4 ways to optimise currency management in times of crisis

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

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

Credits: Kantox
Source

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

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

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

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

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

(2) Optimise the impact of shifting interest rates 

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

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

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

(3) Prepare for disrupted supply chains 

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

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

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

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

Delaying hedge execution also will enable you to:

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

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

(4) Protect your profit margins and cash flows

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

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

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

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

Closing Loops: Connecting FX Hedging and Cash Forecasts

08-06-2022 | treasuryXL | Cashforce | LinkedIn |

 

How one member uses Cashforce to save time and money on FX trades—and helped create an automated hedging process.

One assistant treasurer at a recent NeuGroup virtual interactive session said that her primary project for 2021 is “to make treasury as no-touch as possible.” This is a common theme for treasurers recently, though it’s not always clear where to start. Her first step was to seek potential connections in existing processes and platforms—which led to an overhauled and streamlined process for foreign exchange hedging.
  • The member already was using Cashforce, a fintech that allows deeper analysis of cash flow, to assist in cash flow forecasting, and saw potential in connecting it to Citibank’s CitiFX Pulse platform through the company’s TMS.
  • Through collaboration with Cashforce, Citi and her TMS, she was essentially able to turn the company’s hedging policy into an algorithm that reads the forecast and will potentially execute or propose trades all on its own.

From forecasts to forex. The member said this is only possible because Cashforce can forecast at a high level of granularity. The AT said she was “really lucky” that the tools work together so well.

  • “The forecast at that level of detail is a forecast in document currency,” she said. “And because I can have forecasting at nearly an invoice level, I know what that currency is going to be.”
  • Through the forecast, she said, the company is able to see what its FX position is going to be. “Then if I layer over what hedge I might already have in place, it will be able to tell me what are my gaps,” she said.
  • “The idea is to send it out so that we could auto-trade to fill the gaps below a certain threshold, let’s say 100 grand or less, and review above that just to check the data before we trade.”

A closed loop. Nicolas Christiaen, Cashforce’s CEO, said that, before this project, the member’s process was “very disconnected,” but all it took was connecting the dots.

  • “On the data input side, the ERP, TMS, P&L and bank statements are now put through [Cashforce’s] transformation layer, which results in a cash flow forecast,” he said. “As is very specific in this case, it’s a forecast by currency, by month.”
  • Currently, the company then uploads this forecast back into its TMS for review, and manually executes FX trades based on the company’s hedging policy.
  • “When these hedges are executed, the hedge amounts will pass back into Cashforce via the TMS, closing the loop,” Mr. Christiaen said.

A step further. With the proposed system that the member has designed with Citi, the company could include its hedging policies as a rules-based program in CitiFX Pulse that can read this forecast.

  • It would then “put in place the instruments used for the hedges for the thresholds that need to be taken into account,” Mr. Christiaen said. “Which ultimately results in a proposal.”
  • The chart below demonstrates the vision: As the data feeds into Cashforce, which outputs a forecast, that forecast is reviewed by the member and uploaded to CitiFX Pulse, which can automatically execute or propose FX hedges.

Constant change. Automation is “an awful lot to bite off,” the member said, and recommends starting slow on this kind of process:

  • The first step is to test what systems you already have. “A lot of us have pockets in the organization of different systems that can be leveraged. Some of them can’t do what they say they can or aren’t quite what you need—but sometimes you get lucky, as we did.”
    • She said it is also an opportunity for treasury to work with fintech partners to build exactly what it needs.
  • Collaboration and clear communication with IT is “super important,” which she learned the hard way. “Despite really clear instructions from Cashforce on the size of server we would need, [IT] gave us a quarter of that size and we now need a bigger size,” the AT said.
  • She warns that, although automation opportunities are promising, it’s not always smooth sailing. “Be aware of the opportunities, but also be aware of the work: automation is doable but takes an awful lot of time.”
  • “As the business changes, the structure changes as well,” she said. “The only constant within treasury is change.”

