Partner Interview | CEO Nicolas Christiaen about how and why they built Cashforce NextGen, the ‘next generation’

05-10-2021 | treasuryXL | Cashforce

Why did Cashforce create the ‘NextGen’? What’s the vision behind this great concept? We have asked CEO Nicolas Christiaen 10 questions regarding the creation of the NextGen platform.

Find out why Cashforce created NextGen, what makes it unique and what solution the platform offers to treasurers.

Introduction Nicolas

Nicolas Christiaen is the CEO and Co-founder of Cashforce, an industry leading cash forecasting and working capital insights system. Nicolas has an extensive background in finance analytics, cash management and cash forecasting. He has led the effort to bring Cashforce to multi-national firms in distribution/retail, manufacturing and logistics/services industries. Nicolas uses his experience to drive both product development and thought leadership within Cashforce, resulting in a user base that benefits, not only from the system, but also the best practices that helped design it. Prior to Cashforce Nicolas worked as a management consultant at PwC and was a serial entrepreneur, founding two other software companies. He is frequently a guest speaker in the FinTech community and you will often find him on panels at international treasury conferences.

Introduction NextGen

Cashforce is a “next generation” cash forecasting and working capital analytics solution focused on automation and integration. By using Cashforce’s cloud-based Software-as-a-Service (SaaS) platform, corporates can unlock the potential for their data to help make smarter decisions, saving time and money in the process. Cashforce can consume a large variety of data, process that data using machine learning and get insights into cash flows and working capital. Cashforce NextGen eliminates the manual and cumbersome treasury tasks around cash forecasting, enabling its users to take advantage of AI-powered scenarios and a strong workflow for distributed treasury teams. The Cashforce system serves mid-to-large-sized corporates and is currently being used at over 70 companies and as many countries.

INTERVIEW

1. Can you remember your “A-ha!” moment that made you realize Cashforce NextGen needed to be built?

Yes, I can remember it well. We were working on a proof-of-concept exercise with a huge dataset, imagining ways to manage this large amount of complex data. We have always tried to challenge ourselves to look for ways to do things better. Our technical team of UX and system performance specialists began laying out the case to use the latest technology to provide, not only the functionality, but also the scalability and performance we would need to meet projected commitments and fulfill the product vision. The team did a fantastic job and really showed me the “art of the possible”. That did it for me and we immediately switched gears to figure out how we could make this happen.

2. What critical issue does the Cashforce NextGen immediately resolve for the treasurer?

Right now, treasurers struggle to provide their stakeholders with accurate forecasts. This is due to the difficulty of consolidating data into one place, and dealing with complexities like intercompany payments, various payment behaviors and overdues. Treasury practitioners want to be able to drill into the data and to use the output to make important decisions from “how much excess cash do I have to invest for the short term?” to “how much cash will we have in three months when our planned acquisition closes”? It is hard to do that when your forecast is sub-par. Cashforce helps you pull data from every location where it resides so you can start with a complete picture. Then we layer our analytics on top of that, so that you have a clear picture of what is coming in and going out. The result is that the forecasted cash positions become meaningful enough that you can incorporate them into strategic plans.

3. How does the new platform differentiate from the other players in the market?

Cashforce began its journey from a working capital analysis point-of-view and we built our cash forecasting capabilities on top of that by linking to ERP systems. This had the effect of enriching the quality of the forecasts that we could generate and made them more useful. The ERP connectors themselves are a large differentiator: they ensure a seamless flow of granular, system-based data. This creates a fully transparent view into cash. On top of that, Cashforce applies smart forecasting logic (including AI-based algorithms, P&L-to-Cash logic, payment behavior analysis…) to build highly accurate and automated forecasts for the short, mid & long term. An intelligent simulation engine allows the Treasury department to evaluate different scenarios, analyze their impact and calculate the forecast/actuals variance.

4. Can each ERP system work with the Cashforce NextGen also when you work with multiple ERP’s located in different countries?

Yes, we have many clients that use Cashforce to pull in data from multiple ERP’s. Sometimes it is different instances of the same ERP, and sometimes it is a different ERP altogether. Either way, we configure Cashforce to pull in the needed data automatically, so that the end-users can start using the system with the data already loaded.

5. What is the biggest challenge you experienced while creating this new platform?

When you are trying to build a really remarkable product, there is always a tension between the ideal vision, the dream state, and what development can realistically deliver to meet market and client expectations and keep our overall momentum. On top of that, the pandemic struck while we were in the middle of our efforts, and this put an enormous strain on our timelines, productivity and ability to collaborate in real-time in the way you need to make something special. Doing that through web meetings can slow things down quite a bit, but luckily we already had a solid plan, an established process and an effective line of communication. This enabled us to keep going and now that we are moving back to normal, we are positioned to get out there and show what NextGen can do.

6. What is, in your perception, the biggest benefit of working with Cashforce NextGen?

As we brought Cashforce NextGen to market, we found that several benefits jumped out to our clients: Time-savings, Money-savings and the ability to use knowledge of your current and future cash positions to elevate forecasting to a strategic level. Many of our clients need to actively manage cash to invest or borrow properly, as needed and to make acquisitions. But they are using old tools and forecasting modules that simply didn’t give them what they needed. With NextGen, we have the highest degree of automation, the best workflow, the latest AI and machine learning models to improve forecasting and it all sits in a great user interface that is so easy to use. Sorry to not say one benefit, but the truth is the benefits are many.

7. What is the overall feeling of your customers about NextGen?

Our customers are very excited about the new product, just as we are. Prior to development, we made sure to meet with our clients, share the vision and gather their feedback, especially pain points. It was a great feeling when we went back to them to show our first demonstration of NextGen, you could feel the excitement in the air.

8. Can you give us an outlook on the product developments and tell us a bit more about your vision?

Cashforce’s vision has always been to save time and money for finance and treasury departments. Over the years, we have accumulated expertise around different approaches to short- mid-and long-term forecasting, connectivity with different ERP’s and TMS’s, designing sustainable workflows and integrating technologies such as artificial intelligence and machine learning. We want to leverage this knowledge alongside future-facing technologies, such as APIs, to create a new platform that is state-of-the-art and capable of consuming billions of transactions in real-time. However, we don’t plan to stop at consolidation and analysis of the data. We are working with our clients to build out the system to take the “next action”in their treasury processes. By linking with trade execution platforms and Treasury Management Systems (TMS), Cashforce will be a decision-making engine that drives our customers’ workflows.

