Tag Archive for: cash management

Information session Treasury Management & Corporate Finance

18-11-2019 | by Kendra Keydeniers | Vrije Universiteit

The VU Amsterdam would like to invite you to the information Session of the Executive Education programmes at the VU Amsterdam on Thursday 28 November 2019. This evening gives an insight into the content and organisation of the programmes

 

The Information session of the postgraduate programme Treasury Management & Corporate Finance is from 18.30 hr. to 19:15 hr.

Anyone interested in the programme is welcome. We are looking forward to seeing you at the VU Amsterdam!

Register here

 

Take a dive into RT career stories from graduates

The VU has been delivering RT graduates successfully for a few decades. That means that there are hundreds of graduates working, most of them in corporate treasury. How do their careers look like after they graduated? treasuryXL asked some of the RT graduates about their career development and their thoughts about the RT programme. Check it out:

Why You Don’t Need a Treasury Workstation

| 11-11-2019 | treasuryXL | BELLIN

Location dependence vs. universal collaboration and access

Often times, terms and definitions change over time; and sometimes terms remain the same but their meaning shifts. Take for example the word “bookkeeping:” accountants nowadays no longer put pen to paper and make manual entries in a book. Transferring this concept to treasury, we only need to look at the name of the department itself. Treasurers no longer watch over dungeons filled with treasure troves and other valuables (maybe with the exception of Fort Knox). But that’s not the only shift in meaning: we can also come across obsolete terms and definitions when it comes to the digitalization of treasury tasks and specifically with the term: treasury workstation.

Looking at search requests in Google, one of the most commonly searched terms in treasury is “treasury workstation” – a term that has been in use for treasury systems for many years. However, we need to ask ourselves if the term and the understanding of technology and processes associated with it are still appropriate today. Should they have long been replaced by other terms?

“Treasury Workstation” – is that what treasury is?

“Treasury workstation” contains the element of “station” that appears to have no place in today’s treasury world: mobile communication and the flexible use of systems are such obvious characteristics of our daily work that a “station” clearly no longer delivers. A workstation is literally stationary and therefore limited: it sits in one single place and is only available right there. Conversely, this is precisely where modern systems differ: they’re web-based and can be used from any mobile device without any limitations regarding security, user-friendliness, and functionality. Indeed, the very fact that modern systems are not stationary makes them so powerful. They’re mobile and any number of people can make use of them from anywhere.

Today, large departments and units need to be able to readily collaborate and exchange knowledge and data; a workstation seems inappropriate to meet these demands and stands for a status quo that IT has long left behind. No one wants to install software on a workstation anymore; no one wants to be tied to a desktop computer. The internet with all its enormous potential drives the optimization of business processes and data communication to the point where companies can no longer afford to back workstations, in particular in treasury.

Collaboration with a Treasury Management System

At BELLIN, their system, tm5, is not a physical workstation limited to a specific location. The system is a web-based and dynamically-integrated platform that excels in ensuring global visibility, maximized security and uncapped work-hours saved. The key ingredient in regard to this article is that the system is web-based, yet accessibly by anyone company wide. We call this our Load Balanced Treasury approach which means no per-user licenses, ensuring subsidiaries can share data seamlessly, profit from real-time transparency, and maximize global security.

While many treasurers still refer to modern platforms as workstations, the distinction is important. Modern, web-based systems are platforms for collaboration, for cooperation and for uniting internal and external parties and partners who all contribute to treasurers always having the information they need to do their job: make decisions that reduce business risk, optimize asset management, manage funding and hedging and give the company the overall stability to meet the company objectives.

This is by no means limited to treasury. Unlike a workstation that is only ever available to the people in one particular office, treasury management systems serve the entire company and people from any department can be involved where needed. This allows treasurers to share the workload, get information first hand and have a fully integrated and connected workflow that ultimately benefits everyone.