Article originally published by Neugroup here.

 

 

A guide to cash flow forecasting tools in 2022

07-06-2022 | treasuryXL | Nomentia | LinkedIn |

A company’s worst nightmare is to run out of cash or completely miscalculate future cash in- and outflows. To prevent such doom scenarios from happening, companies use cash flow forecasting tools to help them understand current or future cash positions. Having accurate cash forecasting analyses in place is important because they are fundamental for your company’s growth. You can base your strategic investments and financial decisions on them, and they help you decide on how you shape the future of your company.

Source

As with most things, cash flow forecasting is easier said than done. Developing accurate forecasts can be a challenging job. Especially when your business is increasing in size, you need to consider many aspects. Fortunately, there are several great cash flow forecasting tools to help you overcome the challenges you have, to make forecasting easier and more accurate.

 

What is cash flow forecasting? 

Simply put, cash flow forecasting is the practice of understanding your movement of money that goes in and out of the business, now, in the short-term, or in the long-term. A higher cash inflow than outflow results in a positive cash flow position. And when your cash outflow is bigger than your cash inflow, it results in a negative cash flow position.

Many professionals understand that analyzing cashflows is important yet fail to build reliable processes to do so accurately. Robust cash forecasting will help you understand what your cash position is now, and in the future, simply by analyzing cash in- and outflows.

 

The challenges of cash forecasting

We will not go too much into detail to discuss the challenges of cash forecasting, which we already did in this article. But commonly, treasury and finance teams struggle with two main reoccurring challenges:

 

1. Manual processes (lack of automation)

One of the key challenges in cash forecasting remains the amount of manual labor that goes into it. Especially when your organization is larger, and you need to combine financial data from different banks, subsidiaries, and ERP systems. Depending on how frequently your team runs the forecasting process, it can become very time-consuming.

According to different sources, it is recommended that treasury and finance teams run forecasts on a weekly basis to increase financial control. Imagine all the hours that go into this process by doing so manually: collecting data from multiple data sources and recording everything into your spreadsheets. And that doesn’t even include running the analyses to base your strategic decisions on. To top it off, the spreadsheets also contain many errors, which makes them less reliable.

To add to that, by collecting your forecasting data periodically you never have real-time insight into your cash position because your cash predictions may have changed already the day after you made your analysis.

 

Cash flow challenges graph
Having flexible cash flow and liquidity reporting, and collecting data on cash flows was found most challenging or very challenging for around 70% of decision-makers according to our study with Forrester.

 

2. Lack of centralization

As mentioned earlier, it is a very inconvenient aspect to create liquidity and forecast reports when the data you need is scattered across multiple systems. In global companies, you would need to access several bank accounts to check balances. Or you are working with different subsidiaries, where you need to rely on the timeliness and accuracy of your colleague’s input. Whatever systems you’re using, having a centralized place that automatically pulls all the data from them into one place in real-time can benefit you tremendously.

 

What is a cash flow forecasting tool?

Effective cash flow forecasting tools are there to help you overcome typical forecasting challenges. They help you manage and track all your business cash flows now and in the future. Allowing you to make better strategic and investment decisions for your business.

 

The advantages of using a cash forecasting tool 

There are various solutions available on the market, and they all work differently. Ideally, a tool should be able to help you with your cash forecasting in various ways.

Access real-time information

A great tool gives you an instant overview of your cash position, inflows, and outflows at any time you need it. The more up-to-date your data is, the better you can justify your decisions.

 

Connect and centralize all source-systems

Especially for larger enterprises with multiple banks, ERPs, and other source systems, a tool needs to be able to flawlessly connect to all of them. That’s the only way for you to combine all the financial data required to make accurate cash forecasts.

 

Automate the process of collecting data for you 

Both the gathering of real-time information and connection to all source systems should be automated by the tool or software. That way you can automatically gain real-time insight into your cash position without manual labour.