9. The world is always changing, how does Cashforce stay one step ahead of its competitors?

The treasury world is always changing and will always be changing. It’s up to us to change with it and keep up with shifting consumer needs. Companies that focus on the past tend to stay in the past. So you must know what technology is out there, what is possible, what is available, what works and what doesn’t. For example, AI and machine learning will become ubiquitous and woven into the fabric of finance and treasury. That is why we want to lead the charge to use new methods and new technology. The better informed our clients are, the better prepared they will be to handle these changes as they happen.

10. Looking back on your Cashforce career, what is ‘the thing’ you are most proud of?

I have had the opportunity to work with some very talented people at Cashforce. I am most proud of our ability to create an environment that empowers our people to be as successful as they can. To see these talented people bring Cashforce NextGen to life has been an amazing experience.

Refinitiv case study | How Mercuria manages risk across assets with a single platform

04-10-2021 | treasuryXL | Refinitiv |

Mercuria is a global energy and commodity group, operating in more than 50 countries with over 1,000 employees and offices worldwide. Read more about why Refinitiv Eikon was selected to fulfill the complex cross-asset requirements from pre-trade, trade, through to post-trade and credit screening.

Mercuria’s business lines cover a diverse range of commodities trading as well as large-scale infrastructure assets. For that reason, they searched for a cross-asset platform to manage credit, pre-trade, trade and post-trade to quickly, efficiently and accurately access global market insights, trusted market data and ‘best-of-breed’ industry analytics to help price-up derivative products.

Refinitiv Eikon platform was selected to fulfil the complex cross asset requirements from pre-trade, trade, through to post-trade and credit screening.

Why You Should Say Goodbye To Spreadsheets

| 29-09-2021 | treasuryXL | Nomentia |

A recent Cash management survey that we did showed that 43 percent of respondents continue to experience issues with their Cash flow forecasting. Unsurprisingly, more than half of the market still use spreadsheets to execute this business-critical function. The million-dollar question is, why?

According to the European Spreadsheet Risks Interest Group, the reliability of a spreadsheet is essentially the accuracy of the data that it produces and is compromised by the errors found in approximately 94% of spreadsheets.

If accurate cash flow forecasting remains one of the key priorities for treasury and finance professionals alike and the market has easy access to affordable, cutting edge forecasting applications, why do we continue to rely on outdated, ineffective forecasting tools?

Common myths prevail that spreadsheets save money, are easy to use & flexible. In the spreadsheet’s defence, it’s a nifty tool, that ticks many of the aforementioned boxes and can work very well with cash forecasting solutions. But, for a growing business looking to mitigate risk and plan for the future, risks run high if you’re relying on a system that’s almost surely flawed, demands hours of manual input effort, prone to human error, exists largely undocumented and which no one really knows how it works.

“After the clever intern, who developed the nifty macros and formulas is no longer around……nobody knows how the application generates the numbers.”

Penny wise, pound foolish

Spreadsheeting is, by and large, the manual process of gathering, inputting and administrating data. Typically, spreadsheets have been built up and added to over a period of years, becoming cumbersome to manage and share. In an eye-watering number of cases, the person originally responsible for constructing the spreadsheet has long since left the department. No one knows the algorithm behind the macros and no one assumes responsibility for its maintenance, let alone documenting changes and adaptations. The whispered precedent remains, “if it’s not broken, then leave it alone”……… Ouch!

Alternatives are perceived to be more expensive. Excel, for example, is cheap to acquire whilst Treasury Management Systems are expensive with lots of added features that SME’s in particular, don’t require.

Busting the myths

Cost is no longer a plausible reason to rely on spreadsheets for cash flow forecasting. Cloud-based solutions such as Nomentia Cash Forecasting, offer competitive pricing. Modular, on-demand, SaaS solutions have revolutionised application choice. Simply choose the modules you need, pay by the month and no IT involvement required. Free up more departmental time by reducing the number of resource hours required to maintain a spreadsheeting process and the cost-saving just got bigger.

Spreadsheet errors and inaccuracy are by far the most compelling reasons to consider a move to a specialist cash forecasting application. Finance and treasury cannot afford to make mistakes. Inaccurate cash flow forecasts can literally lay to ruin to a company’s business reputation and/or result in a financial loss or penalty. No scare tactics needed.

Mini Case-Study: Conviviality a ‘Spreadsheeting Horror Story’

(Source: The Guardian UK, 21 March 2018)

At first, the drinks retailer Conviviality said profits would be 20% lower than the £70m expected by the City, with £5.2m of the £14m hole that had opened up in its forecast, down to a spreadsheet error. The remainder was a reflection of weakening profit margins.

On 21 March 2018, the Guardian (UK) reported “Firm issues third profits warning; says it will meet investors to raise funds via a share placing’’. The company, in a stock exchange announcement, said it was holding meetings with investors to raise £125m via a share placing that would help it pay a £30m tax bill due at the end of the month, fund overdue payments to creditors and repay a £30m loan.

The company blamed the first shock profit warning on a spreadsheet arithmetic error made by a member of its finance team and weakening profit margins, and then admitted it had not budgeted for the £30m tax bill due this month.”

Conviviality has since gone into administration

Whether or not the use of spreadsheets was the sole cause of this bankruptcy is not clear, but it seems to have been a major contributor. Such cases are exceptional, but they do illustrate how relying on spreadsheets is not a sensible course of action for any finance & treasury team anywhere.

Many spreadsheets also contain, quite clever but complex, macros and apart from keeping these up to date, finance & treasury is responsible for ensuring their integrity. This is something that is not always feasible. Even when errors are spotted it is often very difficult to decode them, especially given the sheer size of the spreadsheets many finance and treasury folk utilise.

Embracing future-proof change

Readily available and affordable cash forecasting applications have, for those organisations who have embraced the benefits of technology, reduced risk exposure exponentially, facilitated real-time & accurate cash visibility, minimised human resource demand, and liberated finance leaders to take a more strategic role across the business. No-brainer.