Conclusion

Treasury workstations are a thing of the past and platforms like the BELLIN tm5 have long become established as industry standards. Consequently,  it is time we reflect that fact in our terminology in order to find what businesses really need and stop searching for things that were modern years ago. “Station” ultimately suggests inflexibility, stagnation. As time goes by, both terminology and processes are subject to change and move forward – just as treasury does. Perhaps this is just a semantic error or term that has stuck over the years? Either way, as treasury enthusiasts and experts, we are keen to help the industry acclimate to the existing technological ecosystem.

Martin Bellin

CEO

BELLIN logo

Open banking and APIs: transforming the future of treasury

| 05-11-2019 | treasuryXL | BELLIN

Open banking is about much more than advanced technology. It has an impact on business models, processes and ways of thinking – and it will definitely have a huge impact on treasury.

The EU’s revised payment services directive (PSD2) has forced European banks to set up standardised interfaces, so-called APIs, to enable third parties’ technological access to bank accounts. This is an attempt to break up the banks’ monopoly and boost competition amongst payment service providers.

When it comes to payments, PSD2 APIs are currently limited to single Euro payments area (SEPA) single payments. Simply put, they are generally ill-suited for corporate payment processing. Nevertheless, open access to customer and transaction data for third parties represents a radical change that threatens traditional banking business models.

While in the past, banks reigned freely over their customers’ financial data – often keeping them in the dark about margins, fees and transaction routes – open banking makes banking fundamentally more democratic and gives companies much more freedom and flexibility.

How does a company want to handle its payment processing? With open banking, it will be of little relevance to corporates exactly how their payments are processed. As long as the payment goes from A to B, the back-end technology being used is up to the service provider. What will be more significant for corporate treasury departments when it comes to payments is how quickly this information becomes available to them.

Open banking’s impact on cash management

Today, treasurers are blind when it comes to intraday cash flow movements. Depending on the bank, they only receive balance information a few times a day at specific times. This has always been as real-time as it gets. Treasurers who would like to know their account balance at any time and in ‘real, real-time’ need to request this information. But how can you know when to best inquire about your account balance when you have no idea when money will be credited?

Some companies make use of automated requests, managed in their treasury management system (TMS). The system sends scheduled requests to the bank, for example every minute, to check if any new information is available. An analogy would be sending round a company postman to empty the letterbox every few minutes without knowing if anyone has actually posted a letter. This leads to enormous amounts of data and clogs up communication channels and systems, without really solving the issue.

A much more intelligent solution would be to not request the information until it is actually available. For that to work, there would need to be some kind of signal that data has come in – just like the signal flag on American letterboxes. New technologies, such as APIs and WebSockets, enable this kind of reversed order. The bank signals that a new balance is available as soon as money is credited to or debited from an account, and treasurers and other finance professionals can then take action. The same is true for payments, where status notifications for a transaction would be available straight away.

The future of APIs

What will the future look like for banking communication? Will APIs relegate existing technologies, such as electronic banking internet communication standard (EBICS) or SWIFT, to the sidelines? APIs’ greatest downfall is their lack of standardisation. Conversely, complete and powerful standardisation across the SEPA area is the biggest asset of these established communication channels.

In the context of PSD2, there have been various European initiatives to achieve standardisation, for example those of the Berlin Group. However, there is no comparable global initiative, and when BELLIN recently analysed the open banking offering of the ten most relevant banking groups, the discrepancies were staggering. What is needed are suitable enhancements of established technologies that could then be combined with new technologies, for example combining the EBICS protocol with API technology.

And this future is not far off. Massive changes that will impact treasurers’ day-to-day work significantly are just around the corner. Large retailers have already implemented instant payment solutions using APIs that not only enable them to transfer money, but also to receive notifications when a payment has come in as soon as it does. This has enabled them to fully connect payment processing, real-time balance information and customer service.

Direct communication of data between companies and banks is likely to have other, far-reaching consequences for treasury, for example when it comes to FX and risk management. Real-time corporate-bank communication definitely brings challenges for cash management. Banks will have to solve how cash pooling is handled in the future whilst also determining the time on which interest calculations are based. However, with new standards for speed, efficiency and data quality, open banking will continue to revolutionise treasury far beyond 2020.