 

Automatically able to create reports and infographics based on your data

Following up on the previous point, once your tool has automatically-collected data, it should be able to visualize it in a customized way that suits your needs. Whether it is certain types of reports, graphs, or other dashboards.

 

Save resources while enabling better decision-making

Better and faster analyses of your cash position and forecast without creating reports manually will help you save the time that you can use for making strategic decisions.

 

The different types of cash forecasting tools

 

Basic tools for small and medium-sized companies 

Market research has shown that in the U.S. in 2018 alone, around 63% of companies used spreadsheets for budgeting and reporting purposes. Even though this number was declining, spreadsheets are still considered the most basic go-to tool for cash flow forecasting.

 

The two main (free) providers for cash forecasting tools on a basic level (they don’t need explanation):

  • GOOGLE SHEETS 

  • MICROSOFT EXCEL 

 

Of course, you can make your spreadsheets as advanced as you want. But the fact is that most smaller organizations traditionally use spreadsheets to do their cash flow forecasting. Their set-ups are less sophisticated and with fewer data sources. As a result, it’s easier to pull the data you need.

The advantage of spreadsheets is that they are very cheap and effective. Yet, once your organization grows bigger and you start using several banks, and other source systems like ERPs, they become unmanageable and start taking a lot of your team’s resources.

 

Intermediate tools for small and medium-sized companies

There are several intermediate cash forecasting tools that are increasingly helpful for smaller and medium-sized companies compared to the basic tools. Sometimes they can replace spreadsheets completely, but most often they complement them.

 

1. POWER BI

Microsoft’s Power BI is a tool that can collect data from different sources and allows you to visualize them through dashboards. Though it’s a handy tool, it requires quite a bit of training and getting used to. Connecting Power BI to your systems, importing data, and building the right reports can still require a lot of manual labor.  

Power BI’s list of systems you can connect to is limited. Especially bank and ERP connections are lacking which are usually required for bigger companies.

Power BI Dashboard
Power BI dashboard example

 

2. CAUSAL

If you have an accounting system, a CRM, and some data warehousing system, chances are that Causal can help you out collecting that data in one place. Their data visualization tool will help you better understand the combined data from your connected places.

Just like Power BI, Causal is unable to connect to financial institutions, like banks, that are often required to get a better understanding of your cash position.

 

3. SHEETGO 

Sheetgo is a handy tool when you want to combine the data from different spreadsheets. The more spreadsheets with financial data you have the more challenging it is to combine them and build accurate cash flow forecasts.

Sheetgo does not take away the manual work that includes pulling data from source systems. It is more a tool made to integrate with Google Sheets or Microsoft Excel.

Sheetgo cash flow template
Sheetgo’s cash flow template

 

4. NOMENTIA LIQUIDITY 

If you’re looking for a cash flow forecasting tool that can connect multiple source systems, banks, and ERPs – then Nomentia Liquidity is a great option. Nomentia Liquidity gives you visibility over your past, present, and future cash positions.

Nomentia automatically pulls all data from different source systems and visualizes them in a customized format for each client. The implementation is also done together with a dedicated customer specialist, so you don’t have to worry about any manual labor or integration problems.

Nomentia Liquidity dashboard
Nomentia’s liquidity dashboard

 

Advanced solutions for medium and big-sized companies

If you’re looking for more complete cash forecasting services, then you need to consider the top treasury and cash management vendors that are well known. Most of these vendors offer Software as a Service (SaaS) solutions which take away the work of managing the solution.

 

1. NOMENTIA CASH FORECASTING 

Nomentia’s cash forecasting SaaS solution allows you to do forecasts as detailed as you require. You can run real-time forecasts continuously based on a collection of all scattered systems that hold your financial data.

