched their fourth 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 period, you can expect one educational video per month.

Duration: 16.42 min

WATCH NOW FOR FREE

Enjoy, explore and develop!

Interested to know more about this topic and the upcoming educational videos? Contact our Expert Wim Kok.

 

Wim Kok

International Business Consultant
Trade Finance Specialist

 

 

 

 

Subscribe and receive your 41 pages ‘easy-to-read’ eBook, What is Treasury?

16-05-2022 | treasuryXL | LinkedIn |

 

Treasury, Corporate Finance, Cash Management, Risk Management, Working Capital Management and Blockchain. What are the purposes of these treasury functions?

treasuryXL created this eBook based on the most relevant best practices that Treasury experts provided over the last years. We bundled the most important information for you and created easy to read and understand articles about the main subjects within the World of Treasury.

We took a deeper dive into each of the above-mentioned treasury functions and highlight:

  • The purpose of each named Treasury function (What is?)
  • What specialists do
  • Examples of Activities
  • Summary of Frequently Asked Questions and answers
  • Conclusion

How to receive the eBook ‘What is Treasury’ for Free?

We simply giveaway two presents for you! By signing up for our newsletter you will automatically receive the following in your inbox:

  1. On Fridays, our Coffee Break weekly newsletter will land in your inbox. In this weekly newsletter, we will highlight the whole week full of the latest treasury news within our community.
  2. The 41 pages eBook, What is Treasury?
Subscribe and Download

 

Subscribe, Join, Download and Relax.

Welcome to our community and have fun reading!

 

 

Kendra Keydeniers

Director, Community & Partners at treasuryXL

 

 

 

 

Balancing short and long term needs

12-05-2022 | Cobase | treasuryXL | LinkedIn |

 

In the final blog in this series we look at how to identify the right bank connectivity partner for your company to maximise the benefits of open banking.

As discussed previously, current bank connectivity solutions make life easier for corporate treasury and new developments have the potential to deliver major improvements. However, existing solutions are still far from optimal and even new technology will not address every issue.

Therefore, corporates should focus on the business benefits rather than on merely technological aspects when selecting a bank connectivity partner.

A useful first step in this process is to develop a deep understanding of the business case and build management support. Factors to take into account here include the benefits of improved cash visibility; risk management benefits; the opportunity to enhance operational efficiency; and potential security improvements.

Once these factors have been established it may be useful to make an inventory of the project requirements such as:

  • Which banks and jurisdictions need to be accessed?
  • What is the relationship with other services – ERP connectivity, payment hubs, treasury services?
  • How much flexibility is required in light of expected changes in the banking landscape?
  • What do you need to do to benefit from open banking in the future?

Weighing up the value of meeting current needs against the ability to address future requirements is a challenging process. It is important to understand that switching to a new bank connectivity solution can be very disruptive, so there is obvious value in selecting a partner that will be a good fit beyond the short term.

This means identifying a provider that will facilitate migration to future developments without requiring significant change at the customer end.

When selecting a bank connectivity partner you should assess the following aspects of potential service providers:

  • Security: If you rely on a provider for all your bank connections you need to be certain that they behave with integrity and in a secure and reliable way. Can the provider evidence this?
  • Functionality: Does the provider cover the functionality and banks you need to realise your value determination? Depending on your needs this may go beyond payments and reporting and include services such as FX and forecasting.
  • Connectivity: Does the provider deliver the ERP and bank connectivity you need today?
  • Future-proofing: Will the provider be able to move to open banking APIs once the banks make them available for corporates as well as provide APIs to your ERP environment?

This final point is vital – you do not want to select a provider only to encounter implementation issues once new opportunities become available.

To assess your provider’s ability to facilitate future developments, check their current ability to handle external APIs and that they have the right licences and capabilities to connect via APIs to your systems once you are ready.

A reality check on Open Banking

To know more about the benefits of new developments in bank connectivity for treasury and cash management you can download our white paper. It offers insights into how corporate treasurers and cash managers can avoid pitfalls.

The world’s largest treasury event is returning to Vienna in September | 10% discount via treasuryXL

09-05-2022 | Eurofinance | treasuryXL |

 

EuroFinance International Treasury Management, the world’s largest and most influential treasury event, will take place in Vienna from September 21st-23rd 2022. Returning in-person after 3 years with more than 2000 attendees including 150 world-class speakers, the event offers unparalleled networking and insights from the world’s most senior corporate treasurers. treasuryXL is proud media partner of the 31st edition of the EuroFinance event.

Why attend?