Karsten Kiefer, Product Manager Solution Management, BELLIN

Karsten Kiefer

Product Manager Solution Management

 

The Core Benefits of Netting For Corporates

| 29-8-2019 | treasuryXL | BELLIN

Simplify intercompany commerce, minimize fees and elevate visibility

 

Understanding the core benefits of netting

Multinational corporations are familiar with the downsides when involved with intercompany commerce. Growing transaction fees, currency exchange risk, and lack of transparency are common facets that make it difficult for such organizations. Corporations can implement netting to mitigate those downsides and free up valuable time for treasury and accounting departments. This article will shed light on the benefits of netting and why your company needs to consider implementing it.

A brief definition of netting

Netting or “Intercompany Netting” is the process of reconciling and netting intercompany invoices between two parties, resulting in a final payment and netted cashflow. In regard to financial markets, the purpose is essentially to minimize transactions and distinguish remuneration in multiparty agreements. Netting is suitable for various situations, participants, and cycle types. For more information, check out our in-depth guide to netting here.

Bilateral Netting: Two companies reconcile invoices they may owe to each other and one company agrees to pay the other one sum.

Multilateral Netting: Three or more companies netting invoices together and a netting center is used.

Multilateral Netting vs Bilateral Netting

Further Reading: Netting: An Immersive Guide to Global Reconciliation

Macro benefits of netting

Foreign Exchange Risk Mitigation

Multinational companies often perform transactions with their own subsidiaries or with non-group companies. Because of this, companies must keep currency exchange rates in mind. Original invoices are often sent in the originating currency,  which raises the need for either an external exchange service, a bank, or a netting center. With netting, the foreign exchange risk is centralized to the netting center.

It will not only keep existing invoicing procedures intact but avoid the loss of money involved with inflated currency exchange rates when using external exchanges. As mentioned, the FX risk is transferred from individual subsidiaries to the parent company, which is usually more equipped to manage it.

Floating money is wasted money

Cash-in-transit is a thorn in just about everyone’s side. Stagnant approval and processing times can create a chain reaction of risk as that cash is unable to be used. Whether it is bilateral or multilateral netting, keeping invoices to a minimum reduces the amount of money that is stuck in the limbo phase of approvals and processing times.

Increased transparency

Treasurers are able to operate at a high level when they are afforded visibility of cash flows. When subsidiaries make bulk payments, lack of liquidity or financing issues can arise and if company-wide visibility is lacking, it becomes difficult for a treasury department to act accordingly. Bulk payments backload and are concentrated in a short amount of time, cash flow is stretched thin among many of the subsidiaries. A netting system will provide daily reports and monitoring tools that provide cash flow visibility throughout the group.

Netting Vorteil Transparenz

Maximize operational efficiency

Naturally, one of the more prominent benefits of netting occurs on a daily basis. Treasury departments will see a drastic reduction in time spent on transactions and managing foreign exchange risk. From an operational point of view, a netting process simply saves treasurers time and establishes a company-wide process for disputes.

An example of this is with BELLIN clients, who save an average of 2 days of work per month per affiliated company. For an organization of 30 affiliated companies, that’s 60 days per month or 720 days a year. Realized savings typically range from $250,000 to +$1,000,000 on an annual basis.

Manage Disputes

When implementing a netting system, the treasury department is tasked with establishing a protocol for managing disputes. When subsidiaries fail to submit payables, a hitch in the payment process is born. What this causes is the inability for the payee to continue with their daily operation as they wait for receivables. Administrators can establish automated escalation protocols, which will elevate disputes to upper management based on pre-defined time periods. The escalation system leads to both tangible and intangible benefits as it literally resolves disputes through escalation and also provides an incentive for subsidiaries to execute their payables to avoid the unnecessary involvement of management.