The platform works very intuitively, and you can even run simulations for possible scenarios. The data visualization can be customized by yourself or by specialists from Nomentia. In contrast with other vendors, you can only opt for the cash forecasting module without committing to any other modules offered by Nomentia.

 

2. KYRIBA CASH AND LIQUIDITY

Kyriba has a tool for cash forecasts that combines multiple data sources. They can provide you with daily, weekly, monthly, or yearly cash forecasts.

In their SaaS, Kyriba has a worksheet that can help you automate manual work and connect different systems to each other for better-centralized cash forecasting analyses.

 

3. GTREASURY CASH FORECASTING

The cash forecasting tool by Gtreasury allows you to combine data into a single worksheet and run different analyses within it. You can run forecasts daily, weekly, monthly, quarterly, or annually.

A recent feature GTreasury introduced is the trademarked SmartPredictions, which can predict future liquidity and changing conditions with the help of data imports and artificial intelligence.

 

4. COUPA CASH AND LIQUIDITY

Coupa’s treasury solution includes a cash forecasting module that can build scenarios, and do analyses to measure your short, mid, and long-term business liquidity.

The financial data is captured in a reporting functionality that treasury teams can easily analyze and share within the organization. Coupa offers both standard and customized reports.

 

5. SERRALA CASH MANAGEMENT AND FORECASTING

Serrala offers cash forecasting as part of its bigger cash management solution. The module can be set up for cash flow-based planning categories, scenarios, and simulations.

The solution helps you automate your processes by configuring the settings yourself, and it gives you insight into your cash position through the consolidation of various data sources.

 

The right tool for your company depends on your needs  

A cash flow forecasting tool can be beneficial for you to tackle the manual labor and time consumed due to a lack of centralization. If your set-up is not that advanced yet, you can rely on solutions like spreadsheets or intermediate tools like Power BI, Causal, Sheetgo, or Nomentia Liquidity.

For bigger companies with several source systems, we recommend looking into advanced cash forecasting tools that will significantly decrease your costs. Even if the initial investment of buying such a solution may appear slightly higher.

 

 

REMINDER WEBINAR | The Evolution of Open banking, Connectivity and Real time: How will APIs change the Treasurer’s daily life?

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

Live session | June 14 | 11 am CET

Do you know how to take use of APIs’ benefits for small, medium, and large companies? APIs are a real-time catalyst for providing CFOs and treasurers with a 360-degree perspective of their liquidity management. Discover everything there is to know with our partner Kyriba; our next live session will take place on June 14 at 11 a.m. CET.

Join the panelist discussion to hear from experts in the field

  • Pieter de Kiewit, Owner of Treasurer Search is moderator of this session. With his passion for treasury and his wide industry knowledge he is the obvious person to ask the right questions to the experts.
  • Patrick Kunz, owner of Pecunia Treasury & Finance and highly valued treasuryXL expert. 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 has worked with both international corporates from all fields of business as well as national non-profit organisations.
  • Félix Grévy, VP Product, Open API and Connectivity, Kyriba
    Felix Grevy has more than 20 years of experience working in Financial Technology and held various roles in product development, sales and product management.
    He has been working on API for the last 5 years, building and launching successful API platforms. He has joined Kyriba in 2020 to lead the API and connectivity strategy

We will go around several questions:

  • Who should, own/build the API; Bank, customer or TMS provider? If a bank builds one should it be open source?
  • How can APIs contribute to accounting or controlling, in situations where there are intraday statements, but accounting is only able to process them with end of day statements? Two-way traffic: API’s for both statements / Camt for instant payments
  • How does the CFO leverage the instant payments vs instant acknowledgement?
  • APIs vs Swift. How do they operate together?

Registration

Discover everything there is to know about APIs and how to unify data in a single platform to deliver key insights.

Register today for the next event on API and its advantages.