Sometimes taking a leap of faith, moving away from the old and onto the new, can be a daunting decision. Historical hang-ups, ranging from less than favourable experiences with legacy systems, pre-conceived assumptions around cost implications, and work-flow disruption make it all too easy to decide to ‘leave well enough alone’. Before you take the decision to stick with the spreadsheet that’s done what it apparently ‘says on the tin’ for many years – let’s consider the following:

Back to the future

In a world where cyber security is of the utmost concern and data privacy, e.g., GDPR, is a regulatory requirement, can finance and treasury really afford to run their operations on spreadsheets? Spreadsheet security cannot and does not compare to the advantages of specialist systems that have been built with security in mind. Indeed, some spreadsheet applications lack even basic authentication security, can be easily copied and distributed outside the confines of the business without the knowledge or prior agreement of management.

Spreadsheets were built for convenience-only in a pre-internet world where cyber-attacks and data security were unknown and of no consideration. Spreadsheets were not built with security in mind.

Square peg in a round hole

Spreadsheets don’t grow with your treasury and finance needs. Organisations often try to adapt their spreadsheets to a growing business but soon realise that the complexity of doing so is almost impossible. Adding new accounts and deleting old accounts becomes challenging at the best of times, but managing this critical process in a spreadsheet, whilst trying to drive the business forward, is often a step too far, leading to errors and oversights.

Treasury and finance, by its very nature, consists of a number of different individuals performing a variety of activities, sometimes at the same time. This results in the sharing of valuable company information between several people and departments in any one day. Managing this process on spreadsheets can be difficult and nigh on impossible, even if some automation is achieved. Typically, only one person can update a spreadsheet at any one time so the workload that needs to be shared becomes inefficient and confusing. Maintaining full transparency around additions, edits, and alterations are off the table. Once an edit, or error, is made on the spreadsheet, it remains invisible and untraceable until something goes wrong. In addition, identifying the point of error-impact is often a time-consuming, futile, and frustrating exercise for some unfortunate departmental executive, even if they have the necessary investigative skills.

Doomed to repeat the same mistakes

Spreadsheets are not that good at quantifying or qualifying historical data, and treasury & finance needs this data regularly. That is not to say data cannot be stored in earlier spreadsheet versions, but due to the way they work, it is not a simple task to access, view, assess, and report this data as efficiently and effectively as modern cash management applications. Losing valuable historical data for comparison and variance purposes is a high-risk consideration. Accidentally saving over historic files, or indeed losing files altogether, is a terrifying experience we’ve probably all experienced at some stage in our careers. Notifying management of a spreadsheet faux pas is just as bone-chilling, remaining undisclosed and causing further inaccuracy to forecast outputs.

As alluded to in an earlier blog ‘Five expensive myths in Cash Forecasting’, there is a very real chance that the person who created the original spreadsheet has moved on and left the company. How many finance and treasury departments have found themselves in a position where a mega spreadsheet, long lauded as a ‘work of art,’ is no longer sufficiently supported and documented with non-existent instructions on how to maintain or update the worksheet.

Cassette recorders, big hair, leg warmers, the Rubik’s cube, Walkman, and mobile phones the size of small suitcases are all legacies from the 1980’s. Technology and hairstyles have moved on….. so should cash forecasting applications.

Use gamification techniques in the checkout process

27-09-2021 | treasuryXL | EcomStream | Ramon Helwegen |

Gamification aims to increase engagement and create more loyalty through positive user experiences. Loyalty drives returning customers. It’s a loyalty risk if your checkout process is hard to complete.

The least exciting part of the online customer journey must be the checkout process, for sure. However, in a relatively simple way you can gain a lot here, limit abandoned shopping carts and drive loyalty of your visitor.

Imagine: Your customer has already chosen the product and has already agreed on the price. Isn’t it important to secure that conversion as quickly and as simply as possible?

What is the problem of a boring checkout process with all kinds of input fields? It is just not fun to do. Combine the pleasant with the useful. A gamified process is simply more pleasant to complete. With subtle adjustments, you can already achieve a lot and fortunately you do not have to reinvent the wheel yourself.

With a gamified checkout you set a goal, offer control, reward good behavior and deliver speed. By adding a gamified twist to the checkout process, you improve the necessary focus from your customer and limit the chance that he or she will be distracted and never finish the transaction again.

The checkout process is task-oriented and a number of things can be improved during this process. In the visual below you can see a number of thoughts and considerations that take place during the checkout process in the hearts and minds of your customers. By gamifying certain tasks you quite easily make checking out more pleasant. This also makes the overall customer experience just better as you remove friction.

A shopper who leaves the site even after the checkout has started? Make sure to avoid such a costly event.

A gamified checkout works. Just try it.

About EcomStream

EcomStream is an independent consultancy and is specialized in optimization of online, omnichannel and marketplace payment solutions, and optimization of checkout flows.

The goal is to achieve much lower costs for you while creating a much better customer experience for your customers.

Thanks to its lean organisational model, EcomStream will help you to reduce the cost of ownership of your payment solution and to improve your ROI, fast.

Interested to know more about what gamification can mean for your business? I am ready to help!

Ramon Helwegen

About EcomStream

EcomStream is an independent consultancy and is specialized in optimization of online, omnichannel and marketplace payment solutions, and optimization of checkout flows.

The goal is to achieve much lower costs for you while creating a much better customer experience for your customers.

Thanks to its lean organisational model, EcomStream will help you to reduce the cost of ownership of your payment solution and to improve your ROI, fast.

Your Last Call | International Treasury Management Virtual Week | September 27 – October 1

22-09-2021 | Eurofinance | treasuryXL |

It’s free, It’s Virtual…

International Treasury Management is the annual meeting place for 1000s of the World’s most senior treasurers to learn and share experiences in valuable peer to peer discussions. With a reputation for ground-breaking sessions and world-class speakers, our 30th anniversary event will explore the boundaries of the profession, take a glimpse into the future of business, treasury and working life as well as offer the practical case studies on the treasurer’s top agenda items.

Only one treasury event can deliver the comprehensive mix of big picture global insight and granular treasury knowledge you need to make the right choices for the future.

Back to the future, again

Over the past 30 years since EuroFinance’s inaugural conference on International Cash and Treasury Management, much has changed. Treasurers have firmly become business partners, technology experts, risk managers and opportunity spotters. They often lead fundamental change within the company as markets, business models and technology shifts.