BELLIN tm5: a comprehensive netting solution

BELLIN’s intuitive TMS: tm5, has a netting module that reconciles invoices and manages disputes with an ‘agreement-driven approach’.

The ‘agreement-driven approach’ is essentially a self-clearing methodology that utilizes the previously-mentioned: escalation protocol. tm5 automatically matches all receivables against payables and has an embedded dispute workflow for discrepancies. Consequently, the group company establishes group-wide agreements for disputes and will elevate them accordingly. With such an approach, all subsidiaries are involved in the entire process, disputes are mitigated and automatically escalated, and there is group-wide transparency.

BELLIN’s tm5 netting module has an intuitive interface but the key ingredient that makes it shine is that the platform has standardized functionality with the flexibility to meet the needs of all subsidiaries.

Interested in finding out more about whether netting is the right solution for you? Give BELLIN a shout or check out tm5, our intuitive treasury management system.

Author picture ofFlorian Kolb

Florian Kolb
As a Senior Treasury Consultant and Payments Specialist, Florian Kolb is in charge of a number of implementation and process consulting projects focusing on worldwide bank connectivity. He has great experience with SWIFT/H2H connections and complex global payments projects. Before joining BELLIN in June 2016, Florian worked as a consultant in accounting for an IT systems solutions provider. He studied at Verwaltungs- und Wirtschaftsakademie (Administration and Business Academy) in Freiburg, Germany, and is a Certified SWIFT Specialist.

 

Transform Intercompany Trade with Multilateral Netting

| 19-8-2019 | treasuryXL | BELLIN

Legacy tools yield legacy results

Too many international companies are manually reconciling and netting intercompany invoices. These companies may lack a clear and structured workflow for this process, leading to a host of potential risks and issues along the way including:

  • High volume of intercompany transactions
  • Too many invoice and expense disputes
  • Shadow bookkeeping
  • Lost productivity
  • High bank fees and fx costs

According to a recent Deloitte poll of finance professionals, reconciliation is the biggest intercompany hurdle. With only 9.2% of finance professionals saying their organization has a holistic, efficient, and clear intercompany reconciliation process, there is a clear need for a solution.

When asked what poses the greatest challenge to the implementation of intercompany accounting:

  • 21.4% of participants claim disparate software systems are their biggest challenge
  • 16.8% claim intercompany settlement
  • 16.7% said complex intercompany agreements
  • 13.3% said transfer pricing compliance
  • 9.4% said FX exposure

Introducing a multilateral netting solution

With a centralized multilateral netting solution, companies can boost profit and productivity by gaining global visibility and control, automating processes, settling disputes locally, and reconciling and netting transactions seamlessly.

Average BELLIN clients savings with our multilateral netting solution:

  • 2 days of work per month
  • $250,000 to $1,000,000 on an annual basis from banking and FX fees

Average industry savings figures:

  • 15% year over year growth
  • 50% labor cost reduction
  • €13 saved per invoice through automation
  • 1hr of labor saved per day

Would you like to learn more about BELLIN’s multilateral netting solution? Just reach out to BELLIN for a tm5 demo, or visit tm5 page.

The Role of Netting in Cash Management

|13-8-2019 | treasuryXL | BELLIN

Increased cash flow efficiency, faster cash allocation and optimized FX management

Cash management is every company’s bread and butter. Considerably fewer companies make use of netting, despite its many advantages for cash management.

 

 

 



Netting supports companies in making their cash management more efficient and less costly by:

  • Boosting cash flow efficiency,
  • Consolidating invoices and enabling faster cash allocation,
  • Allowing companies to better calculate their FX exposure and hedge it strategically.

Cash management

Through cash management, companies ensure they can always meet their financial obligations. It allows them to allocate the required liquidity to the right entity, at the right time, in the right currency. For treasury to achieve that, all incoming and outgoing payments as well as account balances and forecasts must be visible. With access to complete and up-to-date information, treasury can monitor processes, plan liquidity based on forecasts and strategically manage cash in different currencies.