 

Recording Live Discussion Session | More reliable cash forecasting in a fraction of the time

01-06-2022 | treasuryXL | CashAnalytics | LinkedIn |

 

Recently, treasuryXL partnered with CashAnalytics on a LIVE discussion session about how much time, effort, and money can be saved by adopting a data-driven approach to cash forecasting.

During this session, Conor Deegan CEO of CashAnalytics was joined by Ron Wessels, owner of Term Finance and Interim Head of Tax & Treasury at Systal Technology Solutions, and Pieter de Kiewit, Owner of Treasurer Search. They have presented battle-tested methods for increasing the reliability of your data, breaking free from tedious forecasting processes, and freeing up more of your time for analysis.

Click on the image above to view the recording and learn how cash flow automation

 

Cuts your manual workload and reporting timelines by over 90%

Provides detailed insight into transaction-level data across all your entities

Frees you from Excel-based processes that are riddled with human errors

 

On-Demand Webinar Hedging Margin Risk in a World of Volatility

31-05-2022 | treasuryXL | Gtreasury | LinkedIn |

Gain on-demand access and learn how to take the first steps toward creating a hedge program in our latest webinar from April 19th.

Source: Gtreasury

On-Demand Webinar

Original Broadcast: April 19, 2022

 

Gain on-demand access and learn how to take the first steps toward creating a hedge program. HedgeTrackers, Juan Enrique Arreola, and GTreasury’s Evan Mahoney outline:

  • The key drivers of financial risk
  • How hedging helps mitigate threats to value creation
  • Typical barriers to setting up a hedge program
  • Why manual hedge programs often fail
  • 7 steps to setting up an automated hedge program

Click here to gain On-Demand Access

 

 

Featured Speakers:

Juan Enrique Arreola, CPA

Client Services Manager

HedgeTrackers

Evan Mahoney

Product Owner

GTreasury

LIVE SESSION | The Evolution of Open banking, Connectivity and Real time: How will APIs change the Treasurer’s daily life?

27-05-2022 | treasuryXL | Kyriba | LinkedIn |

Live session | June 14 | 11 am CET

How to benefit from the advantages of APIs, for small, medium, or large companies?

APIs are a key work in Treasury Management Systems and the link to multibank platforms. APIs are a catalyst in real time to grant CFOs and treasurers a 360 view of their liquidity management.

Webinar June 14, Kyriba and treasuryXL

Join the panelist discussion to hear from experts in the field

  • Pieter de Kiewit, Owner of Treasurer Search is moderator of this session. With his passion for treasury and his wide industry knowledge he is the obvious person to ask the right questions to the experts.
  • Patrick Kunz, owner of Pecunia Treasury & Finance and highly valued treasuryXL expert. 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 has worked with both international corporates from all fields of business as well as national non-profit organisations.
  • Félix Grévy, VP Product, Open API and Connectivity, Kyriba
    Felix Grevy has more than 20 years of experience working in Financial Technology and held various roles in product development, sales and product management.
    He has been working on API for the last 5 years, building and launching successful API platforms. He has joined Kyriba in 2020 to lead the API and connectivity strategy

We will go around several questions:

  • Who should, own/build the API; Bank, customer or TMS provider? If a bank builds one should it be open source?
  • How can APIs contribute to accounting or controlling, in situations where there are intraday statements, but accounting is only able to process them with end of day statements? Two-way traffic: API’s for both statements / Camt for instant payments
  • How does the CFO leverage the instant payments vs instant acknowledgement?
  • APIs vs Swift. How do they operate together?

Registration

Discover everything there is to know about APIs and how to unify data in a single platform to deliver key insights.

Register today for the next event on API and its advantages.

 

Looking back at the FinanzSymposium in Mannheim, Germany, organized by SLG | Pieter de Kiewit

25-05-2022 | treasuryXL | Pieter de Kiewit | LinkedIn |

 

We at treasuryXL consider it our task to inform you about all that’s interesting in Treasury. Last week Schwabe, Ley & Greiner organized their FinanzSymposium for the 33rd time. One of our partners, Pieter de Kiewit of Treasurer Search, volunteered to go and check it out. This is what he came back with.

