Tag Archive for: ABC

Treasury ABC Part IV

S059QDGBOG

 

For many people Treasury is, as they think, something that is not concerning. Because there are many items that could be mentioned and listed here, I chose to mention the items that have effect on our daily lives, even if we are not aware of the existence of the described item. Last week I published the third part of the treasury ABC which I’ll call the Treasury ABC for normal citizens. 

 

R is for Regulations

Regulations, regulations. Most people don’t like rules and legislations in their life. The perception is that rules and laws make us “less free”. And in a way, it is. Another way of looking to rules and legislations is that they give a certain assurance that things are going in an way that is generally accepted. Related to treasury activities it is important that the funds invested e.g. for your pension are in safe hands and that risks are limited to guarantee that, when you are entitled to receiving a monthly pension payment, you actually see the amount on your bankaccount. So remember, rules give more certainty and reduce risk for your own sake.

S is for Stock Exchange

Being Dutch it might make you proud to say that a Stock is a dutch invention. One of the oldest known stock is a share in the VOC (Vereenigde Oostindische Compagnie) dated September 9th 1606. Having stocks, and wanting them, brings the next step: a stock exchange where people can buy or sell financial instruments (stocks, options, etc.). Nowadays the index of the Stock Exchange is a main indicator of the state of the economy in a country. The higher the index the better the economy (or the perception of the economic state).

T is for Treasury

When writing the ABC for Treasury it might be helpful to give a definition of Treasury itself.Treasury is about steering and control of financial assets within an organization. Part of treasury management is Risk management. An organization wants to be sure that its financial assets will not disappear “in air” because of wrong investments. Finally, Treasury is also about reporting and justification of the actions which were made with regard to Treasury.

U is for United Kingdom

The United Kingdom is (still) one of the biggest countries in the EU. What makes this country special is that it did not give up it’s own currency but kept the Great Britain Pound (GPB) with care and proud. If that was the right decision is hard to say. Anyway, since we know that the outcome of the 23rd of June the UK will most probably will exit the EU, having their own currency makes such a step less complicated then it already is. Let’s compare some figures between the Euro, the GPB and the US Dollar (figures as at august 8th, 2016):

Currency rate USD 1.00 0.77 0.90

Currency rate GBP 1.30 1.00 1.16

Currency rate Euro 1.12 0.86 1.00

On June 23rd you could buy GBP 762 for Euro 1000. A day later, after the Brexit seemed unavoidable, you could buy GBP 813 and today (august 11th) GPB 859 for Euro 1000. Now we can see that the (financial) world doesn’t think it is very wise for the United Kingdom to leave the EU. The currency rate of the GPB to Euro has dropped around 12%.

V is for Volatility

Volatility of a stock or a currency rate is an indicator for the stability of it. The more volatile the stock, the more unrest around the company concerned. Some stocks are very stable and give the investor lower risk. The more volatility, the more uncertainty in the market. You can figure out that the more volatile the market is the more your investment is at risk.

Jan Doosje

 

Jan Doosje

Owner of Fimterim Advies & Consultancy

 

treasuryXL: summer holiday reading material

| 10-08-2016 | treasuryXL |

Time flies, it is August already. And, for most people, August means holiday time and taking time to read. Have you got your summer holiday reading list sorted yet? The perfect moment to provide you with some summer holiday reading material. These are the top 5 best read articles of treasuryXL from the start. Have a great summer!

 

1 | How can Cash Management influence the Cash Conversion Cycle?

| 27-06-2016 | Olivier Werlingshoff |

credit-card-851502_960_720How can the Cash Conversion Cycle (CCC) be optimized? The CCC measures the time the money is tied up in the sales and the production process before it’s converted into a cash in from customers. When translated in a formula this will be the DSO + DIO – DPO (Day’s Sales Outstanding + Day’s Inventory Outstanding – Day’s Payables Outstanding). Read the full article

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2 | Business case – Funding strategy : how Fastned uses Nxchange

| 09-05-2016 | interview with Claire Tange from Fastned |

logoFastnedFastned’s growing and they’re giving investors the chance to directly buy and trade in certificates of shares via Nxchange. We’ve asked Fastned’s CFO Claire Tange to explain this type of financing. Read the full article [separator type=”” size=”small” icon=””]

3 | Treasury ABC – part I

| 08-07-2016 | Jan Doosje |

S059QDGBOGFor many people Treasury is, as they think, something that is not concerning. Because there are many items that could be mentioned and listed here, I chose to mention the items that have effect on our daily lives, even if we are not aware of the existence of the described item. I’ll call it the Treasury ABC for normal citizens. Read the full article

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4 | 8 Career Hurdles in a Transfer from Banking to Corporate Treasury

| 07-07-2016 | Pieter de Kiewit |

careerAn increasing number of bankers come to my recruitment desk wanting to make a transfer to corporate treasury. This transfer can be made successfully but there are a number of things to take into account. Below the 8 career hurdles, I hear most about, in a transfer from banking to corporate treasury. Read the full article

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5 | Foreign bank accounts, how to include them in your cash pool

| 21-06-2016 | Jan Meulendijks |

janmeulendijksSignificant balances on your foreign bank accounts which are really of better use in the country where your operation is? Include them in an automated cash pooling scheme so that all your funds are available in The Netherlands and no more unnecessary interest is paid! Read the full article

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Treasury ABC Part III

| 29-07-2016 | Jan Doosje |

S059QDGBOG

 

For many people Treasury is, as they think, something that is not concerning. Because there are many items that could be mentioned and listed here, I chose to mention the items that have effect on our daily lives, even if we are not aware of the existence of the described item. Last week I published the second part of the treasury ABC which I’ll call the Treasury ABC for normal citizens. 

 

K is for Key Performance Indicators

Similar for almost all type of branches also implementing Key Performance Indicators can be very helpful for goal setting and monitoring your Treasury performance. E.g. a Treasury Key Performance Indicator can be the achieved return on investment, the percentage of invested capital in AAA obligations, the maximum percentage allowed investment in options or the days you can finance your running business compared with your liquidity. Of course, many more examples can be given.

L is for Loan

You can give a loan or receive a loan depending your need for cash/investment means or your “overliquidity”. A loan is the most simple instrument for Treasury purposes and helps you to finance your (temporary) need for cash or, if you are the lucky guy to give the loan, to increase your return on investment (compared to the percentage you get e.g. from banks or national governments). The loan contract defines the sum of money, the interest percentage you have to pay or the counterparty will receive, the repayment schedule and, if applicable, other conditions.

M is for Mortgage

A mortgage is generally spoken involved when you buy a house or another fixed asset (offices, factory, etc.) Not that many people have the financial means to pay for a house at once so a mortgage is then a way to finance the capital needed. It’s not easy to get a mortgage nowadays because there are a lot of regulations and conditions you have to fullfil before you will get the money on a deposit. In far most of mortgages the house you buy will be the security for the bank who provides you with the mortgage. Furthermore, banks will check if you have enough capacity to pay back the mortgage timely, if are a trusted person, the value of the house when you have to sell it unexpectedly when e.g. you become ill or lose your job.

N is for (Treasury) Note rates

A treasury note rate gives you information of the return of investment if you buy notes from a government. The rate depends of course on the time and risk of the note. If you buy a note from the Greek government you will get a higher yield then a note from Germany but the risk if you will lose your money is higher with the Greek note. Furthermore the yield depends on the kind of security (in time) you buy. The yield for long term notes will mostly be higher then a note for a month. So two main ingredients define the yield you will get; risk and the duration.

O is for (Treasury) Officer

In larger organisations you will find one or more treasury officers which are involved in daily operations in Treasury and also in Treasury policy. As Treasury has its own habits and language it’s important to know what you do in the field of Treasury and are aware of the risks. We have seen a lot of organisations gone (almost) bankrupt because they thought they knew what they were doing but it turned out to be, in some cases, exact the other way around. Therefore it is advised to have one or more educated Treasury officers in your organisation.

P is for Pension Fund

For some people the question of the solvency of your pension funds (if you have any) is more relevant than for others. Mostly your own age is an important  “trigger” or awareness around Pension Funds. There are several kinds of Pension Funds e.g. for government employees, employees from a certain branch or a pension fund from a certain private company. Anyway, in all cases, you, as a contributor to the pension fund, want to have certainty to receive a pension when you are entitled to it and that the amount you will get is the same you expected. Nowadays, since the financial crises from 2008, the uncertainty of obtaining your proper pension is bigger because the yields which pension funds achieve are lower than they should be to adhere to long-term achievements.

Q is for Quote

A quote is an offer from a counterparty which they give you when calling them. For instance, if you call the bank and want to buy USD and you ask “Can I get a quote for 1000 USD?” and the answer is “You can buy USD 1000 for € 98.” and you accept it, the deal is done. So take care saying “yes” or “I accept” because you have to buy the USD 1000 for the amount of euros but also the bank has to deliver for that price. A quote is therefore not as “free” as it sounds.

 

Talking to our readers and contributors we have noticed that there are treasury related words with many different understandings. We’ve asked Jan Doosje to kick off a treasury ABC. Of course this is not binding and there are letters which can be connected to several treasury related words We need your input to make a complete treasury ABC. Would you like to contribute to the treasury ABC? Please contact our community manager Stephanie Derkse via [email protected].

Jan Doosje

 

Jan Doosje

Owner of Fimterim Advies & Consultancy

Treasury ABC Part II

| 14-07-2016 | Jan Doosje |

S059QDGBOG

 

For many people Treasury is, as they think, something that is not concerning. Because there are many items that could be mentioned and listed here, I chose to mention the items that have effect on our daily lives, even if we are not aware of the existence of the described item. Last week I started off with the first part of the treasury ABC which I’ll call the Treasury ABC for normal citizens. 

 

F is for Floor

A floor is a technical term for an interest option. When buying a floor you are “ensured” to receive an interest rate at the level you pay for. Even if the actual interest is lower, you will be compensated for the difference.

G is for Gold Standard

A Gold standard is the monetary system where a currency unit is equal to a certain weight of gold. So, for every banknote the central bank has a stock in its bank safes. The system of the Gold Standard no longer exists.

H is for Hedge fund

A Hedge fund is a fund that has the purpose of lowering risk for a restricted group of investors by buying and selling shares. When the market as a whole goes down, a hedge fund tries to keep on the same level/rate as the hedge fund started with so the investors are “ensured” to get their investment back without a loss. Nowadays hedge funds are also sometimes speculating and can be confronted with big losses when the hedge fund manager doesn’t do his job right. Be sure of all risks and opportunities before you step into a hedge fund.

I is for Instrument

Not every instrument is made for the making of music. Looking in the perspective of treasury an instrument is used to achieve a goal from the investor e.g. lowering risk or optimize rentability. Treasury instruments can be divided for the following purposes:

  1. Interest risks
  2. Interest swaps
  3. Forward rate agreements
  4. Options
  1. Currency risks
  2. Options
  3. Currency swaps
  4. Forward contract
  5. Money market instrument

J is for Jumbo.

In 1972 the United States Department of the Treasury issued a Jumbo Bronze medeal Huge 8 ounces. This is the category of useful information.

Talking to our readers and contributors we have noticed that there are treasury related words with many different understandings. We’ve asked Jan Doosje to kick off a treasury ABC. Of course this is not binding and there are letters which can be connected to several treasury related words We need your input to make a complete treasury ABC. Would you like to contribute to the treasury ABC? Please contact our community manager Stephanie Derkse.

Jan Doosje

 

Jan Doosje

Owner of Fimterim Advies & Consultancy

Treasury ABC – part I

| 08-07-2016 | Jan Doosje |

S059QDGBOG

 

For many people Treasury is, as they think, something that is not concerning. Because there are many items that could be mentioned and listed here, I chose to mention the items that have effect on our daily lives, even if we are not aware of the existence of the described item. I’ll call it the Treasury ABC for normal citizens. 

 

A is for Asset management

Asset management is the management of, amongst others, supervision and investing of and in (mostly) big portfolios of shares, obligations and other financial instruments. The goal is to increase the invested funds by making a high return. Pension funds depend on their return of investment to fulfill their commitment to participants of the pension fund. Bad results can affect your monthly income when you are entitled to pension.

B is for Bond

This is not only for James and his family. Bonds are issued by national governments to satisfy their need for funds. Depending the grade of a country, the return on a bond can vary. Be sure, if the interest rate is high, risk will also be high. Don’t jump into “junk bonds” because it can cost you a lot of money.

C is for Currency rate

A currency rate is the conversion rate between one currency and another. For example: USD/EURO. When the currency rate is > 1, you will get more dollars for your euros. When the currency rate is <1, you will get less dollars for your euros. Suppose the currency rate USD/EURO is 1,11 and you go shopping in New York. If the price is $ 100, you will see on our bank account a withdrawel of € 90,01.

D is for Dollar

The US Dollar was born on September 8th, 1775. Some people believe that the name comes from the Dutch (daalder) or from the German “Taler”. However, the USD still is the most important currency in the world despite the Yen, Euro or Chinese Yuan.

The price of the dollar is influenced by :
* Supply and demand factors
* Sentiment and market psychology
* Technical factors

E is for Euro

The Euro is a new currency, which was born in Maastricht while the treaty of 1993 was signed. Virtual the Euro came into existence in 1999 while the notes and coins came into circulation as of January 1st 2002. Before the Euro, the European countries were divided in their currencies.  “We” had Austrian Schilling, Belgian Franc, Cypriot Pound, Dutch Guilder, Estonian Kroon, Finnish Markka, French Franc, German Mark, Greek Drachma, Irish Pound, Italian Lira, Latvian Lats, Lithuanian Litas, Luxembourg Francs, Maltese Lira, Monegaque Franc, Portuguese escudo, Sammarinese Lira, Slovak Koruna, Slovenian Tolar, Spanish Peseta and Vatican Lira. Imagine the lack of transparency before the Euro existed.

Next week we’ll proceed with part II of the treasury ABC for normal citizens.

Talking to our readers and contributors we have noticed that there are treasury related words with many different understandings. We’ve asked Jan Doosje to kick off a treasury ABC. Of course this is not binding and there are letters which can be connected to several treasury related words We need your input to make a complete treasury ABC. Would you like to contribute to the treasury ABC? Please contact our community manager Stephanie Derkse.[social_links size=”normal” align=”” email=”[email protected]”]

Jan Doosje

 

Jan Doosje

Owner of Fimterim Advies & Consultancy