Tag Archive for: payments

Blockchain: Securities market infrastructure players in the contra-attack

| 7-4-2017 | Carlo de Meijer |

 

Blockchain technology has long been viewed as a threat to CSDs (Central Securities Depositories) and their role as intermediaries for securities transactions. Blockchain and distributed ledger technology may make the role of many intermediaries in the post trade market infrastructure obsolete. In one of my blogs (Blockchain and the securities industry: future eco-system) I was one of those who think that players such as custodians, CCPs, CSDs and others would disappear when blockchain would be used in a massive way.


“It however is not expected that there will be a complete disintermediation of service providers. While the role of custodians would greatly disappear and those of clearinghouses and CSDs will drastically change in a blockchain environment, the rest of the value chain in the securities industry may remain largely intact. The functions associated with tracking, reconciling, and auditing enormous amounts of data are not going to be disintermediated away. They have to continue to exist, but just need to be done more efficiently, at lower cost and with fewer errors”- Carlo R.W. de Meijer

But these players are going in the contra-attack. 15 CSDs from developing and emerging markets, including Strate and NSD, have agreed to form a consortium to explore blockchain and DLT technology in a post-trading environment. The partners say that“financial market infrastructures need to embrace the technology and identify opportunities that will add value to their current clients”.

Let’s look what they are all doing.

CSDs aim to build distributed ledger for mobilising scarce collateral (January 2017)

A coalition of four central securities depositories are collaborating with Deutsche Börse on an initiative to use blockchain technology to ease cross-border mobilisation of security collateral. The members of the so-called “Liquidity Alliance” include The Canadian Depository for Securities Limited (CDS), Clearstream (Luxembourg), Strate (South Africa) and VPS (Norway). Via this initiative they want to overcome existing hurdles when moving collateral across various jurisdictions, making the transfer faster and more efficient. The Alliance’s ‘LA Ledger’ will initially be implemented as a prototype based on the Hyperledger Fabric. Validation by regulatory authorities and market participants will start in the second quarter of 2017.

DTCC taps blockchain to rebuild its platform (January 2017)

The Depository Trust & Clearing Corporation (DTCC), a US post-trade provider, has announced plans to use blockchain technology in 2017 to rebuild its platform. It aims to create a credit derivatives post-trade lifecycle solution built using a distributed ledger platform. Blockchain can simplify the process by automatically maintaining a shared electronic record of the security which is visible to all relevant parties.  This new DTCC’s platform – Trade Information Ware house – will keep track of the security throughout the lifecycle of the associated bond.

IBM, Axoni, and R3 CEV, two technology startups have been selected to work on the project which is set to kick-off in January 2017. DTCC expects the new blockchain-enabled Trade Information Warehouse to go live in early 2018. Furthermore, the project has been developed with input from market participants and infrastructure providers including Barclays, Citigroup, Credit Suisse Group, Deutsche Bank, JPMorgan Chase, UBS Group, Wells Fargo, IHS Markit and Intercontinental Exchange, DTCC said.

SWIFT creates blockchain application to simplify cross-border payments (January 2017)

SWIFT has begun building a blockchain application to simplify cross-border payments. The global platform is integrating open-source blockchain technology with its own products to build a proof-of-concept that might “one day” replace the so-called “nostro” accounts its members keep filled with cash all over the world – just in case they need it. A successful test of distributed ledger technology (DLT) could enable banks to optimize their liquidity globally and SWIFT to reduce the costs of reconciliation between independent databases maintained by the inter-bank platform’s members, reduce operational costs and free up liquidity for other investments.

Euroclear pencils in 2017 for bullion on blockchain roll out (December 2016)

Euroclear, the securities market depository, is set for a 2017 go-live for the application of blockchain technology in the London bullion market after completing its first pilot trades. Over 600 OTC test bullion trades were settled on the Euroclear Bankchain platform over the course of a two-week pilot. A number of leading market participants in the London bullion market – all part of the Euroclear Market Advisory Group – were involved in the test run, including Scotiabank, Société Générale, Citi, MKS PAMP Group and INTL FCStone. The Euroclear Bankchain Market Advisory Group set up in June this year now includes 17 participants working with Euroclear and blockchain platform provider Paxos in the roll-out of the new service. Another market simulation will run early this year in preparation for a production launch later in 2017.

Euroclear report: “CSDs matter in blockchain settlement system” (December 2016)

A new report by Euroclear has looked at the regulatory and legal aspects of the use of blockchain technology in post-trade settlement in a European context. The report, Blockchain Settlement: Regulation, Innovation, and Application, with support from Slaughter and May, found that central securities depositories (CSDs) would play an important role in a blockchain-based settlement system. It added that as ‘custodians of the code,’ CSDs could exercise oversight of, and take responsibility for, the operation of the relevant blockchain protocol and any associated smart contracts. CSDs will continue to perform an important role as trusted, centralised FMIs, providing gatekeeping services and oversight of the relevant blockchain. While the Euroclear report states that CSDs are trusted central entities that facilitate the settlement process, it is believed that the distributed ledger technology system would be a natural evolution of this facilitation role.

SWIFT deploys PoC for bond trading based on blockchain (November 2016)

SWIFT has unveiled a proof-of-concept for managing the entire lifecycle of a bond trade based on blockchain technology. SWIFT, that has been targeted in the press as “a legacy incumbent that will be doomed by DLT”, is determined not to be left behind “in the wake of the revolution that is unfolding in the finance world” with the adoption of blockchain or Distributed Ledger Technology (DLT). SWIFT believes “it can leverage its unique set of capabilities to deliver a distinctive DLT platform offer for the community.”

At the beginning of 2016 SWIFT and Accenture released a paper investigating how blockchain technology could be used in financial services. As a technology assessment, SWIFT and Accenture identified gaps between existing DLT solutions and industry requirements.

SA Strate to launch block chain based e-proxy voting in 2017 (October 2016)

Strate, South Africa’s central securities depository (CSD), plans to launch an e-proxy voting system based on blockchain technology in 2017. The body, responsible for clearing and settling all transactions that take place on the Johannesburg Stock Exchange (JSE), has partnered with Russia’s National Settlement Depository (NSD) to develop and test systems aimed at simplifying shareholder voting. Both CSDs plan to launch the e-proxy voting system in 2017, as such they are looking to partner with an international service provider whose product is around 70% to 80% complete. In South Africa, the planned e-proxy voting system will be rolled out on a client-by-client basis, with an eventual goal to have the entire market take up the system.