  • Be inspired by headline speakers as they interrogate a changed world including Guy Verhofstadt, member of the European Parliament and Göran Carstedt, former corporate executive of Volvo and IKEA
  • Get practical solutions to treasury challenges with new case studies and immersive discovery labs
  • Hear from the disruptors at the new The Future of Money Stage
  • Delve into the latest innovations and new technology driving change, and how to apply them to your treasury
  • Meet with more than 100 banking and tech partners and join forces to innovate and shape the future

 

For the full agenda and to register, please click here

TreasuryXL contacts can claim a 10% discount with code: MKTG/TXL10

 

Cashing in on optimisation

03-05-2022 | Cobase | treasuryXL | LinkedIn |

 

Careful planning significantly boosts the chances of a cash management optimisation project being implemented successfully. Formulating a comprehensive strategy is the first – and perhaps most important – step a treasury team should take to ensure that a cash management optimisation project delivers the maximum benefit to the organisation.

In this context, there are a number of important considerations that should be part of any project that aims to optimise cash management by using new bank connectivity solutions.

1. Determine value of proposed activity

First and foremost, the treasury team needs to determine the actual value of the proposed activity to the company. This cash management value statement should be supported by management.

Whether the value lies in reduced capital costs, mitigated risks, more efficient payment processes, a less complicated IT landscape or any other area, companies that are unable to articulate the bottom-line value of a project should be very hesitant about embarking on it.

Once the real business value has been identified, the company needs to consider at which managerial or hierarchical level in the overall company structure this value improvement can best be managed. In other words, what is going to be the cash management operating model?

This question can only be answered by identifying

  • What needs to be taken care of centrally
  • What can be done at the operating company level
  • What information should be visible what operational activities need to be executed and where

These and other issues require careful consideration and a robust decision-making process.

From there, the ideal banking portfolio can be derived and the company can determine the banking features and functionality it requires, why these features and functions are necessary, and where they are needed.

This assessment should lead to a minimally required collection of banks and accounts.

Only after this stage has been completed should the company start thinking about actual connectivity solutions and consider questions such as:

  • In which system are we going to manage our cash and execute payments?
  • Do we also need more treasury-oriented functions like liquidity forecasting or managing our currency risks?
  • If no system is in place yet for the management of payments or the treasury functions should we consider sourcing one service that provides these together with the bank connectivity?
  • Which dashboards and user interfaces do we need?
  • Which APIs and/or other interfaces do we need to install?

2. Undertake the project internally or work with partner

The next question is whether the company should undertake the project internally.

This is feasible in scenarios where a corporate possesses the required internal skill sets and competencies and has a simple overall banking and company structure. However, if the business has a more complex banking landscape and/or company structure, it is advisable to work with a specialised partner.

3. How to optimise benefits of Open Banking in future

Finally, the company should ask how it will be able to optimise the benefits of Open Banking in the future. Corporate treasurers need to recognise that they may only execute such a project once or twice in a lifetime, whereas external partners for whom this is a core business will have extensive experience and insights. In that case, it is essential to choose a partner you are confident will be able to service your future Open banking needs without requiring a difficult migration for you.

In the final blog in this series, we will offer guidance on how to identify the right bank connectivity partner for your company.

A reality check on Open Banking

To know more about the benefits of new developments in bank connectivity for treasury and cash management you can download our white paper. It offers insights into how corporate treasurers and cash managers can avoid pitfalls.

Attend the 33rd Finance Symposium | 18-20 May 2022 | Mannheim

20-04-2022 | treasuryXL | LinkedIn |

 

The treasury and finance community finally meets in person again. treasuryXL is proud media partner of the 33rd Finance Symposium.

 

 

For more than 30 years, the Finance Symposium has developed into the most important industry gathering for treasurers and finance managers in the German-speaking world. Every year, around 2,300 finance experts meet to discuss together, make contacts and receive new impetus. The outstanding congress program offers visitors a broad spectrum of professionally challenging topics from finance and treasury management in three days. In over 170 forums, workshops and expert panels, participants will learn about the latest developments in finance and treasury.

 

 

The speakers are high-ranking finance managers from major companies and prominent guests from politics and business. For example, in 2022 Martin Schulz, former President of the European Parliament , and Verena Pausder, entrepreneur and expert in digital education, could be won for exciting presentations and discussions. The most important banks, system providers and financial service providers in the industry will present themselves on 1,000 m2 of exhibition space.

For more information and tickets, visit: www.finanzsymposium.com

 

 

 

Kendra Keydeniers

Director, Community & Partners at treasuryXL