Netting

Companies that have implemented netting offset cash flow obligations between two parties and consolidate them to a net payment. Most companies use netting for balancing intercompany trade flows. However, it is also possible to integrate other parties as netting participants. Using internally-agreed conversion rates, companies can engage in cross-currency netting.

More information on netting: Netting: An Immersive Guide to Global Reconciliation

Videos on Reconciliation and Netting and Cash Management

The impact of netting on cash management

Netting takes a specific proportion of all cash flows and places them within the framework of a dedicated and structured process. This process, the netting run, is repeated at regular intervals. It can be divided into four steps:

  1. Data import
    Data is imported from the ERP system to the netting system.
  2. Data reconciliation
    The netting system automatically matches and consolidates submitted payables and receivables based on pre-defined parameters and creates a netting statement.
  3. Data sharing
    Once data has been matched and invoices consolidated, the netting center communicates the net amount to every netting run participant. It can be issued in their currency of choice.
  4. End of cycle
    The netting center makes one single payment to participants with a positive balance. Participants with a negative balance make one net payment to the netting center.

netting run

Netting boosts cash flow efficiency

By offsetting payables and receivables, netting reduces the number of transactions. In turn, this reduces cash-in-transit. And reduced cash-in-transit and minimal transactions make for reduced efforts when it comes to procuring liquidity, interest burden and payment processing.

In addition, the schedule of the netting run means payments are made on a specific date: instead of having to monitor countless different dates, treasury can lean back and wait for the end of the netting cycle.

Netting makes the lives of cash managers much more linear: they can plan accurately and allocate the exact amounts of required funds to accounts. This means that the company can keep floating assets to a minimum. Netting lends structure to complex processes and ensures opitmal allocation of cash flows.

Netting accelerates cash consolidation and allocation

All transactions between two parties result in accounts receivable for one company and accounts payable for the counterparty. The respective journal entry must show a zero balance. However, without a structured process in place, consolidation efforts are often far from straightforward. The different parties pursue different interests – either receivable- or payable-driven.

A good netting process seeks agreement between the parties and allows them to clarify any disagreements within a structured and automated framework. Agreement-driven netting encourages participants to submit accurate data. This makes for a much faster reconciliation process and makes it possible to automate several steps of the netting cycle. A speedy reconciliation process is followed by swift payment processing –  directly in the system and with one click – and makes for greater efficiency.

Faster consolidation has a positive impact on cash flows. At the same time, netting saves treasurers valuable time when it comes to monitoring invoices. Conversely, accountants no longer need to waste hours matching invoices. On average, time savings amount to 1-2 man-days per month per entity. For a group consisting of 10 entities, this equals 10 to 20 days per month and 240 days per year – a full-time position that can be dedicated to other tasks that add real value to the company.

 

Netting saves time

Netting optimizes FX management

Netting makes it easier for companies to manage their FX exposure, i.e. to optimize their FX management.

The payment terms defined as part of the netting cycle govern the timeframe between issuing an invoice and paying it. Companies that use cross-currency netting also set internal conversion rates for the currencies in question that apply to the respective netting cycle.

Having defined dates and rates, treasurers gain insight into an entity’s hedging requirements for a specific time period and can consolidate this sum to one hedging transaction. The netting center also defines the settlement price that is used to convert each entity’s FX payments to the respective settlement currency. This creates implicit hedging. The netting center can post and settle the transactions for each netting run participant without impacting the FX result. Entities transfer their actual currency exposure to the netting center, where it can be hedged strategically.

How netting optimizes FX management – an example:

As part of a monthly netting cycle, a company defines a payment term of 30 days. An entity issues and posts an invoice in March, which is paid in April. In February, the netting center defines the FX rate for March, and the March rate is identical with the settlement price for April. The netting center has complete visibility of currency requirements and can hedge the FX exposure centrally. Transaction and conversion costs are reduced to a minimum.