The decision to partner with NSD, taken at the Sibos Conference in Geneva last year, is rooted in the fact that both CSDs have conducted independent proof of concept studies and are at a similar stage in understanding and developing an appropriate voting solution. The NSD was also one of the first financial organisations in the world to announce the development of a blockchain-based prototype for e-proxy voting. Strate and NSD will share information regarding standards, regulations and DLT technologies; explore mutually beneficial ideas; and look to make savings through the sharing of technology and development costs. They are claiming that several other CSDs have expressed interest in joining them.

Innovation in CSD space session at SIBOS: “ a slow burn for CSDs” (September2016)

During the “Innovation in CSD space: What about distributed ledger technology?” session at SIBOS, some panellists argued that the technology would “hail the end of CSDs” while others said there would be no revolution, just a “natural evolution” of what exists.

The message from the CSDs was that they are “open to innovation with blockchain, but will test it out in safe places first”.   

WFE Survey “Financial market infrastructures piling into blockchain” (August 2016)

More than 84% of trading venues and clearing counterparties (CCPs) surveyed by the World Federation of Exchanges (WFE) are either investigating or actively pursuing the applicability of distributed ledger technologies in financial markets.

WFE says that the poll of 24 members indicates that firms are at different stages of evolution in their DLT initiatives, with one having already deployed a DLT-based application, some at proof-of-concept, and others on the spectrum of evaluation, design, and proof-of-technology. Clearing and settlement provided the most obvious use case for respondents, but with regulatory, legal and technical risks an issue there was little consensus on a viable time frame for live production.

Strate, global CSDs to collaborate on blockchain use (August 2016)

Strate, the South African body responsible for settling transactions concluded on the Johannesburg Stock Exchange, met with 20 other central securities depositories (CSDs) in Switzerland in September to discuss how blockchain technology can be used across global financial markets. Aim is to form a group of CSDs to share information and knowledge. The group of CSDs would try to determine an ideal model for putting clearing settlements and the transaction of shares on to a blockchain.   And as opposed to each going and developing their own technology, the group could potentially get a vendor to develop something for all of them or develop something their selves and share it and share in the costs.

Euroclear explores use of blockchain in London gold markets (June 2016)

Euroclear is exploring the potential of using blockchain technology to create a next generation settlement service for the London gold market. The clearing is working with blockchain infrastructure firm itBit and market participants to evaluate the use of distributed ledgers to remove the risks and reduce the capital charges related to the settlement of unallocated gold. Euroclear will thereby use ItBits’ Bankchain product, a private network of trusted participants that clears, tracks and settles trades in close to real-time, opening the prospects of providing true delivery-versus-payment in the bullion market.

Rise testing post-trade blockchain tech with banks, custodians and CSDs (May 2016)

RISE Financial Technologies (RISE), a provider of distributed ledger technology for both post-trade settlement and securities safekeeping, has become the first technology firm to launch the second generation of blockchain for the post-trade sector. RISE is testing its solutions with a number of leading financial institutions including banks, custodians, and CSDs.

The core attributes of RISE’s technology are de-centralised ledger qualities and permissioned transparency, which gives access to different types of information depending on who you are. These qualities are applied to ensure any ‘single point of failure’ inherent in many technology systems is removed and guarantees data integrity. So investors have sight and control over their assets but not those of other participants; issuers have a view but no control into final beneficiaries; financial institutions (ledger operators/validators) have access to client information; and regulators have a complete view of the information in their jurisdiction in real-time but no direct control over the assets.


Carlo de Meijer 

Economist en Researcher

 

 

 

 

More articles about blockchain from Carlo de Meijer:

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How can payments improve your working capital? Part I

| 6-4-2017 | Olivier Werlingshoff |

Working Capital is the term for the operating liquidity of a company that can be used and is needed to continue the day to day business. To calculate the working capital you have to deduct the current liabilities from the current assets. By managing your account receivables, accounts payables and inventory you can fluctuate your cash position and optimize your working capital so that the cash “trapped” in the company can be lowered to a minimum while you are still able to meet your payment agreements.

The way you are making or receiving payments can have influence on the trapped cash and therefore can influence your working capital.In a few articles we will dive into the world of payments and explain the influence on working capital. In this first article we will discuss the wire transfers within the EU and cross border.

Wire Transfer

SEPA
With SEPA all payments in the EU are considered as a local payment. To minimize your banking process time with bank transfers you don’t need to open local bank accounts in the different countries in the EU anymore. If you have a customer in, let’s assume Spain and you agreed on a payment term of 30 days, you send your invoice by mail as soon as the  client signed the contract. At that moment your working capital will increase with the amount until the moment the amount is paid into your bank account.

You can mention on your invoice that payments can be done by transfer to your IBAN number in The Netherlands. The maximum processing time will be one banking business day if you send the payment instruction before the cut off time of your bank. This means that if the client is doing the payment on Friday before the cut off time, mostly 3.30 PM, the amount will be on your account on Monday. Otherwise you will receive it on Tuesday.

Risk of non-payment
With wire transfers you still have the risk of nonpayment by you customer. Within the SEPA area you can also use Direct Debits. With this type of payment you can be the one who initiates the payment and if your client accepts, your money could be on your account after the agreed payment term of 30 days. Furthermore Direct debits can’t be reversed by your client when you use the Business variant.

Cross border
If you have a client in the US, you will also send him the invoice by mail to skip the postage process. You can ask him to transfer the amount to your IBAN number. The client will probably convert the amount in his own currency and make an international transfer. With a cross border transfer you will have different costs: the outgoing transfer cost, the incoming transfer cost and also even sometimes correspondent bank costs. Besides the high costs, payments can even take a week before reaching your bank account.

What is the effect on your working capital? Because it takes a long time before you get paid, your accounts payables will increase and the “days sales outstanding” will be longer than the 30 days you agreed on.
When you have a lot of international clients in one specific country you can make a calculation whether opening a local account in the country of your clients could be profitable for you. To avoid correspondent cost you can choose a bank that has connections with your main bank.
After receiving the money on your local account there are some instruments you can use to sweep the balance to your main account in The Netherlands, those products are called pooling techniques.

In the next articles we will focus on payments by internet, credit – and debit cards but also payment on delay and trade products.

Olivier Werlingshoff - editor treasuryXL
Olivier Werlingshoff

Owner of WERFIAD

 

 

 

More articles from this author:

Managing cash across borders

How to improve cash awareness without targets

 

 

Managing treasury risk: Operational Risk (Part VII)

| 21-3-2017 | Lionel Pavey |

 

There are lots of discussions concerning risk, but let us start by trying to define what we mean by risk. In my last article on how to manage treasury risk I will write something about operational risk. The Bank for International Settlements (BIS) defines this as “the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.  If you want to read my earlier articles on managing the different treasury risks please refer to the complete list at the end of today’s article.