What next? This event will delve into how treasury operations can gear up for the future, having learned the lessons from the past. Where, who, what and how will the corporate be in the coming years and what is treasury’s role?

Keynote sessions will offer big-picture insight alongside themed streams including:

Payments revisited
Risks and Rewards
Digital strategies
Practical solutions to day-to-day Treasury challenges
The power of partnership

What makes International Treasury Management the must-attend event of the year?

networking on a global scale – a significant rise in attendees in 2020 boosted the value networking with banks, providers and potential clients… all in one place
strategic insights and best practices – get solutions to the challenges you face from treasury and economic experts during keynotes, practical case studies, fireside chats, analytical panels and more
future trends – delve into the latest innovations and new technology driving change in treasury, and their practical applications
live Q&A with world-class treasurers – enjoy borderless networking and live Q&As with high-profile speakers directly after each session
cost and time-efficiency – tune in form anywhere in the world, at the click of a button with no long distance travel or accommodation costs
continued learning – catch up on any missed sessions and re-watch your highlights, on demand for up 2 months after the event
unite your international teams – as a free event, it offers an opportunity for your whole treasury team to attend. Perfect for encouraging learning and development at all levels

September 27th – October 1st | Virtual

Register Now for Free!

Why M&A-Intensive Enterprises Need a Robust Technology Integration Strategy

21-09-2021| treasuryXL | TIS |

This article evaluates how the success of long-term M&A activity on the part of large enterprises is dependent upon their ability to integrate and connect the pre-existing technology stacks of newly acquired subsidiaries with their broader infrastructure. Chiefly, we evaluate how enterprises that regularly establish new subsidiaries and entities across the globe can ensure that the various finance, treasury, and banking solutions leveraged by these companies before the acquisition can be integrated and connected in a cost-effective and optimized fashion.

M&A Activity Remains a Top Priority for Global Enterprises

Although merger and acquisition (M&A) activity is fairly common in today’s business environment, it is typically large, global enterprises that leverage the strategy most frequently.

For organizations with billions in revenue and a steady stream of new investment, taking advantage of new market opportunities is often best achieved by acquiring companies that have already proven themselves successful in the field. In the case of the world’s largest enterprises like Microsoft, Apple, and Facebook, M&A activity comprises a significant portion of overall growth. In fact, Microsoft alone has acquired more than 216 companies since their founding, and Apple acquires a new company at an average rate of once every four weeks. Across other industries like staffing and HR, Fortune 500 firm ManpowerGroup has acquired four new companies in the past five years and 15 total companies over the past few decades.

But while an M&A-intensive business strategy might be advantageous for eliminating competition, increasing revenue, and maintaining growth, there are a variety of challenges that must be confronted in order for the model to prove successful in the long-term.

Of course, any M&A project undertaken by a company will face obstacles, most of which revolve around how to best integrate the employees, products, systems, culture, and customers of the acquired company into the acquiring enterprise. These challenges are typically what executives and business leaders focus on most during M&A projects, and for good reason. If employees and customers are dissatisfied with how the acquisition is managed or if the acquired company’s product line stagnates, it can quickly turn the entire project on its head and substantially hinder future profits and revenue.

However, in today’s digitally-oriented business landscape, the above factors are not the only concern for M&A-intensive enterprises. Instead, one of the core challenges confronting modern acquisition projects lies along the technology front.

This is particularly true when it comes dealing with finance, treasury, and banking technology.

Why is Financial Technology Complexity so Common for M&A-Intensive Companies?

When evaluating the operations of enterprises that regularly undertake new acquisitions, it’s easy to see how technology complexity can manifest itself.

Let’s quickly walk through a sample scenario.

Looking specifically at finance and treasury technology, suppose that a U.S.-based manufacturing firm decides to acquire an emerging competitor in Asia. Also suppose that this Asian competitor has been operating independently for several decades and has its own spread of regional entities, as well as a pre-existing set of back-office platforms and IT solutions. As such, the company is already using an ERP, TMS, and AP system, as well as a globally distributed network of banks and bank accounts.

Going a step further, now consider the diverse range of currencies, payment formats, and financial networks that the Asian enterprise uses compared to the acquiring U.S. company. Also, because the compliance arena in Asia is managed through a diverse and multifaceted set of jurisdictions, conducting financial operations in the region will require a unique approach to managing regulatory and sanctions processes, as well as data and payment security.

For the acquiring U.S. company, connecting the various systems and networks used by the Asian subsidiary with their broader technology stack will be no easy feat. To start, some of the systems in place at the Asian subsidiary may be hosted locally or even running on older, unsupported versions. If modern cloud solutions have not been adopted, then integration via open APIs becomes highly unfeasible and it will likely require extensive IT support to establish the connections. The same is true for integrating the various bank channels and payment formats in use by the Asian subsidiary into the enterprise’s global financial architecture. Accommodating the various risk, regulatory, and compliance measures in place across Asia will require even more support, as well as collaboration with multiple legal and banking teams.

The end result being?

Although a single acquisition of this scale may be manageable for a global enterprise with significant resources, those that consistently undergo new acquisitions will likely experience much more difficulty. This is because internal IT teams rarely have enough bandwidth (or budget) to successfully establish all of the required connections for every system. Instead, what often happens is after a few months or years, IT is forced to divert their attention from one acquisition to another, thereby letting a portion of outstanding system connections fall to the wayside.

Ultimately, this creates an environment where much of the data and information captured at the local or “entity” level will sit idle and siloed from the rest of the enterprise. Instead of real-time data access across their individual units and subsidiaries, finance and treasury teams at HQ will have to rely on manual submissions from field personnel to ascertain data. In some cases, it may take weeks for this information to be received, by which time it is often outdated.

In the long run, the impact of these technology limitations has far-reaching consequences for the broader enterprise, especially if such issues are present across each new subsidiary or locality that they acquire.

What are the Main Problems That This Lack of System Integration & Connectivity Cause?