Netting FX-Management

 

Netting and cash management in a nutshell:

Netting is a powerful tool for companies to optimize their cash management. Netting lends structure to offsetting cash flows and puts them into a clearly defined timeframe, the netting cycle. This has the following benefits:

  • Very precise account planning
  • More efficient cash flows
  • Faster consolidation
  • Option to automate processes
  • Speeding up of the cash allocation process
  • Visibility of FX requirements
  • Strategic FX hedging

Interested in finding out more about whether netting is the right solution for you? Give BELLIN a shout or check out tm5, our intuitive treasury management system.

 

 

Big tech vs Fintech vs Banks – in international payments

| 09-07-2019 | by Patrick Kunz |

This title makes it sounds like it’s a fight. To be honest: it is! The market for international payments is huge and its lucrative. In a McKinsey report the 2018 market size for payment revenues was close to 2 Billion. Not strange everybody wants a slice of that.

Fintech & Banks

Traditionally the market for international payments was dominated by banks. Recent years and technological advancements has shown that banks are slow to adapt to new technology and market requirements. In some cases it still takes days to transfer money from Europe to Asia, while an email, FB message or picture can be send in seconds. Fintech has tried to fill the gap with innovative tech solutions that solve these problems. Often these companies are lean and mean and adapt to market changes much quicker than the big stable banks. They provide cloud solutions, link to every bank possible and make you more bank independent. Lately we have seen consolidation in the fintech market where players are merging, growing or being taken over by banks. Some banks have started their own fintech. But often fintech only solved a part of the problem and is build on the existing (bank) infrastructure. Banks are also working on innovation: instant payments, swift GPI and PSD2 api’s are helping the customer paying faster and easier. These initiatives are great but have taken years to be implemented.

Bigtech

Then there is a third group of players: big tech. These are the google, facebook and alixpress of our world. These are traditionally IT companies who have a big client base but these companies where not involved in payments (yet). Their edge is size, market access and fast adoption. What happens if they enter the market for payments? Are they likely to win? Look at Alipay, massively successful in China but growing immensely outside Asia to. Why ? because it is easy to use, innovative, low cost and probably most importantly connected with an existing service of the bigtech (alixpress – shopping). The company provides the full customer journey: shopping for product and paying the goods in the most easy way without moving away from the website. Not only via desktop but also via mobile. On the go they make it possible to pay by scanning a QR code, in a grocery store or in a cab. Who needs cash OR a debit card, you only need your mobile phone and an app! Why was this successful? Because the existing customer base was already there they just vertically integrated into the customer journey; easier for the customer and therefore extra revenue for Ali. But also more power for Ali.

Stablecoin Libra

Looking at Facebook and their Stablecoin Libra. Digital currency, unregulated, not based on the traditional banking/payment infrastructure. There are big and significant differences with Bitcoin but the idea is the same: sending and receiving money worldwide in an instant as digital currency. There should be no speculation on the Libra-Rate as the rate of exchange is based on a basket of currencies (EUR, USD, JPY etc). Similar to the old tech Special Drawing Rights from the IMF. So what makes libra different to bitcoin and the other coins? I am not going into the technical differences as that is beyond my scope and would bore you. The main difference is the easy of adoption. New to bitcoin and want to use it: you have to open a wallet, trading account and learn have to transfer the BTC to somebody and the receivers also needs a wallet; a barrier for most. Using Libra will be much easier as it is just an extension of the services of Facebook. Libra potentially has 2,4 billion users (the number of facebook accounts). This is a big competitive advantage. Compared with smart marketing (facebook knows that) and combining it with existing products there is a big potential. Sending money to your facebook friends in Australia or Japan? No problem: in-an-instant via Libra. Besides facebook it is also supported by other big players like Visa, Spotify, Paypall, Mastercard, Vodafone. Is there a future without Libra ? And how many facebook users are there without an bank account. There are 2,4 billion facebook users and 1,7 billion people without a bank account in this world. The reach is already huge so there is low barrier for adoption.