 

Whilst this is the last article in this series, it is actually – potentially – the most significant risk that a company can face, as there are many different ways that a loss could occur, together with the fact that when it happens the amount lost can be very large. Even if the size of the loss could be considered small, there is always the threat of reputation risk which, once identified, is very difficult to erase from the memory.

While it is possible to insure against rogue trading for a company (the risk present in the Treasury function can be quantified and qualified) it is very rare that damage is caused by just one individual – a financial version of the lone wolf theory. Operational risks tend to be interlinked – a fraudulent payment could be initiated by human involvement (either as fraud or human error) and facilitated by weak processes together with insecure technological systems.

There are 2 main areas of operational risk within treasury for a company

  1. Internal
  2. External

There are 3 main categories of operational risk within treasury for a company:

  1. Computer System, Information Technology
  2. Theft and Fraud
  3. Unauthorised Activity

Computer System, Information Technology

A lack of robustness and deficiencies in the technology and systems contribute to circumstances for failures, errors, data losses, corruption and fraud. Internally considerable care and attention should be given to the protocol for Static Data. This encompasses all the relevant reference data for a counterparty and should be subject to at least an input and verification procedure before entering the computer system. Changes to Static Data have to be recorded, together with the proper paper trail and authorization matrix. Externally the risks relate mainly to illegal entry (hacking), together with the complete theft of data.

Theft and Fraud

Both internally and externally main areas include:

  • Theft – both physical and electronic
  • Extortion
  • Embezzlement
  • Forgery
  • Misappropriation
  • Willful destruction
  • Bribes
  • Kickbacks
  • Insider Trading

Unauthorised Activity

From the Treasury point of view, this is an internal activity and mainly relates to 2 types of transactions – unauthorized by transaction and or type; transactions that are not captured in the system and reported. These can lead to monetary losses (though a gain is possible – at the price of an operational risk), together with loss of reputation.
The last category clearly shows where the biggest risk occurs within a company – at the human level. Generally speaking, these are caused by incompetence, lack of knowledge, misuse of power or compulsion to act caused by external factors – extortion.
It is clear therefore that whilst the electronic systems employed by a company can be a liability if not properly programmed or safeguarded, even here, most of the errors can be traced by to human intervention.

So why are the human risks so often underestimated? Naturally a company wishes to have the feeling that its staff can be trusted (within reason). After all, the company felt that the staff were the right people to employ. It is not my intention to formulate the reasoning and thinking of people who perform illegal acts. However certain areas that can be considered include how staff are treated; the demand placed on them; the rewards given; the levels of transparency and inequity within the company; a closed-off attitude (problems in one department are kept within that department and not discussed throughout the company); the role model set by owners, directors and managers; loss of personnel, reduction in morale; disinterested and unmotivated staff.

 Solutions

An effective framework of operational risk management needs to be designed and implemented within the business. This requires input and commitment from all departments within the company, meeting one agreed standard and not being shaped to every individual department’s wishes. The framework has to run and meet the requirements for all different strategies within the company.

I wish to finish with 2 examples of operational risk to illustrate how large they can be.

In 1995 the world’s second oldest merchant bank (Barings Bank) collapsed due to the actions of a rogue trader. Corruption and a lack of internal control led to a loss of GBP 827 million.

Around the same time I was employed as an international money broker working in the interbank market and travelled every day from The Hague to Amsterdam via train. As I knew the route off by heart, I read all the time – magazines, papers, books – anything. I purchased a book called “The Cuckoo’s Egg” as it seemed interesting and would pass the time away sitting on the train.
The synopsis told me that an unreconciled accounting discrepancy of just 75 cents would lead to a world of computer espionage and spies. I highly recommend reading the book to understand how a simple error can grow to show the dangers of ignoring operational risks. If you like acronyms then you will enjoy reading about the FBI, CIA, NSA and KGB – all hacked via a UNIX server at a laboratory linked to the University of California.The story is true and threatened national security.

Trust people – but do not place temptation in their way.

Lionel Pavey

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

 

More articles of this series:

Managing treasury risk: Risk management

Managing treasury risk: Interest rate risk 

Managing treasury risk: Foreign exchange risk

Managing treasury risk: Commodity Risk

Managing treasury risk: Credit Risk

Managing treasury risk: Liquidity risk

Toename SCF om werkkapitaal te financieren

| 14-3-2017 | Jan de Kroon |

Rond de Creditexpo verschijnen er tal van artikelen over de voor en nadelen van uiteenlopende ontwikkelingen rond het thema Supply chain financering (SCF). Zo publiceerde PriceWaterhouseCoopers (PwC) recent in verkorte vorm de uitkomsten van een gehouden onderzoek naar Reversed Factoring als alternatief voor werkkapitaalfinanciering van banken.

Het zal de lezer niet verbazen dat SCF in het algemeen en reversed factoring specifiek, hard groeien. Het is een nieuwe trend en dus is er ook een groeiende groep innovators en early adopters. Dat laatste echter vooral bij adviserende of toeleverende partijen in het proces. En dus met een zeker belang.

Waarbij ik overigens geen waardeoordeel geef;  ik ben zelf ook adviseur.
Wel is het van belang iedere ontwikkeling en dus ook deze, te beoordelen op de werkelijke merites. Anders dan in relatie tot bancaire financiering heet het niet voor niets Supply chain financiering.

Belangrijk is te bedenken dat het juist daar van toegevoegde waarde is, waar de vertrouwensrelatie tussen leverancier en afnemer in de keten ‘beyond reasonable doubt’ is. Je hebt een relatie waarin je langer met elkaar optrekt als op elkaar ingespeelde ketenspelers. Omdat dat vertrouwen er is kan het ook zonder bank en omdat je het vaker met en voor elkaar doet, loont het ook er wat meer ‘(infra)structurele’ afspraken over te maken.

Dat houdt tegelijkertijd in dat als de connectie een minder frequente of regelmatige is, het instrument minder tot zijn recht komt. Mutatis mutandis geldt dat ook voor ‘reversed factoring’ als belangrijk SCF instrument. Anders dan reguliere factoring gaat het niet om het bevoorschotten op basis van de kredietwaardigheid van de verkoper, maar om het voorfinancieren van debiteuren in portefeuille op basis van hun kredietwaardigheid. Daarmee is het een alternatief voor die bedrijven die op basis van hun eigen kredietwaardigheid niet of moeilijk bij banken of factormaatschappijen terecht kunnen. Hoewel het wordt aangeboden door factormaatschappijen, kan echter ook een opvolgende ketenspeler hier zijn surplus cash voor inzetten. Met name dat laatste is interessant omdat op die manier er een zekere ‘disintermediatie’ plaatsvindt; de supply chain regelt het zelf buiten de financiële sector om en bespaart zich de tussenmarge.