Thinking through the above M&A scenario, suppose that a similar conundrum impacts each (or most) of the M&A projects that an enterprise undertakes. Eventually, the lack of automated connectivity and control between the enterprise’s HQ and each of their subsidiaries will result in significant financial issues, particularly in the below areas:

Liquidity Management: If financial data related to cash positions and balances across a subsidiary and its underlying banks and accounts cannot be effectively transmitted to an enterprise’s HQ, then everything from cash forecasting and cash repatriation to short-term investing and risk mitigation will be impacted. If the enterprise does not know the exact amount of funds available across each entity, then it cannot effectively plan ahead to take advantage of investment or tax savings opportunities. Over time, losing out on these opportunities due to gaps in data quality and reporting can cost an enterprise millions of dollars every year.
Payments Management: For enterprises that cannot accommodate the range of payment systems and formats in use by their subsidiaries or that struggle to connect with their bank channels and networks, a variety of pain points will occur. Common issues include a reliance on outdated formats that limit data quality and security, delays in payment processing that impact the timeliness of transactions and also constrain employee bandwidth, and an increase in operational costs for continuing to support legacy processes and channels. Additional security and compliance issues may also manifest themselves, as highlighted below.
Security & Fraud Prevention: Without ample visibility into the payment processes and cash positions at each of a company’s subsidiaries or any centralized window for viewing this activity in real-time (or at least same-day), it becomes monumentally more difficult to identify and prevent fraud from occurring. If payments are initiated in disparate platforms at the local level and no overarching control or transparency is provided at the HQ level, then the threat of both internal fraud and external fraud increases exponentially.
Compliance & Regulation: Due to the diversity of data management protocols, financial regulations, and sanctions policies that exist across each world region, a lack of payments standardization within an enterprise can result in increased legal and regulatory risk and also jeopardize their reputation and standing. Examples of data and payments compliance protocols for which non-compliance can result in severe penalties include OFAC sanctions in the U.S., GDPR data policies in Europe, and the recently introduced Personal Information Protection Law (PIPL) in China.
General Financial Execution: If financial data is not automatically flowing between an enterprise and its subsidiaries, then every department and stakeholder with a need for this data is impacted. Accounting will be unable to track ledgers or financial statements, legal will struggle to manage regulatory and compliance issues, treasury will be hindered in their liquidity and payment processes, and the C-suite will lack the high-level financial data they need to make strategic decisions.

Although the above financial technology challenges present serious hurdles for M&A-intensive enterprises, there are solutions that can be put in place to alleviate the strain. One such solution includes the adoption of a modern Enterprise Payment Optimization (EPO) platform.

How Can the Complexity Caused by Global M&A Activity be Simplified & Managed?

Because of the diverse systems landscape and limited IT bandwidth that often exists across M&A-intensive enterprises, achieving global visibility and control over finance and treasury operations requires a unique approach to connectivity and integration. In recent years, one strategy that has grown increasingly popular involves the adoption of an enterprise payment optimization (EPO) platform.

Modern EPO platforms are typically cloud-based solutions that sit above the other systems in an enterprise’s financial technology stack and manage connectivity across all their various back-office, banking, and 3rd party systems, including those at their entities and subsidiaries. Rather than connect every platform used within the enterprise to every other system, each solution need only connect to the EPO platform instead. This drastically simplifies the process of integrating new solutions with an enterprise’s tech stack and also automates the process of transmitting payments and financial data between any system that is connected to the EPO platform, including those used by different entities and departments.

Although the adoption of an EPO platform requires some up-front legwork, using a vendor like TIS ensures that the complexity of connecting to banks and various internal systems is almost entirely outsourced. This means that formerly difficult and time-consuming tasks that were a drag on internal IT teams (such as configuring and maintaining the links between new entity systems and HQ ERPs, HR systems, and TMSs) are now managed by the EPO vendor. As payment formats evolve or new regulations require changes in integration, EPO vendors like TIS automatically handle the upgrades and also manage the addition of new countries, banks, and users to an enterprise’s network as growth and expansion dictate over time.

Ultimately, by connecting all of the various banks and systems that comprise your financial technology stack to an EPO platform, you effectively ensure that regardless of where an entity is located or what local systems are being used, the data and information stored on their platforms is never left isolated or unaccounted for. And as older or outdated enterprise payment solutions are eventually replaced by newer and more upgraded systems, connecting them to the EPO platform in a similar fashion will ensure ongoing cohesion and connectivity across your global networks, even as various technology overhauls and system migrations occur at specific entities within the enterprise.

Once this type of EPO platform has been adopted, the ensuing benefits can be felt immediately by all enterprise stakeholders. Company-wide visibility to global cash balances drastically improves, liquidity management protocols become more streamlined, payments compliance and security features are standardized across all departments and entities, and the enterprise’s overall payments execution workflows become more automated and controlled.

Today, these capabilities are exactly what TIS is offering enterprises through our EPO technology suite.

Why is TIS the Ideal Solution for Simplifying M&A-Induced Technology Complexity?

TIS’ Enterprise Payment Optimization platform is a global, multi-channel and multi-bank connectivity ecosystem that streamlines and automates the processing of a company’s payments and subsequent reporting across all their global entities, banks, and financial systems. By sitting above an enterprise’s technology stack and connecting with all their back-office, banking, and 3rd party solutions, TIS effectively breaks down department and geographic silos to allow 360-degree payments and cash visibility and control. To date, the ~200 organizations that have integrated TIS with their global technology stacks have achieved near-100% real-time transparency into their payments and liquidity. This has benefitted a broad variety of internal stakeholders and has also enabled them to access information through their platform of choice, since the data that passes through TIS is always delivered back to the originating systems.

This systematically controlled payments workflow is managed by TIS for both inbound balance and transaction information and outbound payment instructions. Data can be delivered from any back-office system via APIs, direct plug-ins, or agents for transmission through TIS to banks and 3rd party vendors. No matter where you operate, TIS provides global connectivity by creating and maintaining compatibility with your required formats, channels, and standards so that organizations can connect with virtually any bank in the world.

Because of the deep connections that TIS maintains with internal systems such as ERPs or TMSs, external banks, and 3rd party vendors / service providers, the process of managing payments is simplified for every internal stakeholder. C-suite executives, treasury, accounting, AP, legal, HR, and other key personnel can access whatever financial data they need, exactly when they need it. And by automating this flow of information for both inbound and outbound payments, TIS provides the control and flexibility that enterprises need to function at their highest level.

Ultimately, the extensive experience and unparalleled integration capabilities provided by TIS enable enterprises to streamline their methods for managing payments and data across each entity and subsidiary. This has proven vital for a variety of TIS’ globally diverse clients, including Fortune 500 firms like ManpowerGroup and international NGOs like IFAW. And as these organizations add new companies, localities or seek to replace the underlying systems in use across various regions, TIS is there to help them manage the new integrations and connections, thereby ensuring a seamless transition and constant control over global payments and information.

In the digital world of enterprise payments, TIS is here to help you reimagine and simplify. For more information about how TIS can help you transform your global payments and information processes, please refer to the below resources.

About TIS

TIS is reimagining the world of enterprise payments through a cloud-based platform uniquely designed to help global organizations optimize outbound payments. Corporations, banks and business vendors leverage TIS to transform how they connect global accounts, collaborate on payment processes, execute outbound payments, analyze cash flow and compliance data, and improve critical outbound payment functions. The TIS corporate payments technology platform helps businesses improve operational efficiency, lower risk, manage liquidity, gain strategic advantage – and ultimately achieve enterprise payment optimization.

Visit tis.biz to reimagine your approach to payments.

Which Options Are There When It Comes To Bank Connectivity?

15-09-2021 | treasuryXL | Nomentia |

In this blog, we want to give an overview of the different options for bank connections from host-to host, direct connections through regional standards and SWIFT. On top of that we’ll also take a look at open banking APIs and what possibilities they might hold for the future.

Bank connections enable corporate customers to exchange messages with their banking partners. Companies need to have a relationship with at least one bank, in practice there are typically several banks involved, for example to exchange account information and sending payments. Bank connections are so to speak the backbone of your treasury department because they ensure the uninterrupted flow of information between your business process tools and banks, allowing you to create accurate cash forecasts, manage liquidity and the likes. Bank connectivity will remain a topic that corporate treasury departments need to decide how to approach. Now, let’s look at the different options for creating bank connections.

Direct host-to-host connections

One of our webinar polls showed there are still 30% of our respondents who maintain host-to-host connections with their banks. This means that typically the IT department sets up bank connections to specific banks. How those work in specific then depends on the bank. With some banks a host-to-host connection is needed for each country where the company is operating. Luckily many banks offer single point of entry connectivity which means that once you’re connected, you can use it to operate cash management messages in all or multiple countries where the bank has branches.

Since the bank is hosting the service, it also means that the bank is dictating all technical requirements and corporate customers need to adapt to changes the banks might make.

And change is imminent, especially when it comes to messaging formats, communication protocols and security requirements. There are for example client certificate renewals that come up usually every two years. Root certificates expire more infrequently but cause more maintenance work.

Another quite timely example is the Transport Layer Security (TLS) protocol version upgrade. TLS certificates not only have to be renewed from time to time, but older TLS protocol versions have known vulnerabilities and the banks are enforcing their clients to use newer versions all the time.

Maintaining direct host-to-host connection requires you and especially your IT department to make a commitment to maintain these connections day in and day out. Which requires special technical expertise from the IT department and a lot of resources, especially when you employ many host-to-host connections in your ecosystem.

Direct connections through regional standard protocols

The EBICS (Electronic Banking Internet Communication Standard) is a standard protocol that is used in Germany, Switzerland, and France. Also, banks in other countries are testing this standard.

The challenge with EBICS has been that different countries have their own versions of the standard. In 2018 EBICS 3.0 was launched with the goal to harmonize the differences and to make it easier to communicate across borders. In practice Germany and Switzerland are still using EBICS 2.5 and it will take until November 2021 until EBICS 3.0 becomes mandatory for banks in Germany.

Some international banks have adopted EBICS into wider use. Which means that corporations familiar with EBICS may use it for message exchange and authorization in other countries as well. Only the future will show if EBICS fulfils its vision of becoming the pan-European standard protocol for bank communication.

Connections through SWIFT

Companies can connect directly to the SWIFT network and with that get connected with over 11 000 financial institutions in more than 200 countries. SWIFT is hosting and maintaining the global network for that. It’s highly secure and reliable. It’s a single gateway that almost sounds like it opens the door to paradise for you, at least in the mind of someone who spends his time building host-to-host bank connections for single banks. You are empowered to change banking partners based on your business needs without having to worry about establishing new connections.

SWIFT has a sort of do-it-yourself approach by providing Alliance Lite2 to companies. And here comes the other side of the coin. A direct connection to SWIFT is costly and requires time and resource-demanding integration. In addition, you need to comply in full scope with the SWIFT Customer Security Programme (CSP) that requires all their members to protect their endpoint, because naturally, they need to protect their network.

Most corporate customers use a SWIFT Alliance Lite2 Business Application (L2BA) provider or a Service Bureau for the connection. In the L2BA model, a service provider takes care of handling all necessary requirements to connect to the Swift network and you buy your bank connections pretty much as a service. Often this is packaged with other products and solutions you might use.

Open banking APIs

Open banking APIs are one of the most interesting developments. We already see banks all across Europe offering premium APIs for corporates that go beyond what is possible today.

Open banking APIs are set to bring a real-time component to the game that hasn’t been there so far. In the past there was no way for external systems to fetch for example real time balances from banks, but this is about to change. While as previously, corporations would execute batch payments, with open banking APIs this will be possible whenever a payment is needed with instant effect. Looking at balances and payments is the beginning of new solutions that will be available to corporate treasury.

Open banking APIs is something that companies and providers such as Nomentia will need to take into account for their roadmap because this is clearly where we will be able to provide innovative solutions for our customers in the future.

What’s the verdict?

It would be great to give an easy answer to this question. But it’s just not that simple. As I outlined above, all connection methods have pros and cons It really depends on your needs and internal structures what you need.

WATCH OUR WEBINAR ABOUT BANK CONNECTIVITY

Transitioning from LIBOR: Explaining the cash fallback rates

14-09-2021 | treasuryXL | Refinitiv | Jacob Rank-Broadley

The LIBOR transition: We explain what fallback rates for the USD cash markets are and provide practical insights on how these rates can be used.

Refinitiv USD IBOR Cash Fallbacks are designed to ensure existing USD LIBOR referencing products such as loans, bonds and securitisations can continue to operate post-USD LIBOR cessation.
There are two versions of the Refinitiv USD IBOR Cash Fallbacks: those for consumer products and those for institutional products.
Initially, market participants can use the prototype USD IBOR Cash Fallbacks to become more familiar with the rates and test technical connectivity.

For more data-driven insights in your Inbox, subscribe to the Refinitiv Perspectives weekly newsletter.

During my previous blog on fallbacks in April 2021, I outlined the importance of introducing robust fallback rates into the USD cash markets.

There is a substantial exposure of cash instruments that have no effective means to easily transition away from LIBOR upon its cessation. New LIBOR legislation signed into State of New York law reduces the adverse economic outcomes associated with the instruments by requiring them to use the Alternative Reference Rates Committee’s (ARRC) recommended fallback language.

In March, the ARRC announced Refinitiv as publisher of its fallback rates for cash products. Since then, Refinitiv has been working with the Federal Reserve and the ARRC to finalise the design of the USD IBOR Cash Fallbacks.

Refinitiv is committed to supporting you through the LIBOR transition with LIBOR Transition and Replacement Rate solutions

Fallback rate economically equivalent to USD LIBOR

The Refinitiv USD IBOR Cash Fallbacks provide the rates described in the ARRC’s recommended fallback language.

These are composed of two components: the adjusted Secured Overnight Financing Rate (SOFR) part measures the average SOFR rate for the relevant tenor. Added to this is a spread adjustment, which measures the difference between the USD LIBOR for each tenor and SOFR compounded in arrears for that tenor.

Adding these two components together gives an all-in fallback rate that is economically equivalent to USD LIBOR.

There are two version of the Refinitiv USD IBOR Cash Fallbacks: those for consumer products and those for institutional products. Both are published to five decimal places and include the adjusted SOFR rate, the spread adjustment and the all-in rate.

Watch: Refinitiv Perspectives LIVE – The LIBOR Transition: Risk-Free Term Rates

Consumer cash fallbacks

Refinitiv USD IBOR Consumer Cash Fallbacks are designed to ensure existing USD LIBOR referencing consumer cash products such as mortgages and student loans can continue to operate post-USD LIBOR cessation.

These rates are based upon compound SOFR in advance, which means the rate is known at the start of the interest period, plus the spread adjustment.

Prior to 1 July 2023, the spread adjustment will be calculated as the median difference between USD LIBOR and SOFR compound in arrears for the previous 10 working days, resulting in the spread adjustment changing on a daily basis.

This is an indicative rate, and while it should not be used as a reference rate in financial products, it is designed to aid familiarity with the USD IBOR Consumer Cash Fallbacks prior to adoption in July 2023.

Following 30 June 2024, the spread adjustment will be calculated as the median of the historical differences between USD LIBOR for each tenor and the compounded in arrears SOFR for that tenor over a five-year period prior to 5 March 2021.

For the period between 1 July 2023 and 30 June 2024, the spread adjustment will be calculated as the linear interpolation between the two rates outlined above.

A floored version of the consumer cash fallbacks is also available, meaning that if the average SOFR across all days in the tenor is below zero, then the all-in published fallback rate will be solely the corresponding spread adjustment.

Refinitiv USD IBOR Consumer Cash Fallbacks will be published in 1-month, 3-month and 6-month tenors.

Institutional cash fallbacks

Refinitiv USD IBOR Institutional Cash Fallbacks are designed to ensure existing USD LIBOR referencing commercial cash products such as bilateral business loans, floating rate notes, securitisations and syndicated loans can continue to operate post USD LIBOR cessation.

In order to account for different conventions in different markets, there are a number of different versions of the Refinitiv USD IBOR Institutional Cash Fallbacks. There are three different ways of capturing the average SOFR rate: SOFR compound in arrears, Simple SOFR in arrears and SOFR compound in advance.

Added to this is the spread adjustment, which is calculated as the median of the historical differences between USD LIBOR for each tenor and the compounded in arrears SOFR for that tenor over a five-year period prior to 5 March 2021.

Unlike Refinitiv USD IBOR Consumer Cash Fallbacks, there is no transition period. This means that the spread adjustment remains fixed for perpetuity.

Each of the SOFR compound in arrears and Daily Simple SOFR rates will be available in up to seven tenors in a variety of different forms in order to conform to convention in different markets.

The 3-, 5- and 10-day lookback without observation shift versions give counterparties more notice by applying the SOFR rate from three, five and ten business days prior to the rate publication date.

The 2-, 3- and 5-days lookback with an observation shift versions also give counterparties more notice by applying the SOFR rate from two, three and five business days prior to the publication date, but in contrast to a lookback without observation shift, it applies that rate for the number of calendar days associated with the rate two, three and five business days prior.

The 2- and 3-day lockout versions fix the SOFR rate for the last two and three days prior to publication.

The plain version has no lookback, observation shift, or lockout.

The SOFR compound in advance rates for institutional products will be available in 1-month, 3-month and 6-month tenors.

Download now: Navigating the LIBOR transition

What’s the next step?

Initially, market participants can use the prototype USD IBOR Cash Fallbacks to become more familiar with the rates and test technical connectivity.

Following the ARRC’s recent endorsement of Term SOFR, Refinitiv plans to supplement the initial prototype with a forward-looking term rate version in due course.

During the prototype phase, we anticipate changes to the methodology based on user feedback to ensure full alignment with industry standards prior to publication of the production rates.

Production rates for the institutional cash fallbacks should be available from autumn 2021, and for the consumer cash fallbacks they will be available from July 2023.

How to access the rates

Prototype rates are now available from the Refinitiv website and through Refinitiv products including Refinitiv® Eikon, Refinitiv Real-Time and Refinitiv® DataScope.

For more information on these rates, including the methodology and identifiers (RICs), please visit our Refinitiv USD IBOR Cash Fallbacks page.

Refinitiv is committed to supporting you through the LIBOR transition with LIBOR Transition and Replacement Rate solutions

Nomentia Acquires TIPCO: A union of exceptional products and teams

08-09-2021 | treasuryXL | Nomentia |

Nomentia announced yesterday that the company has acquired TIPCO Treasury & Technology. Shortly after the news was released, we had the chance to sit down with Jukka Sallinen, CEO of Nomentia, and talk about the announcement, what does the acquisition promise for finance and treasury professionals globally, and what does the future hold for Nomentia.