Read more

Turbulent markets put focus on evaluated pricing


24-05-2022 | treasuryXL | Refinitiv | LinkedIn |

 

Fixed income volatility looks like it will be around for a while, due to whipsaw-like changes in the overall economic environment. In such an environment, firms need to have the right evaluated pricing to ensure they are pricing their portfolios at fair value levels and that they are complying with regulations.

 

Read more

Winding Down Russia: Treasury Challenges

23-05-2022 | treasuryXL | ComplexCountries | LinkedIn |

 

This was our third call on the situation in Russia. It focused on the practical challenges people are facing: nearly all participants are either running down their businesses or continuing on humanitarian grounds for products which are exempted from sanctions, particularly in the healthcare sector. However, as one participant put it, winding down is easier said than done.

This report was compiled by Monie Lindsey. based on a Treasury Peer Call chaired by Damian Glendinning.

We are happy to share a copy of the full report FREE, please contact us and mention ‘Russia Report’ in your message.

Source

Chair’s Overview

This was our third call on the situation in Russia. It focused on the practical challenges people are facing: nearly all participants are either running down their businesses or continuing on humanitarian grounds for products that are exempted from sanctions, particularly in the healthcare sector. However, as one participant put it, winding down is easier said than done.

  • Many businesses operate through franchises in foreign countries. Terminating the franchise agreement may not be enough to stop them from continuing the business and using the brand name – some high-profile companies which have stopped operations still have franchisees who are continuing to trade, using the name.
  • In some cases, the name remains on the business. This makes it difficult for the brand owner to walk away, as the reputational risk remains.
  • People in the healthcare sector feel a need to carry on for humanitarian reasons. For them, there are significant logistical challenges getting new shipments into the country: no flights, very little sea freight, so heavy dependency on road transport, with limited willing suppliers. They are encountering an additional issue: sanctions apply based on customs codes, and some health care products have not been appropriately coded.
  • In other sectors, companies continue to sell down their existing inventory – but even this can be complicated, as fresh inputs can be required to make goods saleable.
  • Still, other participants have operations that are purely local, and do not require imports. These will typically continue to function, though moves are being made to make them fully independent.
  • Despite all the above, most participants continue to be able to pay down intercompany debt, pay dividends and settle outstanding intercompany invoices.
  • Cash operations are complicated by the need to segregate payments emanating from sanctioned banks. Again, this seems to work, and customers are usually willing to transfer their payments to non sanctioned banks.
  • Many Russian entities have taken steps to disguise their real ownership as a means of evading sanctions: some participants are using a database to identify the true beneficial owners to see whether sanctions apply.
  • Most international banks continue to function, but SocGen recently announced it is selling Rosbank. This raises the concern it may be sanctioned in the future.
  • Most international banks are refusing to open new accounts, and none is interested in taking deposits. This is a concern for participants who are building up cash balances as they sell down inventory. Raiffeisen seems to be the major exception to this.
  • It continues to be possible to convert RUB into hard currency – as long as you are not using a sanctioned bank. Hedging is also possible, but liquidity is limited and deliverable forwards are not available. NDFs seem to work.
  • Several participants have had to remove their Russian subsidiaries from their centralised treasury structures and in-house banks. This has resulted in the hiring of new local staff to manage the newly independent operations.
  • One participant raised the concern that Russia may be branded as a state sponsor of terrorism. This would complicate matters even further.

Bottom line: despite the length of this summary, there are still further details in the report below. Please read it. The overwhelming feedback from the call was that everyone is trying to comply with the sanctions, and business is either being scaled back, or completely localised. People have stopped looking for ways round sanctions – but compliance is complicated.

The full report on Winding Down Russia: Treasury Challenges is available to subscribers. Please get in touch for details. Enquire