Belangrijk is ons te realiseren dat SCF nu juist de ketenactiviteit en dus een zeker repeterend karakter benadrukt en de financiering daarop inregelt. Voor meer eenmalige transacties of transacties met minder regelmaat is SCF en daarmee reversed factoring vooralsnog minder geschikt. In dat soort gevallen is voorlopig de weg naar nieuwe start-ups als ‘Debiteurenbeurs’ meer geschikt. Daar kan een onderneming afzonderlijke facturen of incidentele liquiditeitskrapte op maat oplossen.

Jan de Kroon

 

Jan de Kroon

Owner & Managing partner of Improfin Groep

TMS Buyer’s Guide from AFP: a short summary

| 1-3-2017 | treasuryXL |

The latest TMS Buyer’s guide of the Association for Financial Professionals (AFP) has been published in 2016, but contains enough interesting information to look at it and make a short summary. With the buyer’s guide AFP wants to offer its members a closer look at treasury technology today. Some of the top TMS vendors in the (global) marketplace were asked to share their view on what treasury departments were looking for in a system—or how such a system should look like. It is a growing market and there are many options to choose from. The questions is, how a treasury professional can judge if the TMS he is considering or currently uses is the one best suited to his needs? According to AFP the TMS Guide will help practitioners to answer that question by giving a list of TMS suppliers and describe the latest technologies and trends. As a treasury professional who also is responsible for a smooth treasury proces within your company you want to be sure that you are getting the most for your money.

The content of the Guide is divided in two parts: a list of TMS suppliers where they describe shortly their products and services and a TMS functionality matrix, which lines out specific TMS functionalities and which company from the list supplies which services or products for the different functionalities.

The list in the guide is one of worldwide suppliers.  Most likely AFP has not the intention to offer a complete list and it is obvious that you will find local suppliers in the different markets.

These are the companies in the guide:

  • ION
  • Orbit
  • Axletree
  • Bellin
  • Bloomberg
  • Chatham Financial
  • Expertus
  • Financial Sciences Corporation
  • GTreasury
  • Hanse Orga Group
  • Kyriba
  • OpenLink
  • Reval
  • Strategic Treasurer
  • Treasury Xpress

For our readers we will focus on some companies that operate in the European/Benelux market.

Bellin

Bellin (in the Benelux represented by Enigma) has successfully launched over 15,000 companies on their tm5 Treasury Management system, leading the industry in project success rates. This has given a certain perspective on some of the less thought about aspects of TMS implementation, especially when it comes to cash management. They focus on three factors they think people do not pay enough attention to when implementing their TMS, and how these factors can improve the cash positioning, forecasting and risk management:

  • Don’t automate, do streamline
  • Get your subsidiaries involved in cash forecasting early, so you can use their data.
  • When it comes to risk management, start with real data, and use specific analysis to establish where you have weaknesses

Bellin states that implementing the TMS system is only  the beginning and that more challenges come along while you are on the way. Read more.

Kyriba

Kyriba is the global leader in cloud treasury solutions. Kyriba delivers award-winning, secure, modular and scalable SaaS treasury solutions with integrated bank connectivity, payments, and risk management. They developed a cloud treasury management solution that is delivered on a single platform. Kyriba’s Treasury Cloud is used by more than 1,300 clients globally to protect against payments fraud and cybercrime, while proactively managing market volatility, onerous compliance requirements, and creating opportunities to fund new growth. Kyriba’s Cash and Liquidity capabilities include Cash Positioning, Cash Forecasting, Advanced Forecasting, Variance Analysis, Liquidity Forecasting, In-House Banking, and Multi-Lateral Netting. Clients also benefit from full accounting, GL posting, and Bank-tobook reconciliation workflows. The Cash and Liquidity modules are supported by the Kyriba Connectivity Hub and Data Exchange. With Kyriba’s Payment Management suite, clients can initiate, approve and release payments to any of their banks globally. Kyriba also supports payment factories, including multiple routing options to integrate all corporate payment workflows in a centralized payment hub. Read more

Hanse Orga

Hanse Orga is a global provider of specialized financial software for CFOs, treasurers and financial professionals seeking the perfect solution for their individual requirements. Their FS² software family is fully embedded within the SAP landscape so that companies capitalize on existing technology investments and profit from seamless finance processes. Over 1,000 customers in more than 50 countries worldwide have already profited from their systems and consulting.
With their SAP-embedded software family FS² and specialized consulting they help customers worldwide to achieve best results for their finance processes. FS² works with SAP S/4HANA Finance as well as previous SAP systems such as HANA and ECC! Corporates benefit from future-proof functions, a modern user experience and flexible report settings – on any device, anytime and anywhere! Whether the software is installed on premise, in the cloud or as a hybrid solution, the software supports fully audit-proof processes.
FS² is available for these areas: Cash, Liquidity and Treasury Management, Accounts Payable, Accounts Receivable, Bank Account Management and Working Capital Management. Read more

Reval

Reval is a global provider of a scalable cloud platform for Treasury and Risk Management (TRM). Their cloud-based offerings enable enterprises to better manage cash, liquidity and financial risk, and to account for and report on complex financial instruments and hedging activities. The scope and timeliness of the data and analytics they provide allow chief financial officers, treasurers and finance managers to operate more confidently in an increasingly complex and volatile global business environment. With offerings built on the Reval CONTACT Cloud Platform companies can optimize treasury and risk management activities across the enterprise for greater operational efficiency, security, control and compliance. They offer Reval Core ™ for mid-market treasuries and Reval Choice™ for  organizations faced with
complex treasury and risk challenges. Read more

Treasury matrix in the TMS buyer’s guide

The TMS functionality matrix lists (all) the companies in the guide for the following functionalities:

  • Foreign Exchange
  • Debit Interest rate products
  • Derivatives
  • Electronic Dealing
  • Balance & transaction management
  • Bank account management
  • Reconciliation
  • Forecasting
  • Confirmation
  • Accounting
  • Reporting
  • Security
  • Target company size
  • Implementation

For more information on the details of the functionality matrix follow this link.

Source: TMS Buyer’s Guide 2016, AFP

We believe that the functionality matrix offers very valuable information for treasurers and finance professionals who have to make choices for the implementation of a system.

Some other TMS suppliers in Europe/The Benelux not mentioned in the Guide

It goes without saying that in the Benelux/Europe you will find other suppliers, let me mention just a few – Aaron, Integrity, IT2, Trinity (Wieltec), Global$ WallStreet and Treasury Services.

As an example Treasury Services BV creates a competitive advantage for their clients through the implementation of innovative solutions. They offer a complete treasury management software, treasury training and education, financial engineering solutions and consultancy.