The Battle

Does this mean bigtech will be ‘winning’? In my opinion hard to say. That battle is being fought the coming years. Don’t forgot the power and influence of regulator and governments. Digital payments are unregulated and unknown and could influence the power of governments and the whole banking infrastructure of money regulation, central bank money creation and some even fear de-stabilization of the monetary system as a whole. Regulators could stop/limit the quick steps forward by bigtech.

The coming years will be exiting to see the technological advancements in the battle for payment revenue. The winner will be the consumer; easy of paying will increase further and more importantly the speed will increase. Paying how we want and within a blink of an eye, and this worldwide, will be the new standard within several years.

 

Patrick Kunz

Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV

 

ACT CASH MANAGEMENT CONFERENCE

| 31-1-2019 |  treasuryXL |

The 15th edition of the ACT Cash Management Conference takes place on 12 February 2019 in London.

The ACT’s flagship cash management event of the year provides a unique opportunity to share best practice, hear practical case studies from leading corporates and network with fellow cash management and treasury professionals.

Programme

The payments landscape: keep up to date with the latest changes in payments innovation and regulation:

  • the latest regulatory changes and payment fraud (panels)
  • cross-border payments, the New Payments Systems Organisation (breakout sessions)
  • setting up a payments factory (best-in-class case study)

Cash management evergreens: lack of control and visibility remain the top cash management challenges for treasurers. Discuss key questions such as:

  • what really makes good cash management? (panel)
  • cash pooling structures and trapped cash (breakout sessions)
  • how to get cash forecasting right from the beginning (best-in-class case study)

The bigger picture:look beyond day-to-day cash management and listen to frank discussions on:

  • the profitability of cash management products from a bank’s perspective (panel)
  • designing an optimised liquidity portfolio (breakout session)
  • the future of cash management innovation (panel)

For more information or if you want to register for the event visit the events website.

 

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Reminder: Masterclass Cash Management

| 27-11-2018 | treasuryXL

Op 6 december 2018 organiseert Alex van Groningen een masterclass Cash Management. Hoe spoort u verborgen cash op en hoe speelt u het vrij? Richt een effectief cash management systeem in en optimaliseer het bedrijfsresultaat, het werkkapitaal en de liquiditeitspositie.

 

Hoe spoort u verborgen cash op en hoe speelt u het vrij?

Cash management expert Eva Borstlap onthult aan de hand van diverse actuele casussen (o.a. Blokker) maatregelen die met beperkte actie een groot positief effect op zowel de effectiviteit, het rendement als de liquiditeit van de organisatie hebben.

Onderwerpen

  • De essentie van cash management: wat is het wel en wat is het niet
  • De relevantie van een gezonde focus op cash
  • Financiële besturing; samenhang tussen de operationele-, investerings- en financieringsactiviteiten en hoe deze te meten (oa EVA/NPV, futures en SWAPS)
  • De essentie van werkkapitaal en waarom pure sturing op werkkapitaal niet zinvol is
  • Theorie vs praktijk; waarom is de praktijk weerbarstig (Blokker casus)?
  • De directe relatie tussen cash management met de operationele processen en de verborgen cash die in elke organisatie aanwezig is

Voor wie?

Dit programma is specifiek ontwikkeld voor (assistent) financial- en business controllers, financieel managers en andere financiële professionals die nieuwsgierig zijn hoe zij zelf een concrete bijdrage kunnen leveren aan het genereren van extra cash.

Programma

09:30 – 10:00 uur | Introductie

  • Introductie en verwachtingen deelnemers
  • Waarom de focus op cash essentieel is
  • Een wandeling door een Jaarrekening; relatie tussen resultaat en cash

10:00 – 11:00 uur | De essentie van Treasury

  • Groepsopdracht rondom het thema ‘resultaat en cash’
  • Theorie: De essentie van Treasury en de relatie met de operationele de bedrijfsprocessen
  • Welke rol kan/moet een financial hierin spelen?

