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

The Role of APIs in Strategic Cash Forecasting

19-05-2022 | treasuryXL | Kyriba | LinkedIn |

 

By Andrew Deichler, Content Manager and Strategic Marketing

Source

Cash forecasting has undergone some substantial changes over the past couple of years. While forecasting has always been important, the COVID-19 pandemic highlighted just how critical it is, and why CFOs are prioritizing it more than ever.

In a recent webinar, Bob Stark, global head of marketing for Kyriba, and Lisa Husken, value engineer at Kyriba, discussed the current and future state of strategic cash forecasting. When exploring the data, one key point became clear—APIs are the key to more accurate cash forecasts.

How Forecasting Has Changed

Prior to the pandemic, many organizations with high idle cash balances might not have prioritized forecasting, Husken noted. However, once the pandemic hit, as well as other issues that followed like supply chain disruptions, even cash-flush companies quickly saw the important role forecasting played in their liquidity strength.

Risk management has also become more of a focus in the pandemic era as macroeconomic factors impacted FX, interest rates, the supply chain, and inflation. This prompted a shift from organizations generally producing one cash forecast to looking at multiple scenarios for cash and liquidity. “The ‘what-if’ scenarios became increasingly important,” Stark said. “It’s not like they didn’t happen before… but everyone became intrigued by [scenario planning] come 2020.”

Data-Driven Decision-Making

Given the focus on risk and the necessity to explore multiple potential scenarios, today’s treasury functions are focusing heavily on data-driven decision-making. Organizations have more data than ever before, and they need real-time access to it in order to make strategic decisions. And the only way to facilitate that is through APIs; “You can’t become more data-driven without actually having integrated platforms with APIs,” Stark said.

While many organizations view APIs as connectors that allow companies to access their banks and real-time payments, they have much greater potential. They have the ability to unify data, bringing information together into one, composable system, Stark explained. They can take a company’s system of record (the ERP), merge it with a treasury management system, and also bring in data sets from other internal and external sources, such as purchase requisitions, purchase orders, invoices, sales forecasts, etc.

With such expansive capabilities, it’s plain to see why APIs are the perfect tools for forecasting. A survey of over 800 finance executives by IDC and commissioned by Kyriba revealed that 88% of them are prioritizing APIs this year. That’s because CFOs understand that APIs can unify forecast data across their organizations so that they can make better decisions. They are demanding more precise cash forecasting and liquidity planning.

And they are right to demand it, because at the moment, they don’t have the insights they need. The survey also revealed that currently only 15% of finance leaders leverage real-time data to drive insights, and only 25% of finance teams reliably forecast cash and liquidity beyond one month.

Husken noted that those two data points go hand in hand. Reflecting on her previous role as a treasury practitioner, she noted that once forecasts go beyond 4 weeks, their accuracy tends to be 50% at best. “If you don’t have access to that real-time data, then you’re not utilizing the most up-to-date information,” she said. “Then how could you be as accurate as you could be going out further than four weeks.”

Better Forecasting Rewards

Improving the forecast would provide treasury and finance teams with more confidence to capture higher yield, which is desirable in a rising interest rate environment. With the insight strong forecasting provides, some Kyriba clients have been able to decrease the amount of cash they commit to working capital on a both short-term and a long-term basis and divert it to higher-yielding activities.

For example, through improved forecasting with Kyriba, Health Care Service Corporation (HCSC) was able to reduce working capital holdings by nearly $4 billion. The health insurance company was then able to make more strategic investment decisions earlier in the day, resulting in a 5% increase in investment returns. Short-term returns grew by $40 million, while long-term returns have seen an increase of $140 million.

Looking ahead, treasury teams may reap even higher rewards as interest rates increase. The culmination of data that APIs facilitate will create better forecasts, enabling organizations to put cash on the balance sheet to the best possible use. Borrowing will get more expensive as interest rates increase, but APIs can vastly enhance the decision-making process.

Listen to the full webinar here. And for even further insights, download the AFP Treasury in Practice Guide, Treasury Opportunities in Strategic Cash Forecasting.

Click here to view all blogs by Kyriba

Fraud Check Up

17-05-2022 | treasuryXL | TIS | LinkedIn |

Fraud as a threat: Evaluate your risk!

Source

Record high of fraud threat level: 87% of professional treasurers from companies and banks worldwide have perceived an increase in fraud threat in comparison to the year before. * Attacks on companies have intensified significantly, threatening all processes of financial transactions and payment relevant courses.

Additionally, due to the rapid change to remote work since the start of the pandemic, security strategies have undergone the greatest stress test. New and secure means are available and necessary to protect your company against rapidly evolving fraud schemes.

 

Is your company at risk? Find out now by answering a couple of questions.