Working capital management : Some practical advice on the optimization of the Order to Cash Cycle

| 27-2-2017 | François de Witte |

 

As mentioned in my article “Treasury : proposed “to do” list for 2017”, working capital management will remain a hot topic throughout the year. The first priority is to reduce the working capital needs and financial expenses by optimizing the Order to Cash cycle. In this article, we will develop a plan of approach and propose some concrete actions enabling to generate tangible savings.


Background

The purpose of the Order to Cash optimization is to improve the whole cycle from the moment of the ordering of the goods or services, until the final payment, with the aim to:

  • reduce operational inefficiencies and risks such as delays between goods or service delivery and invoicing, credit management issues, unapproved discounts and deductions, data quality issues, etc.).
  • improve a number of processes such as the invoicing, the dispute management, the credit management and credit control
  • assess the current the tools, build business case for the improvement thereof, and implement them.

Plan of Approach

When starting such a project, I recommend to have at first a quick scan of the overall Order to Cash process so as to identify the critical areas and to assess the business case. Based hereupon, one can then subdivide the project in a number of streams.

In such a project, typically the following processes should be covered:

Ordering processes:
It is important to have a client acceptance process (for me a must in the B2B) and a clear policy on the way orders are accepted. I recommend to only accept written orders. For nonstandard goods, we also need to examine if a prepayment is required before an order is accepted, so mitigate the risk in case that the client does not execute this obligations. It is also useful to check beforehand if the exposure on the client will not exceed the existing credit limits.

Current invoicing processes:
Ideally the sending of the invoice should coincides with the delivery of the goods or services. Furthermore it is important to have the invoices sent timely. These actions enable to reduce the “hidden DSO”. Quite a lot of companies lose several days of easy working capital by neglecting this.
A good customer database is key, and in combination with the ERP, this  enables an automation of the invoicing process.  I recommend to use as much as possible e-invoicing, so as to reduce the costs and the postal delays.

Current credit management processes:
A formalized credit policy is a prerequisite. A number of solution providers offer solutions for the scorings of your clients, so as enable you  to define the credit limits in function hereof. In some sectors this information can be enriched by market information. Of course, one need to ensure that sales staff comply with this and check beforehand that the  credit terms have been duly approved. The credit manager needs to work hand in hand with the sales staff.

Current dispute management processes:
Prevention is important. For this reason, when ordering nonstandard goods, it is recommended to check beforehand the availability of the goods and the timing of the delivery, so as to manage the expectations of your clients. Throughout the process (from the order acceptance to the delivery and the invoicing) one should apply thee “first time right” so as to avoid disputes and litigation afterwards. Check also if some services and repairs are to be done under a maintenance contract or warranty, in which case they should be invoiced to other parties.

Current collection and credit control processes
It is important to have a well-organized credit control process enabling to send reminders quite soon after the due date (if possible the first reminder after 15 days). It can help to send to send to your clients some days before a gentle reminder of the forthcoming due invoices. Once the 2nd reminder has been sent, and provided that there is no dispute, it can be useful to block the delivery of goods and services to your client, so as to have an additional leverage, and to have  the credit collectors should calling the clients to see why they do not pay, and agree with them on an action plan.
When the classic reminder and call actions do not succeed, involve also the sales department and consider first a final call  by another person, before sending your clients to the debt recovery service or to the debt collection agency.
It is important to also ensure an automation of the processes, in particular if one has to address high volumes. If you cannot do it with your current systems, there exist good solutions in the market.

Reconciliation and allocation of incoming payments:
This is a big challenge for many companies. Make sure that your clients use the right payment instruments and payment messages, so as to facilitate the reconciliation process. Within the accounting department, incoming payments are not always allocated promptly, distorting the real accounts receivable outstanding. As a result, reminders can be sent unduly, leading to client dissatisfaction.

KPI’s and Dashboards:
It is important to foresee KPI’s for all the involved stakeholders, as well as incentives to ensure that everybody play the game. Dashboards should enable to remain in control and to monitor regularly a number of key indicators. An area of attention are the overdue receivables. A too high percentage of overdue receivables/total portfolio might be an indicator of possible uncollectable receivables and the need for write-offs.

Attention points

An Order to Cash optimization program is complex and we need to address a number of issues such as :

  • The resistance to change: people will come up with several reasons to keep on with the current processes. Overwork or client dissatisfaction will be used as excuse for deviations with the processes. Hence involve all the stakeholders, take time to listen to them and to make sure that they buy in the change. If the change is well explained, people will tend to accept the changed processes. The support of the senior management is key to address this resistance.
  • The limitation of the systems such as e.g. the ERP or the accounting package: Quite a lot of companies miss opportunities because they do not understand the capacities of their ERP. Involve from the start system experts and examine with them possible workarounds.
  • The standardization of processes throughout the organization : This can be an issue, in particular when working on multiple locations. Processes should be well documented. Once this is done, one can look for the automation.
  • The information and training of the stakeholders: Make sure that process documentation is easily accessible, and consider organizing training sessions for the involved staff.
  • The time and effort needed to implement external solutions: This requires a good business case, including all the aspects. Do not underestimate the cost, the effort and time to implement the tool.
  • The determination of the KPI’s and incentives: this should not only involve finance, but also other Sales, sales administration, the production department and the other involved stakeholders. Build in incentives to ensure that everybody play the game. Make sure that the KPI’s are monitored regularly so as to be able to take corrective action in case of divergences

Conclusion

By managing better the order to Cash Cycle, you can generate a lot of savings. This requires a global approach involving all the stakeholders. To be successful, an optimization requires a number of concrete process improvements, but also the buy-in of all parties involved. A good change management should ensure that the improvements are embedded in the organization, and smart dashboards will enable to monitor that one remains on track.
Technology can help to automate the processes, but do build first a business case and to not underestimate the effort.

It can be a long journey, but in the end, it is worth the effort.

 

 

François de Witte

Senior Consultant at FDW Consult

 

 

More articles of the author:

PSD 2: A lot of opportunities but also big challenges (Part I)

PSD 2: The implementation of PSD 2: A lot of opportunities but also big challenges (Part II)

Treasury: Proposed “to do” list for 2017

Working capital management – not just a finance issue

 

Payment fraud – how companies can protect themselves

|13-2-2017 | Joerg Wiemer | sponsored content |

Information about the opportunities and risks of digitalization is widely spread. In general, risks occur when there is a chance of losing a competitive advantage or falling behind.  However, one of the biggest risks is without doubt cybercrime. Attacks on IT systems worldwide increased yet again by 38 percent in 2015, according to the consulting firm PwC in their “Global State of Information Security Survey 2016”. If these attacks are aimed at the payment transactions of a company, the entire existence of the organization is easily threatened. Therefore, security measures in treasury and payments processes should be at the very top of the agenda. Jörg Wiemer, CSO of TIS, explains how companies can ensure increased security.

In general, when does a risk exist for companies during payment transactions?

JW: In principle, in any situation that involves a lack of transparency across bank relationships and activities. In these cases, cash positions and liquidity are not clear. Let’s assume that a branch transfers ten million dollars at the beginning of the month. If these bookings rely on manual processes and the balance is only checked once at the end of the month, it takes a full thirty days until the fraud is detected. Time is literally money.  By monitoring treasury in real time, it is possible to detect these procedures much earlier, thereby solving them in many cases.   

It can take a lot of time until the head office of the branch gains knowledge about such cases.

JW: This is the heart of the problem: The prevailing regional division of labor makes it easy for fraudsters. If the account statements in paper are collected locally in each branch, it takes weeks until those responsible in the head office notice that an account statement is missing, and with it, the positions written on it. This is exactly why a company should collect all account statements from every bank account worldwide automatically and assess liquidity positions in real time with a software like TIS.

What else facilitates frauds?

JW: Fraud can occur if there is no complete overview of the electronic signing authorities, if there is no dual control principle during payment transactions or during the administration of payment recipients and, in general, during every user administration, which is particularly prone to fraud. These are the typical gateways.

How can I detect that I am at an increased risk?

JW: One reliable indicator of a low level of security in payment transactions is a high amount of manual transactions. Normally, the assumption is that every payment has to be recorded in the accounting system according to the best practices – no booking without receipt, and no payment without a previous booking. Nevertheless, under certain circumstances, there are deviations and exceptions of this principle. The key term here is “exception handling”, which results in a manual payment. An exemption is necessary for these cases, which includes comprehensive process documentation. The possibility of recording and authorization of non-automatic payments should be restricted to certain recipients of the payment and internal user groups. Furthermore, the user should only be allowed to use unchangeable payment templates that have been approved in advance.

How can companies reduce risks?

JW:  A general rule is to standardize and and automate processes across the group of companies! Payment related tasks can be executed on local level, however, based on a standardized and automated process. A central directory of every existing account and a payment governance should be mandatory for every company. Security in payment transactions begins with the professional management of the bank accounts. Otherwise, those responsible run the risk of fraudulent payments through accounts that are not registered in the ledger. The next step is to centralize the payment transactions. Digital payment platforms like TIS pool the cash flow and standardize and automate it. This way, payment procedures and the cash flow are controllable at all times.

What has payment looked like in practice up until now?

JW: Heterogeneous and confusing. Companies have a lot of different systems in each part of their organization and they use different e-banking tools to connect to the banks. The SAP system then generates payments. This is complicated and complex and there are many different protocols and formats. This is the reason for high costs as well as increased fraud risk.

In light of this, which solution approach does TIS pursue?

JW: We provide a payment transactions platform especially for medium and large-sized companies in any industry. The platform connects their accounting system with the respective bank. It then operates between the core systems – which the client does not have to change –  and the bank. Therefore, the platform is the single point of contact, allowing all automated and standardized payment transactions to be combined in a uniform way for the entire company. This makes the management, monitoring and assessment of payment transactions tremendously easier.

The TIS solution runs completely in the cloud. What about the topics of control and secure data storage?

JW: A server as such is either secure or not secure, no matter if it runs in the cloud or in your own house. It is also possible to dial into an in-house server with the banking tools of a company from anywhere as long as the person has the appropriate authorization or the right amount of criminal energy. This is why the server has to be permanently protected from non-authorized access with a high level of modern technology. The big data centers, with which TIS also cooperates, have totally different possibilities than a single company. Let me say a few words regarding the topic of online banking:  the idea that banking tools on a private notebook which runs offline are somehow more secure is an illusion. This computer provides a much bigger gateway for viruses and Trojans than any e-banking solution that runs in the cloud. It speaks volumes, that the Swiss Reporting and Analysis Centre for Information Assurance (MELANI) has recently started receiving a much higher amount of reports from the general public regarding e-banking frauds.

The right software is one part, but what can be done to ensure risk is handled correctly and that the right methods of payments processing are put into place?

JW: Good governance must be established and implemented. Companies need globally valid rules for their payment transactions with detailed guidelines on the following: how accounts are managed, who can open new accounts, who must give permission for this, and the documentation necessary to do so. There are always bad examples for what can happen if the company does not follow the guidelines. Remember the case of the automotive suppliers Leonie mid-2016? Cybercriminals acquired documents and assumed somebody else’s identity. They were then able to divert 40 million euros from accounts of the company to accounts abroad.

My advice on how to minimize risk? Establish governance guidelines and use a central platform for the management of bank accounts and payment transactions. Through automated and standardized processes, companies can protect themselves against manipulation and fraud and, ultimately, the loss of money.

If you are interested to read more about this topic please click on security in payments

joerg wiemer

 

Joerg Wiemer

CSO and Co-Founder of  Treasury Intelligence Solutions GmbH ( TIS)

 

 

 

PSD 2 : The implementation of PSD 2: a lot of opportunities but also big challenges – Part II

| 1-2-2017 |  François de Witte |

After having examined the detailed measures of the PSD2 in my first article, in the 2nd part we will examine the impact of PSD 2 on the market. In order to help you read the text we will once more start with a list of abbreviations.

 

LIST OF ABBREVIATIONS USED IN THIS ARTICLE

2FA    :   Two-factor authentication
AISP  :    Account Information Service Provider
API :       Application Programming Interface
ASPSP : Account Servicing Payment Service Provider
EBA :     European Banking Authority
PISP :    Payment Initiation Service Provider
PSD1:    Payment Services Directive 2007/64/EC
PSD2  :  Revised Payment Services Directive (EU) 2015/2366
PSP :     Payment Service Provider
PSU:      Payment Service User
RTS :     Regulatory Technical Standards (to be issued by the EBA)
SCA :     Strong Customer Authentication
TPP :     Third Party Provider

Impact on the market

A major implementation journey:

The ASPSP (mostly banks) will have to make large investments in order to comply with the PSD2, in the following fields:

  • Implementing  the infrastructure enabling the application of the PSD2 scheme to the currency transaction in the EU/EEA area, and to the one leg transactions.
  • Ensuring that they can respond to requests for payment initiation and account information from authorized and registered TPPs (third party providers), who have received the explicit consent of their customer for to this. They will have to develop interfaces that enable third party developers to build applications and services around a bank. Internal banking IT systems might need to be able to cope with huge volumes of requests for information and transactions, more than they were originally designed for.
  • Ensuring their security meets the requirements of the SCA (strong customer authentication). This will be a big challenge both for the banks and for the other payment service providers).

PSD2 will make significant demands on the IT infrastructures of banks. On the one hand the IT infrastructure has to be able to be interact with applications developed by the TPPs (PISP and AISP). On the other hand, banks have to develop their systems in such a way that they don’t have to do this from scratch every time a TPP approaches them. This will require a very flexible IT architecture. The banks have to have a middleware that can be used by their internal systems, but also by the applications of the PSP’s.

Although PSD2 does not specifically mention the API (Application Programming Interfaces),  most technology and finance professionals assume that APIs will be the technological standard used to allow banks to comply with the regulation.

An API is a set of commands, routines, protocols and tools which can be used to develop interfacing programs. APIs define how different applications communicate with each other, making available certain data from a particular program in a way that enables other applications to use that data. Through an API, a third party application can make a request with standardized input towards another application and get that second application to perform an operation and deliver a standardized output back to the first application. For example, approved third parties can access your payment account information if mandated by the user and initiate payment transfer directly.

In this framework, the real challenge is to create standards for the APIs specifying the  nomenclature, access protocols and authentication, etc.”. Banks will have to think about how their new API layers interact with their core banking systems and the data models that are implemented alongside this. The EBA (European Banking Authority) will develop RTS (Regulatory Technical Standard) with more detailed requirements regarding the interface between ASPSPs and TPPs. While these are expected to be published early 2017, based on the EBA’s recent draft RTS, the question is whether they will define the interface’s technical specifications.

Emergence of new players and business models

By integrating the role of new third party payment service providers (TPPs) such as the PISP and the AISP, the PSD2 creates a level playing field in the market. Several market experts expect that this will foster innovation and creating new services. For this reason PSD2 should increase competition.

This might lead to a unique open race between traditional players, such as the banks and newcomers for new services and a possible disintermediation of banking services, as illustrated in the figure down below:

Source: Catalyst or threat? The strategic implications of PSD2 for Europe’s banks, by Jörg Sandrock, Alexandra Firnges – http://www.strategyand.pwc.com/reports/catalyst-or-threat

PSD2 is likely to give a boost to the ongoing innovation boom and bring customers more user-friendly services through digital integration. One can expect that the automation, efficiency and competition will also keep the service pricing reasonable. PSD2 will foster improved service offerings to all customer types, especially those operating in the e-commerce area for payment collection. It will enable a simpler management of accounts and transactions. New offerings may also provide deeper integration of ERP functions with financial services, including of their multibank account details under a single portal, and smart dashboards.

PSD2 also enables a simplified processing chain in which the card network can be  disintermediated. The payment can be initiated by the PISP directly from the customer’s bank account through an interface with the ASPSP. In  this scheme, all interchange fees and acquirer fees as well as all the fees received by the processor and card network could be avoided. The market expects that new PISPs will be able to replace partly the transactions of the classic card schemes. A large internet retailer could for example ask permission to the consumers permitting direct account access for payment. They could propose incentive to encourage customers do so. Once permission is granted then the third-parties could bypass existing card schemes and push payments directly to their own accounts.

On the reporting side, the AISP can aggregate consumer financial data and provide consumers with direct money management services. They can be used as multi-bank online electronic banking channel. One can easily imagine that these services will be able to disintermediate existing financial services providers to identify consumer requirements and directly offer them additional products, such as loans and mortgages.

The PSD2 is for banks a compliance subject, but also an opportunity to develop their next generation digital strategy. New TPPs can provide their innovative service offerings and agility to adopt new technologies, enabling to create winning payments propositions for the customer. In turn, traditional players like banks can bring their large customer bases, their reach and credibility. Banks have also broad and deep proven data handling and holding capabilities. This can create winning payments propositions for the customer, the bank and the TPP.

Banks will have to decide whether to merely stick to a compliance approach, or to leverage on the PSD2 to develop these new services. The second approach will require to leave behind the rigid legacy structures and to change their mindset to ensure  quicker adaption to the dynamic customer and market conditions. A first mover strategy can prove to be beneficial.  Consumers and businesses will be confronted with the increased complexity linked to the multitude of disparate offerings. There also, the incumbent banks who will develop new services  can bring added value as trusted partners

Essentially, PSD2 drives down the barriers to entry for new competitors in the banking industry and gives new service providers the potential to attack the banks and disintermediate in one of their primary customer contact points. New players backed by strong investors are ready to give incumbents a serious run for their business. This is an important battle that the incumbent banks are not willing to lose.

The biggest potential benefits will be for the customers, who can access new value propositions, services and solutions that result from banks and new entrants combining their individual strengths or from banks becoming more innovative in the face of increased competition. Market experts also foresee an increased use of online shopping and e-procurement.

Several challenges to overcome

The PSD2 will be transposed in the national legal system of all the member countries. The involved market participants will have to examine the local legislation of their country of incorporation, as there might be some country-based deviations.

The authentication procedure is also an important hot topic. PISPs and AISPs can rely on the authentication procedures provided by the ASPSP (e.g. the banks)  to the customer but there are customer protection rules in place. Hence, they must ensure that the personalized security credentials are not shared with other parties. They also may not store sensitive payment data, and they are obliged to identify themselves to the ASPSP each time a payment is initiated or data is exchanged.

ASPSPs are required according to PS2 to treat payment orders and data requests transmitted via a PISP or AISP “without any discrimination other than for objective reasons”. A practical consequence for credit institutions will be that they must carry out risk assessments prior to granting payment institutions access – taking into account settlement risk, operational risk and business risk. One of  the main issue is the handling of the customer’s bank credentials by third party payment service providers. The bank needs to be able to perform strong authentication to ensure that the authorized account user is behind the initiation message

There are concerns about security aspects related to PSD2. An example hereof is the secure authentication. All the PSPs will have to ensure that they can demonstrate compliance with the new security requirements. How it will be achieved and monitored ? How will TPPs  interact with banks, since there is no need for a contract to be signed?

If something does not work correctly, there will also be discussions on the liability side. The PSD2 states that the TPP has to reimburse customers quickly enough that they are not bearing undue risk, but one will have to determine which TPP had the problem and work with them to resolve it. This will require further clarifications from the regulators.

In addition the PISP and the AISP vulnerable for to potential frauds. Web and mobile applications could become easy target for cybercriminals for various reasons, including the inherent vulnerabilities in the APIs that transfer data and communicate with back-end systems. The openness of the web could allow hackers to view source code and data and learn how to attack it. APIs have been compromised in several high-profile attacks that have caused significant losses and embarrassment for well-known players and their customers. The PSD2’s ‘access to account’  increases not only the number of APIs, but adds layers of complexity to the online banking/payments environment, adding to the risk of fraudulent attacks.