The acquisition of TIPCO is the latest milestone in Nomentia’s history. What’s the reason behind the transaction?

There are a couple of reasons. First and foremost, we’ve felt that both companies share a very similar mission. We want to provide unparalleled solutions for and with our customers. TIPCO’s Treasury Information Platform (TIP) is an exceptional treasury management solution that is widely known in the DACH region, and TIPCO has been also famous for its acumen in treasury. Our combined solutions and domain expertise make us one of the strongest players in the cloud treasury and cash management space. I have no doubt that our current and future customers will benefit from our combined product portfolio. Another good reason for joining forces with TIPCO is that we’ve strongly felt that both companies have had surprisingly similar cultures – both have a very healthy obsession for providing the best solutions for our clients and we take pride in what we do.

Tell us more about the merged product portfolio and how treasury teams will benefit from it?

Before the acquisition, Nomentia cash management was consisting of Bank connections, Payments, Cash Forecasting, In-house banking, Bank Account Management, and Reconciliation solutions. Adding TIP to the solution mix, we can now provide robust and sophisticated cash flow forecast and cash visibility solutions, as well as solutions for trade finance, FX risk, treasury reporting and treasury workflows, and more. TIP has been always loved by the users and now all Nomentia customers will have access to TIP.

Today, it’s not feasible for treasury teams and finance teams to choose one provider for all their needs or trust that their ERP system would provide a working solution alone. Treasurers should be able to choose the solutions that can best resolve their challenges and meet their needs. To get the best outcome, finance and treasury teams often need to work with multiple vendors – taking the best solution from each. Of course, that’s not always ideal from IT’s point of view, but that’s where our team comes in to take care of the implementation plan together with the client and integrate with their existing systems and banks. We trust that a lot of our current customers will find new solutions from our updated offering that can help them to overcome their current challenges.

New customers will find that Nomentia can offer the widest cash and treasury management solution portfolio on the market to help them build better treasury processes.

How does the acquisition affect Nomentia’s future?

During the past year, Nomentia has taken big steps toward becoming the global powerhouse for treasury and cash management. After last year’s merger of OpusCapita and Analyste, we’ve successfully got our footprint in many new markets, and we’ve been especially growing in the DACH and Benelux regions besides continuing to be the number one choice of treasurers in the Nordics. Acquiring TIPCO and merging the two product portfolios will help us to strengthen our position in Europe even more.

Our team has been also growing significantly – it’s always great to work with people that are experts in their field and can truly help our customers to develop their operations. Together, we will exceed our customers’ expectations with our strong product portfolio and even stronger team. Personally, I am thrilled about the news and can’t wait to roll up our sleeves and get to work together with our new colleagues!

Read the press release to learn more

What to Consider When You choose your Bank Connectivity Strategy? 7 Important Criteria

| 01-09-2021 | treasuryXL | Nomentia |

Most organizations would benefit from some form of Bank Connectivity as a service. But just deciding on outsourcing bank connectivity won’t magically make all those connections appear. In this blog, we’ll cover 7 important criteria you should think of when evaluating different options.

1. In which banks do the majority of your payments flow?

Make a list of all banks that your organization is connected with and include all banking relationships from all your subsidiaries. We have noticed in interactions with our customers that this first step can be eye-opening at times. Often, we have an idea of the different banking relationships but then there are still local bank relations that might not be that visual to your treasury function. It also provides you with a good understanding of how many bank connections you would need and whether you would benefit from simplifying your banking landscape before implementing a bank connectivity solution. If your organization is only working with 5 banks altogether the story is very different from an organization that has relationships with 20+ banks.

After mapping this out, you might want to apply the 80/20 rule: typically, you would first set up connections to the strategic banks that cover 80% of your payment flows. A cloud-based software from a Cash Management specialist will most likely be able to provide you these connections as part of their out-of-the-box functionality.

2. Evaluate your use of local banks

Even if you expand the use of strategic banks to more countries, you might still find a set of local banks that you cannot replace. Typically, a discussion about bank connectivity increases in complexity when the long tail of local banks comes into play. That’s where you need to ask yourself why you are working with local banks. Is it for collecting money, for making payments from a regulatory point of view or because of specific needs within your local business?

Having visibility on Cash is straightforward while covering payment flows is not easily justified from a direct cost savings point of view. At the same time payment fraud plays a role in the local banks. You might want to consider a solution to replace internet banks for manual payments with a centralized solution. Then, the business case cannot be backed up by direct cost savings, but cost-efficient risk mitigation.

3. How consolidated is your banking landscape?

After mapping out all your banks in a first step, you know your strategic banks. Now it’s time to take a look at which countries are covered by these strategic banks. Would it be a good time to reduce your banking relations by using a certain set of strategic banks in more of your countries in order to reduce the number of domestic banks?

4. How many file formats and payment types do you have in use?

It is a different thing to set up credit notes and treasury payments only, as opposed to also including domestic payments, salary payments, and tax payments. We recommend having a solution for all your payment types and file formats: this is the only way to get rid of the internet banks and the tokens.

5. Are you concerned about payment fraud and information security?

You should have a solution to cover all payment types in all countries with all banks. That is the only way to have a full audit trail and control in every country. A centralized payment process enables centralized validation and control. We have covered the topic of payment fraud extensively.

In our case, having bank connectivity as a cloud service lets you benefit from a platform, which invests annually roughly 1bn$ in information security. From an information security perspective, this lets us concentrate on application-level security, which is annually audited by 3rd parties.

6. Are you interested in having transparency in your bank fees?

Modern bank connectivity solutions enable transparency in banking fees: Having bank agreements and the related fees included and matched against the banks’ reports. Even more transparency can be gained with services like SWIFT GPI: SWIFT GPI enables banks to provide bank fee information for the e2e chain. Not all banks support these features yet.

7. Choose wisely

Once you go through the questions and mappings outlined above you are at a good place in making your decision for the right bank connectivity provider. It might seem tedious at times and one might think of bank connections as a mere technical thing, but they are so much more. We feel this is a perfect moment to evaluate all your processes and look at ways to harmonize them.

It’s also a great way to work closely together with your colleagues. We recommend approaching this topic in a project team between treasury, finance and IT: From an IT perspective you want to minimize the IT-footprint, finance will run the daily operations and treasury sets the policies and controls.