* Strategic Treasurer – 2021 Treasury Fraud & Controls Survey Report

Forecasting Through Disruption

11-05-2022 | treasuryXL | Cashforce | LinkedIn |

 

Despite the disruption to customer behaviour brought by the Covid-19 crisis, Pearson developed a consolidated forecasting process that has enabled it to speed up invoicing, accelerate £60m in cash flow and meet its 2020 targets.

Source

Cash flow forecasting has long been recognised as a major challenge for corporations – and learning company Pearson, which has over 20,000 employees and reported sales of £3.4 billion in 2020, is no exception. “One of the challenges with forecasting is to understand what your assumptions are when producing the forecast,” explains Group Treasurer James Kelly. “When you’ve got lots of people producing forecasts independently, and then consolidating them, you need to have a consistent approach.”

Getting people to produce a forecast on time can be difficult, while treasury teams often spend precious time pursuing clerical accuracy. And as Kelly adds, “it is important to have enough detail in your actuals to really understand whether the hypotheses that were ventured in your forecast have actually come to pass.”

Forecasting during a pandemic

The latter is particularly important in times of uncertainty – and few things are as unpredictable as the onset of the Covid-19 pandemic. For many organisations, the crisis meant that cash flow forecasting became significantly more challenging overnight, not least because disrupted customer behaviour meant that forecasts based on historical sales patterns could no longer be relied upon.

For Pearson, with the company’s professional test centres forced to close due to lockdowns, a major challenge came in the form of refunds that had to be issued to customers for tests that had been booked in advance – a situation that was complicated by the differing ways that customers could respond. Some rebooked straight away; some requested an immediate refund, and others waited for a couple of weeks before requesting a refund. And when requesting a refund, customers could either apply to Pearson directly, or request a refund via their credit card companies. All these different scenarios impacted the company’s short-term modelling.

The path to better forecasting


While the challenges were considerable, Pearson’s treasury had already been on a journey to more effective forecasting before the pandemic began – indeed, the automation of cash forecasting formed part of a treasury and cash management optimisation project that won a EuroFinance Treasury Excellence Award in 2019. The company subsequently adopted Cashforce’s AI-powered forecasting system, and continued to work on improving its processes. However, when the pandemic started it was clear that a more comprehensive approach was needed.

“What was interesting about Covid was that some of the basic models that we built around predictable cash flows broke,” Kelly comments. “We were able to keep using some of our models for things like payroll – but on the receipt side, a lot of things that had previously been predictable now became unpredictable.” What this meant was that the forecasting ability of the system almost became redundant – “and the benefits of the solution became more about hypothesis testing, and as a consolidation engine that allows you to build different scenarios.”

With the onset of the pandemic, each business produced a high, medium and low sales forecast, which the treasury team used to build its own set of forecasts. While this exercise was initially carried out using Excel, the treasury’s Cashforce-based 12-week forecast demonstrated good levels of accuracy, as well as integrating with key group systems. As such, the system was selected as the basis for the new approach to producing short, medium and long-term forecasts in 16 categories, later expanded to include 120 subcategories.

Building a map of cash flows

By combining this data with information from the company’s ERP system, Pearson has been able to generate detailed reports, test hypotheses and converge its low, medium and high scenarios, thereby building a detailed map of what is happening with cash flows.This proved useful early in the crisis when predicting how many customers would opt to request an immediate refund and re-book later. After initially modelling a range of scenarios, Pearson then used data from the first week to narrow the range. “Overall, we saw a significant proportion of customer request refunds in the first two weeks, mainly through their card companies,” comments Kelly. “We then started to see a stabilisation. By the end of the year, advance bookings were back to their normal level, with significant pent-up demand for many tests.”

Pearson’s functional currency is GBP, so with considerable variability in the company’s US profits another question was how to use the forecasting information to hedge currency risk. Again, this drew upon the low, medium and high scenarios: forward contracts were used to hedge committed or highly probable foreign currency flows for the low scenario, with collars and options used to provide protection for the medium and high scenarios.

Benefits of the project


Pearson has seen numerous benefits as a result of its enhanced forecasting process. Preparing forecasts centrally has freed up significant time for the operating companies, as well as enabling forecasts to be updated daily, instead of weekly or monthly. And Kelly notes that forecasts are now significantly more accurate than they were in 2019, despite uncertainty relating to the pandemic.

Further, Pearson has been able to use insights from the forecasting process to drive better performance in its working capital metrics – in particular, lower DSO, lower variability in DSO, and faster invoicing speed. These initiatives accelerated over £60m of cash flow in 2020, enabling Pearson to achieve its objective of delivering operating cash flow of over £300m, despite the pandemic.

Above all, the crisis has acted as a catalyst for Pearson to rethink the nature and purpose of forecasting. As Kelly concludes: “Whether the forecast is right or wrong becomes less important than understanding why it’s right or wrong. So the game we were playing wasn’t to get the forecast right on any particular day, but to have a good understanding of the business over time – which then enables you to get it right.”

Pearson will be presenting at the 30th anniversary International Treasury Management Virtual Week from Sept 27 – Oct 1. Registration is free for corporate treasurers. Click here to find out more and reserve your place.

Register free

 

 

GTreasury Announces Deal with Moody’s Analytics to Provide Customers with Asset and Liability Management (ALM) Capabilities

10-05-2022 | treasuryXL | Gtreasury | LinkedIn |

Continuing to modernize its digital treasury and risk management ecosystem with strategic partnerships, GTreasury now offers platform interoperability and data integration with Moody’s Analytics’ ALM SaaS product

Source: Gtreasury

CHICAGO, Ill. – May 10, 2022 – GTreasury, a treasury and risk management platform provider, today announced a collaboration with Moody’s Analytics, a global provider of analytic tools and risk assessment capabilities, to enable customers to seamlessly leverage Moody’s Analytics’ market-leading asset and liability management (ALM) SaaS product. Moody’s Analytics’ ALM SaaS product is now available as an interoperable and integrated component within GTreasury’s continuously modernizing software-as-a-service ecosystem for treasury and finance teams.

As small and medium-sized financial institutions grow, accumulated data reaches volume and complexity beyond what manual spreadsheets or outdated software can reliably or efficiently handle. These legacy approaches place increasing strain on internal staff – especially when accelerating growth puts financial institutions within the purview of new regulatory reporting requirements. Banks, credit unions, and other institutions in this position must implement automated capabilities that remove the burdens of routine ALM tasks and monitor and manage their risk far more effectively and completely.

Moody’s Analytics’ ALM SaaS product leads the industry in meeting these requirements, offering a seamless enterprise platform that integrates ALM, liquidity risk management, funds transfer pricing, and regulatory reporting capabilities. Institutions leveraging the product can fully integrate ALM into their business management and regulatory compliance processes, optimizing capital distribution to achieve strategic benchmarks. The product eases the management of even the most complex ALM tasks, while also providing a foundation for defining client behavioral models and forecasts, and delivering data-backed insights that drive key business decisions.

“Moody’s Analytics offers the most comprehensive and capable ALM product on the market today,” said Terry Beadle, Global Head of Corporate Development at GTreasury. “Small and mid-sized financial institutions struggling under the burden of their asset and liability management duties, especially from a regulatory compliance perspective, are instantly and significantly empowered by the automation and powerful tooling Moody’s Analytics’ ALM SaaS product puts at their command. We’re excited to introduce the many benefits of Moody’s Analytics’ offering to our customers as an interoperable, fully data-integrated, market-leading component of the GTreasury ecosystem.”

With Moody’s Analytics’ ALM SaaS product now available as another component within GTreasury’s ecosystem, customers can easily integrate their data and begin to harness the ALM solution across their treasury and risk management practices.

“Pairing GTreasury’s treasury and risk management system and our own leading ALM SaaS product is an advantageous strategy for firms optimizing performance and streamlining operations,” said Cayetano Gea-Carrasco, Managing Director at Moody’s Analytics. “We’re proud to work with GTreasury to help customers to realize their efficiency goals, and to make more informed and accurate business management decisions based on this seamless data.”

About GTreasury

GTreasury is committed to connecting treasury and digital finance operations by providing a world-class SaaS treasury and risk management system and integrated ecosystem where cash, debt, investments and exposures are seamlessly managed within the office of the CFO. GTreasury delivers intelligent insights, while connecting financial value chains and extending workflows to third-party systems, exchanges, portals and services. Headquartered in Chicago, with locations serving EMEA (London) and APAC (Sydney and Manila), GTreasury’s global community includes more than 800 customers and 30+ industries reaching 160+ countries worldwide.

About Moody’s Analytics

Moody’s Analytics provides financial intelligence and analytical tools to help business leaders make better, faster decisions. Our deep risk expertise, expansive information resources, and innovative application of technology help our clients confidently navigate an evolving marketplace. We are known for our industry-leading and award-winning solutions, made up of research, data, software, and professional services, assembled to deliver a seamless customer experience. We create confidence in thousands of organizations worldwide, with our commitment to excellence, open mindset approach, and focus on meeting customer needs.

REMINDER | Webinar | How successful master data management can help you secure financial processes? May 18th

10-05-2022 | treasuryXL | Nomentia | LinkedIn |

 

Find out how to manage your Master Data in a safe way including how to prevent fraud in this upcoming webinar next week on May 18 together with Nomentia, featuring Mark Roelands, Kendra Keydeniers and Huub Wevers!

Date & time: May 18, 2022 at 14:00-14:45 PM CET | Duration 45 minutes

In this webinar, we’ll discuss how you can manage your Master data in a safe way, how you can prevent fraud and sanction risks through the management of this data, and the subsequent processes that make use of your master data. This ranges from the creation of counterparties in your ERP to the safeguard checks in your payment process and system. 

More specifically, we will discuss the following topics:

  • Introduction to Master Data management
  • Managing the counterparty Master Data in your ERP
  • Trends that companies face related to Master Data
  • High-risk processes using your master data
  • Steps to create a safe and secure culture within your company
  • Setting up appropriate processes and systems to enable security

 

Throughout the webinar, you get a chance to ask any questions that arise.

Click here to register now!

Webinar Nomentia & TreasuryXL

Meet the speakers

Mark Roelands
Risk and Compliance Specialist
GRC Consulting

Kendra Keydeniers
Director Community & Partners
TreasuryXL

Huub Wevers
Head of Sales
Nomentia







 

 

 

Rapid changes in trading are taking place. Are you keeping pace?


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

 

Automation doesn’t make FX, equities and fixed income traders unnecessary, but it does make them more efficient – which ultimately can lead to better profits. Read more

How to Harness Hedging for a Strategic Advantage

03-05-2022 | treasuryXL | Gtreasury | LinkedIn |

 

Hedging can be used as a strategic advantage in times of volatility, especially for currency risk. Register for this Treasury & Risk webcast to discover how hedging can be used as a strategic advantage in times of volatility. 

Date: Wednesday, May 4, 2022

Time: 2:00 p.m. ET |11:00 a.m. PT

Cost: Complimentary

Many companies are exposed to currency risk: a risk to earnings driven by changes in currency exchange rates. A hedge program is designed to drive predictability in financial statements and protect margin and earnings from unexpected changes. However, there are common roadblocks to hedging, like complex accounting rules and control requirements. Plus, current global events have paused companies who think it’s too late – or too risky – to get started. But ignoring hedging is not going to make the risk go away.

How do you safely harness hedging? What solutions provide continuity in addressing market and internal risk? When is the right time to hedge?

Join this webcast to discover how hedging can be used as a strategic advantage in times of volatility. You will learn to:

  • Understand what hedging can and cannot do, and where and how it can bring you the most success.
  • Identify key elements in an FX hedge program necessary for success.
  • Navigate market events and volatility, and redirect resources while keeping business operations steady.
  • Automate treasury and accounting workflows to reduce risk and manual errors.
  • Improve compliance and operational efficiencies.

REGISTER NOW! 

(Not able to attend? We recommend you STILL REGISTER – you will receive an email with how to access the recording of the event)

 

Webinar | How successful master data management can help you secure financial processes? May 18th

02-05-2022 | treasuryXL | Nomentia | LinkedIn |

 

We’re excited to announce our upcoming webinar together with Nomentia on May 18th, featuring Mark Roelands, Kendra Keydeniers, and Huub Wevers!

Date & time: May 18, 2022 at 14:00-14:45 PM CET | Duration 45 minutes

In this webinar, we’ll discuss how you can manage your Master data in a safe way, how you can prevent fraud and sanction risks through the management of this data, and the subsequent processes that make use of your master data. This ranges from the creation of counterparties in your ERP to the safeguard checks in your payment process and system. 

More specifically, we will discuss the following topics:

  • Introduction to Master Data management
  • Managing the counterparty Master Data in your ERP
  • Trends that companies face related to Master Data
  • High-risk processes using your master data
  • Steps to create a safe and secure culture within your company
  • Setting up appropriate processes and systems to enable security

 

Throughout the webinar, you get a chance to ask any questions that arise.

Click here to register now!

Webinar Nomentia & TreasuryXL

Meet the speakers

Mark Roelands
Risk and Compliance Specialist
GRC Consulting

Kendra Keydeniers
Director Community & Partners
TreasuryXL

Huub Wevers
Head of Sales
Nomentia







 

 

 

Why becoming a Register Treasurer is so much more than completing a course!

02-05-2022 | treasuryXL | Pieter de Kiewit | LinkedIn |

Next to being a treasury recruiter, I am also a very happy member of the so-called curatorium of the postgraduate education Treasury Management & Corporate Finance of the Vrije Universiteit Amsterdam. Graduates completed an intense 18-month program and can be recognized by the “RT” behind their name: Register Treasurer which can be translated into “chartered treasurer”. The program is taught in English, has already existed for over 20 years and there are many “RTs” in prominent places in the treasury community. Last week, I attended the latest diploma ceremony, was inspired, and decided I want to tell you more.

Read more