The market is waiting for the RTS (Regulatory Technical Standards) to give guidance on how some remaining security issues will be solved. These include:

  • Treatment of PSU’s (payment service user)security credentials
  • Requirements for secure communication between the PSP and banks
  • Full details and definition of strong authentication
  • Safety of the PSU funds and personal data
  • Availability of license registry for real-time identification of the PSP (PISP or AISP)

It is important that the required clarifications are published soon, in order to avoid a time lag between the implementation of PSD 2 in the national legislations and the real move in the market.

Conclusion

The PSD2 creates challenges, such as the huge investments to be made by the banks, compliance issues and protection against fraud and cybercrime. However several topics need to be clarified such as the RTS and the market players need also to agree on common standards for the interfaces. The clock is ticking in the PSD race.

Traditional players such as the banks appear to have a competitive disadvantage vis-à-vis the new emerging third party payment service providers. However, the Directive opens up new forms of a collaborative approach that can overcome this. New players can provide their innovation and resilience, whilst banks can add value thanks to their large customer base, credibility, reach and ability to cope with high volumes.

The biggest potential benefits might be for customers, who will benefit from new value propositions, services and solutions from new entrants, from banks and new entrants combining their individual strengths, or from banks becoming more innovative in the face of increased and agile competition.

François de Witte – Senior Consultant at FDW Consult

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How much are you paying your bank ?

| 30-1-2017 | Patrick Kunz |

Does your bank send you a monthly invoice how much they charge you on banking costs? Some do but some don’t. Even if you receive an overview of these costs – do you look at them? Often organizations don’t and that’s a pity. A bank is as much a services provider as other suppliers of the company. Of course changing banks is not something you do every year but that does not mean you should never do it or never have a look at your banking costs.

Allthough even if another bank proves to be less expensive, it should not always imply to change the bank, as the indirect costs of a bank change should also be taken into account and you always have the option to renegotiate.

The first step when looking at your banking costs is how your payments look like. Is your company doing only national payments or SEPA or are you transferring (or receiving) money from outside the SEPA region and/or transferring non-EUR payments? This matters because a national payment and SEPA payment will cost you around 0,10 EUR per transaction while an international payment can costs on average EUR 6. The potential saving on international payments is much higher.

There are several ways to reduce the transactions costs:

  • Reduce the amount of transactions. This is often easier said then done because you have to pay your bills and your customers pay theirs to you. However, with international companies there is often a number of intercompany transactions. These transactions do not necessarily have to go via the bank account. They could be settled via in house bank or internal current accounts. Often these intercompany transactions are international transfers or non-EUR payments which brings me to the next point
  • Analyse the foreign currency transactions. As said above these transactions costs around EUR 6 per transaction (and I have seen banks charge up to EUR 50 per transaction) so the saving potential is big, if you do a lot of these transactions. You can ask yourself do you need to pay your supplier in foreign currency? Can I receive my invoice in EUR instead of foreign currency? Often complex questions leading to more questions (hedging?). It is not always possible to change transacting in foreign currency so another solution to reduce transactions costs is to move the bank account to the home country of the currency. This way the “foreign” currency becomes domestic and therefore transactions costs move from international (EUR 6) to domestic (EUR 0,10), a big potential. Of course there are some limitations to this.

Have a look at the total return of your bank. Your bank is one of your suppliers so it makes sense to compare the costs of the supplier to their competitors, especially if you have multiple banking partners. As for suppliers you do not always choose the cheapest but also take into account service level and worldwide availability. It does make sense to compare banking costs every 3 years for market conformity. My advice would be to take into account all banking costs (so also FX deals, corporate finance, trade finance, guarantees). Banks often cross sell their products and the total fees are never visible so you have to gather this information yourself. I prefer to calculate the RAROC (Risk adjusted return on capital) for each banking partner. This way you can easily compare the total return per bank. This helps a lot when renegotiating fees or (new) credit lines. RAROC calculation is not easy and it takes often quite some work to gather all information but once implemented it is a nice tool for companies with multiple banking partners to compare (and rank) banks.

Patrick Kunz

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

 

 

Het belang van de basiskennis van delivery terms en betalingsinstrumenten in een organisatie

| 20-1-2017 | Ger van Rosmalen | treasuryXL

Al een tijdje geleden leverde Ger van Rosmalen dit boeiende verhaal en wij delen het graag met jullie, omdat het nog steeds actueel is. Het maakt eens te meer duidelijk dat goede communicatie tussen afdelingen in het belang van de hele organisatie is en hierin investeren geen overbodige luxe.
Daarnaast is het zeer zinvol dat niet alleen de verkoop-afdeling een goede basiskennis heeft van delivery terms en betalingsinstrumenten, maar ook de andere afdelingen in de verkoopketen en dat ook regelmatig uitgewisseld wordt met de treasury.

De treasury-afdeling van een bedrijf dekt een koersrisico af voor de levering van machines aan een afnemer in Turkije. De betaling is op 60 dagen na factuurdatum en de afnemer heeft een limiet onder de kredietverzekering. Afdeling sales heeft de machines verkocht met als delivery term (EXW) Ex Works. De afnemer stuurt een vrachtauto om de machines op te halen maar bij het laden gaat er iets verkeerd en valt één machine van de vorkheftruck en wordt total loss verklaard. Omdat de tweede machine alleen maar kan werken met combinatie met de andere machine die nu total loss is verklaard, weigert de afnemer te betalen.

Wellicht had de treasury-afdeling dit contract eerder kunnen rescontreren maar nu liep het contract tot de einddatum en volgde er geen betaling. De afdeling treasury werd niet geïnformeerd over dit probleem. De partijen zijn in een juridisch gevecht terecht gekomen want het laden van de vrachtauto blijkt door eigen personeel te zijn gedaan. EXW wil zeggen dat de chauffeur van de afnemer de machines zelf had moeten laden maar vaak, hoe goed bedoeld ook, doen de collega’s van het magazijn dit. In principe gaat het risico over van verkoper op koper bij EXW op het moment dat de machines van hun plek worden gehaald. Laden de magazijnmedewerkers de producten zelf dan had een andere delivery term afgesproken moeten worden namelijk FCA Free Carrier.

Bovenstaande situatie toont aan dat het belangrijk is om niet alleen de afdeling sales maar ook andere afdelingen basiskennis mee te geven van delivery terms en betalingsinstrumenten. Daarnaast is het van groot belang om de afdelingen sales, logistiek, finance, treasury en credit regelmatig met elkaar in gesprek te laten zijn (en te laten blijven), dat maakt dat iedereen attent is op risico’s die ook buiten hun eigen aandachtsgebied liggen. Je hebt tenslotte toch allemaal een gezamenlijk belang binnen een bedrijf?

Ger van Rosmalen

Trade Finance Specialist