11:00 – 11:15 uur | Koffie en thee pauze

11:15 – 12:30 uur | Financiële besturing: theorie en praktijk

  • Theorie: wat is de financiële besturing van een organisatie (operationele-, investerings- en financieringsactiviteiten)
  • Welke parameters en risico management zijn relevant (oa de werking van Futures, NPV, EVA, Swaps)
  • Theorie vs praktijk; waarom de theorie niet altijd werkt (case ABNAMRO)

12:30 – 13:00 uur | Lunch

13:00 – 15:00 uur | Verborgen cash in het werkkapitaal

  • De essentie van werkkapitaal; waarom het vooral geen ‘finance feestje’ is
  • Methoden om werkkapitaal eenvoudig en snel te kunnen beoordelen
  • Inzoomen op de verborgen cash in de operationele bedrijfsprocessen
  • Waar zit de cash ‘verstopt’?

15:00 – 15:15 uur | Koffie en thee pauze

15:15 – 16:00 uur | Opsporen van verborgen geld & Blokker

  • “Het opsporen en vrijspelen van verborgen cash” in de eigen praktijk
  • Introductie Blokker; Wat is er aan de hand; een wandeling door het Jaarverslag

16:00 – 16:45 uur | ’Hunt for cash programma’ Blokker (Case)

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Is cash still king?

| 11-06-2018 | by Patrick Kunz |

All treasurers and most financials know the statement “cash is king”. I do not have to explain the meaning; it is best for a company to have cash above any other forms of (accounting) income. Not talking about the problems of not having any cash. Having cash makes a company stronger and opens possibilities to use this cash (dividends, M&A) and cash is also needed to pay the bills.

However, since several years we are living in a world where interest rates are negative. So it costs money to own cash. It is suddenly costly to be a bigger king. This has some implications for companies and treasuries.

Active cash management

Because it is expensive to have and hold cash it is important for treasurers to know where all the cash is and what the position is. Only holding the cash and doing nothing means that the cash balance will decrease because of negative interest. It therefore makes sense to look into options to reduce the cash level. This does not necessarily mean spending the money!

Several options include:

  • Compensating negative cash balances with positive cash balances, also between different currencies (fx swaps)
  • Repaying loans
  • Paying dividends
  • Paying suppliers earlier to receive a discount

Of course above options are examples and depend on the specific company. Most important aspect in doing above actions are the cash flow forecast. The actions you are taking now have an impact on your future cash position so if some actions are good for now they should also be beneficial in the future situation. Simulations and forecasting software can help with this. For example a simulation on your credit lines, changing interest rates and changing payment terms can be very interesting.

Floors and term

If you are with your bank for a long time there is probably nothing agreed about negative interest rates on your cash as this was not foreseen by banks 10 years ago. This gives you an opportunity to negotiate with the bank on your term for having cash. Some possibilities I have seen with my clients:

  • Floors in the interest rates. This does not necessarily have to be 0% floor
  • Thresholds: for example the first 10 mln no negative interest charge
  • Combinations of above
  • Spread between credit and debit amounts; a lower spread is often better.

Invest

Another option to reduce the interest charge on your cash is to invest the money. This is a sensible topic as most treasurers are risk averse. The more return is expected the higher the risk associated to the investment. Cash at a bank is considered fairly safe (given the cash is divided over several banks with a good credit rating and depending on the amounts). Furthermore the liquidity of the investment is important. Cash is readily available. If you invest the money it first has to exchanged or transferred to cash which can take time or can have an impact on the return. Most treasurers are prudent on investments and/or internal rules do not allow these.

Cash is still king

Overall looking at above cash is still king. For every company it is better to have cash then to be short on cash. However, having too much cash can hurt a company too as the return on cash balances is very low and in most cases negative. In these times the value of a treasurer looking at the cash balances and optimizing it uses (and return) is big. So does your company not have a dedicated person looking at the (excess) cash and the optimization of the cash now and in the future (cash forecasting) then it might be the time to a assign somebody on this task. In most cases the return on this person if positive (even though the interest rate is negative).

An external treasurer or flex treasurer can be of help too.

 

Patrick Kunz

Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV