The dangers of key person risk in currency management
10-03-2023 | treasuryXL | Kantox | LinkedIn | Free yourself from the stress of handling monster spreadsheets with sensitive information that could break at any time
10-03-2023 | treasuryXL | Kantox | LinkedIn | Free yourself from the stress of handling monster spreadsheets with sensitive information that could break at any time
09-03-2023 | treasuryXL | Refinitiv | LinkedIn | With 2023 gearing up to be a momentous year for sustainable finance, this blog explores the key topics that will help to shape the industry now and into the future.
08-03-2023 | Cobase | treasuryXL | LinkedIn | In this competitive market, finding the hidden gems in treasury can be quite a challenge. There must be some talented candidates out there, but how do companies find them? We put this question to one of the hidden gems that was actually found. Hanan Peerun is a Treasury Operations Specialist at GroFin, a financial institution. Her insights will go a long way to answering the question, ‘How do I find and train a great treasurer?
03-03-2023 | treasuryXL | Kantox | LinkedIn | “By using conditional stop-loss and take-profit orders, you can achieve significant savings in terms of the cost of carry.”
01-03-2023 | Sugandha Singhal | treasuryXL | LinkedIn | As treasurers, working capital management is a key part of our responsibilities. It is a metric of how efficiently a company is operating and how financially stable it is in the short term.
28-02-2023 | Cobase | treasuryXL | LinkedIn | Banking software giant Temenos tasked Cobase with devising a better system for the management of its global bank relationships, cash, and FX. The results have slashed manual processes and reliance on spreadsheets, saving the treasury team vital hours in the day.
28-02-2023 | treasuryXL | Kantox | LinkedIn |
This episode of CurrencyCast dives into the impact of behavioural biases in currency management and how they impact financial decisions. You’ll learn about the most common biases that can affect decision-making, including conservatism, forward rate, overconfidence, and loss aversion biases. But fear not! The episode also provides solutions to mitigate these biases and optimise your currency management strategies.
Disclaimer: This information is being shared for informational purposes only and was originally published by Kantox (Source)
Discover how implementing automation solutions can help remove systematic errors and allow you to embrace foreign currencies, increasing profitability and fostering growth.
Don’t let inherent biases affect your work – watch the latest episode of CurrencyCast and take control of your currency risk management today!
23-02-2023 | treasuryXL | LinkedIn |
Download the comprehensive eBook on Treasury function, compiled by treasuryXL. This valuable resource covers a wide range of relevant topics including Treasury, Corporate Finance, Cash Management, Risk Management, and Working Capital Management.
Drawing on the expertise of Treasury professionals and their best practices, we have carefully crafted clear and concise articles that provide you with the most crucial information about the key topics in the world of Treasury.
In this eBook, we take a deep dive into each Treasury function and explore:
Whether you are new to Treasury or an experienced practitioner looking to expand your knowledge, this eBook is an essential resource that will help you stay up-to-date with the latest best practices and insights in the field.
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17-02-2023 | treasuryXL | Kantox | LinkedIn |
Get ready for 2023 with our deep dive into the treasury fundamentals that will take over the currency management scene. All you need to know, from trends to technology, in one article.
Disclaimer: This information is being shared for informational purposes only and was originally published by Kantox (Source)
CFOs and treasurers are getting ready to face the many challenges of 2023. Finding the right approach to currency management will help them protect their company’s margins and adapt to the new reality.
In this episode of CurrencyCast, we sat down with our special guest, François Masquelier, for a complete session on the treasury fundamentals for 2023.
In this article, we will take you through:
Let’s analyse what upcoming currency management trends are going to be the main focus for treasurers this year.
When we take a look at recent European Treasury surveys, the PwC global annual survey and the last OECD survey or surveys, there is a common theme regarding the main focus for treasurers this year.
FX risk management is a top priority for corporate treasurers from 2023 onwards, right behind cash flow forecasting and digital transformation. This means that FX risk remains highly ranked by treasurers, and there are several reasons for this.
Sometimes CFOs do not always understand all the possibilities in terms of what we call optimizing forward points, that is to say, interest rate differentials.
The forward points may be a concern when there is a significant differential of interest, especially with exotic currencies. So it could be expensive to hedge certain currency pairs, depending on which side you are in. Sometimes those forward points could be in your favour, and sometimes could not be in your favour.
Treasurers with a favourable interest rate differential can decide not to hedge at all and just monitor the exposure. This is feasible, but as it is a highly manual task, the monitoring process of the open exposure can become quite tedious and inefficient.
However, the good news is that there exist certain solutions that allow them to dynamically manage your FX exposure. This way, finance professionals can reduce or mitigate the impact of the swap points and, ultimately, reduce the impact on costs.
The dollar and the euro remain important currencies, but there is a number of currencies from smaller but well-managed economies gaining ground.
As corporate treasurers are taking advantage of the benefits of buying and selling in more currencies, there is a microeconomic and bottom-up phenomenon leading to that multi-currency world.
Using the more exotic or smaller currencies, if managed properly, can protect your company against risks. The best approach to currency management this year is to use the most profitable currencies all the time.
You can prepare for these trends if you have a strong currency management system that covers the entire FX workflow and allows you to have clear visibility over your exposure. Take a look at the two main areas that could be affecting your currency management strategy.
Sometimes the importance of having accurate cashflow forecasts is somewhat overstated when it comes to currency management.
Let’s take the example of a micro-hedging program for firm sales or purchase orders. The exposure to hedge is already a contractually binding item, not a forecast at all. So we don’t have really much of an issue.
On the other hand, if you take the case of a layering program or layered hedging program, the FX rate would be built in advance, so the forecasted exposure to hedges is also known well in advance.
And finally, thanks to conditional orders that protect a budget rate, the Treasury team can have time to update and finetune their cashflows.
At Kantox, we believe that currency management is more than just currency risk management, and that currency risk management, in turn, is more than just the instant execution of a hedge.
But that requires a holistic approach to currency management, to cover the entire FX workflow. This means doing away with a siloed approach that allows the company to grow beyond imagination.
In treasury and finance, there are many silos that impact the optimal management of the department. Having clear communication and flow of information with other departments is vital. It provides better visibility of the exposure and gives the CFOs the ability to react to the volatility in the market faster.
Something key in the challenging context we are facing that impacts the very thin operating margins, and a great way to generate added value to the treasury function.
One clear example of this is the companies with subsidiaries that operate in foreign currencies. By offering the subsidiaries to invoice or be invoiced in the local currencies, you are centralising the FX risk, generating value for them and improving risk management.
Another example of tearing down the silos in treasury management is the relationship between the commercial and finance teams. They don’t always see eye to eye, but providing commercial teams with the FX rate they need in real-time is a good way of eliminating that silo mentality.
As consultants from McKinsey said, the early adopters who drive cross-functional teamwork are going to reap the benefits and see a great increase in annual revenue growth.
Now that you know where to focus on improving your currency management, consider what tools could streamline this. But don’t forget to analyse if the current process is hurting you more before implementing new technology. Consider what areas of your FX workflow need revamping.
One of the main pain points for CFOs is not having access to real-time data and dashboards that reflect the current state of the company’s financials. This makes it more difficult for them to make the right decisions on time.
There are tools, like the TMS, that are used in the treasury function with the objective of getting summarized information and reports but they are not properly fit for decision making at the C-level.
They lack dashboards fed with real-time data that would make it easier or facilitate the communication between Treasury and the C-suite. TMS have a few other shortcomings when it comes to currency management.
“Often a CFO is a car driver who does not see his/her dashboard immediately but with delay” – François Masquelier
When pricing with an FX rate, using the forward rate instead of the spot rate can help companies in certain situations improve their competitive position without hurting their budgeted profit margins.
But most TMS lack a strong FX rate feeder, meaning the possibility of providing commercial teams with the appropriate rate -a spot, or the two-month or the six-month forward rate, the pricing markups for a client segment-
Another problem with TMS is that the functionalities in the report are standard and not really customer variables. They are more of like pret-a-porter solution.
When we talk about the reporting and development of specific functionality, treasurers must find a way to fulfil these gaps and find the missing pieces.
This means that in the pre-trade phase of the FX workflow, TMS is not covering the needs of treasurers and CFOs.
ChatGPT is all the rage right now, AI or artificial intelligence is making a comeback. But is it going to be the future in terms of treasury management and cashflow forecasting?
AI could play a role in the future of treasury management. However, we are still in the early days and there are many other ways CFOs and treasurers can start the digitization of the treasury function before resorting to AI.
There are some things that need to change in the way treasury is done and the approach of many finance professionals to the treasury tech stack. Those in charge of managing currencies need to be comfortable with their IT skills to make good use of new technology.
Another hurdle to the implementation of AI in treasury is the lack of access to comprehensive and immediate data. And finally, the inefficiency of highly manual processes when relying on spreadsheets for currency management. All of this takes away from producing accurate cashflow forecasts on foreign currencies.
As we have seen, there are many challenges to currency management that CFOs and treasurers will need to be well prepared for this year.
As interest rate differentials rise and the volatility in FX markets continues, there needs to be a good currency management system to handle the FX risk.
With the help of automation tools, finance professionals will be able to eliminate the silos that hinder the company’s growth and increase visibility over open exposure.
Download now our Currency Management Priorities for 2023 report to learn more about upcoming focus for treasurers and get your currency management strategy ready.
14-02-2023 treasuryXL | Treasurer Search | LinkedIn
Join us for a thought-provoking Live Session on Interim Treasury Management, where our experts will delve into the pros and cons of this exciting market.
Unlock the Benefits of Interim Treasury Management: Discover Why it’s a Must-Have for Your Business!
Our panel of seasoned interim treasurers, including Emiel van Maris, Francois De Witte, and treasury recruiter Pieter de Kiewit, will share their valuable insights and experiences.
This webinar is designed for aspiring interim managers, potential clients, and anyone interested in learning more about this market.
Don’t miss this opportunity to gain tips and tricks from the experts in the field and engage in an open discussion.
Register now to secure your spot!
Everyone is welcome to this webinar.
🌟Moderator: Pieter de Kiewit of Treasurer Search
🌟Duration: 45 minutes
𝘉𝘺 𝘳𝘦𝘨𝘪𝘴𝘵𝘦𝘳𝘪𝘯𝘨 𝘺𝘰𝘶 𝘤𝘰𝘯𝘴𝘦𝘯𝘵 𝘵𝘰 𝘳𝘦𝘤𝘦𝘪𝘷𝘪𝘯𝘨 𝘤𝘰𝘮𝘮𝘶𝘯𝘪𝘤𝘢𝘵𝘪𝘰𝘯𝘴 𝘧𝘳𝘰𝘮 𝘵𝘳𝘦𝘢𝘴𝘶𝘳𝘺𝘟𝘓 𝘳𝘦𝘨𝘢𝘳𝘥𝘪𝘯𝘨 𝘵𝘩𝘦 𝘭𝘢𝘵𝘦𝘴𝘵 𝘵𝘳𝘦𝘢𝘴𝘶𝘳𝘺 𝘪𝘯𝘴𝘪𝘨𝘩𝘵𝘴. 𝘠𝘰𝘶 𝘮𝘢𝘺 𝘸𝘪𝘵𝘩𝘥𝘳𝘢𝘸 𝘢𝘯𝘺𝘵𝘪𝘮𝘦. 𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘧𝘦𝘳 𝘵𝘰 𝘰𝘶𝘳 𝘗𝘳𝘪𝘷𝘢𝘤𝘺 𝘗𝘰𝘭𝘪𝘤𝘺.
We can’t wait to welcome!
Best regards,
Kendra Keydeniers
Director, Community & Partners