Tag Archive for: treasury

How to generate an accurate cashflow forecast | 3 key factors

| 10-12-2019 | treasuryXL | Cashforce |

One would imagine that in a world where smart cities and virtual reality are becoming a part of daily reality, treasury and finance departments would have perfected their cash forecasting by now, giving the CFO a level of confidence in the numbers. Surprisingly, that doesn’t appear to be the case at all – both PwC’s & Deloitte’s Global Benchmarking studies highlighted cash and liquidity risk as the most important treasury challenge to manage.

If you look closer, it’s not difficult to see why: try managing and forecasting the cash flows of a complex internal ecosystem of multiple ERP’s, FX exposure and geographic entities, combined with increased global uncertainty, tax changes, interest rate rises, and regulatory change. Still, having an accurate cash flow forecast and understanding the underlying drivers is essential to a company’s well-being, as it can help you foresee potential problems which may arise in the year ahead. A lot of companies around the world are therefore increasing their efforts when it comes to cash flow forecasting, but with variable results and accuracy.

So what sets good cash forecasting (i.e. accurate and efficient forecasting) apart from bad cash forecasting (i.e. not transparent, inaccurate & time-consuming cash forecasting)?

KEY SUCCESS FACTOR #1: BEING ABLE TO DRILL DOWN INTO YOUR ACTUAL CASH FLOW DRIVERS BY USING TRANSACTION-LEVEL / GRANULAR DATA

A lot of Corporate Treasurers are seeking an accurate cash forecast through a delicate combination of well-chosen cash flow drivers & assumptions. But, to what extent do they have a good view of these cash flow drivers? Do they know what is really eating and feeding their cash (more than the typical high-level AR, AP, Treasury flows that your Treasury Management System will consolidate)?

There isn’t a lot of visibility, unfortunately. Why is that? The classic TMS will typically consolidate basic forecasted flows from the different OpCo’s. The problem is that these OpCo’s cash forecasts are already consolidated from the underlying business transactions. This blurs the insight in the real cash flow drivers and gives no assurance whatsoever on the quality of the data.

To build a good forecast, it is important to have clear and error-free access to the underlying business transactions. In a recent PwC study, only 6% of respondents said they made use of the inputs at the transactional level. But thanks to advances in technology, particularly big data analytics, treasurers can have instant access to the details of the underlying cash movements and are given the ability to drill down to the transaction level. In the gif below, you can see what this means in practice.

Suppose you want to know exactly what drives your company’s cash flow in a certain period. The GIF below demonstrates how easy this could be, using the right platform. Via an easy-to-use click-through interface, the user is able to gain insights per month, quarter, week and day including instant access to the transaction level details.

KEY SUCCESS FACTOR # 2: APPLYING THE RIGHT FORECASTING LOGIC IS CRUCIAL FOR A GOOD FORECAST

Cash flow forecasting is often associated with a pile of Excel sheets and manual work. Treasurers are forced to turn to Excel to calculate their forecasts, because classic Treasury Management Systems do not offer the required flexibility.

Getting insights into all your OpCo’s cash flow drivers is one thing but combining all these data sources and applying the right logic/rules to generate a good forecast is another. Let’s take the example of applying vendor payment behavior. Intuitively, it makes sense to enrich invoicing & sales order details with data on when vendors actually pay.  Many companies, however, struggle to take this data into account. In general, they haven’t set up the appropriate algorithms to include in their forecasts. Hence, they face inaccurate forecasts and a lot of time is spent explaining (over and over again) why it was inaccurate.

Defining forecasting logic in a smart way is not an easy challenge. Yet, if your goal is to achieve an accurate forecast, a set of smart logic algorithms is invaluable. Again, modern technology proves to be a great asset. Progressive companies are using technology-driven, smart engines to calculate & automate their cash forecasts, taking over the manually intensive work and proposing logic that could improve the forecast in the future.

Above you can see how a smart engine works in practice. Cash flows are projected into the future (blue line) using forecasting logic. The dotted orange line represents a scenario with one or more of the underlying assumptions changed and immediately shows the impact relative to the blue line.

KEY SUCCESS FACTOR #3: A GOOD FORECAST IS ONE THAT IS USED TO DRIVE ACTION

Even if your forecast is no less than a piece of art, it might be underused, or not used at all. To make a real impact, there should be actions retrieved from the forecast results. There is a lot of potential in accurately predicting what might happen in the future and this potential should be translated into value.

There is even more value in considering multiple scenarios by changing some of the underlying assumptions (e.g. changing the day or frequency of your payment runs). When working in Excel or a TMS, changing assumptions might trigger a lot of additional manual work and is unfortunately often avoided. To get the most out of your forecasting process, it makes sense to build multiple forecasts and assess the impact of each of these scenarios on cash optimization. Driving action combined with building multiple scenarios, can transform finance departments into business partners for fueling a company’s growth.

The orange line reflects a scenario, built by the user. These views give her/him an immediate comparison between the current forecast (full blue line) and a different scenario (based on assumptions made by the user). A powerful simulation engine is able to show the impact of different scenarios in a blink. Imagine the power this can bring to a business-driven finance department.

Mark O’Toole heads up the Americas for Cashforce, a big data analytics & TMS technology provider focused on cash management, forecasting and working capital.

 

Blockchain | what is it and what does it do for your supply chain?

| 09-12-2019 | by RBS |

Rotterdam Business School will host a blockchain information event on January 27th, 2020 at the Rotterdam Business School, Kralingse Zoom 91

Blockchain is a new disruptive technology that together with Artificial Intelligence (AI), Internet of Things (IoT) and Big Data promises to change the way we do business today. It seems to have a major potential to make supply chains more efficient and transparent by cutting out middlemen and creating possibilities to do trusted peer-to-peer transactions on a global scale. However:

  • What is Blockchain exactly and how does it work?
  • What can Blockchain be used for?
  • Are there proven user cases?
  • How can blockchain be used to create value?

These and other questions related to Blockchain will be answered at the event.

January 27, 2020

16:00 – 20:00 

REGISTER HERE

 

Programme:

15:45 – 16:00    Welcome with coffee

16:00 – 17:00    Blockchain in the supply chain: financial and sustainable solutions

Victor van der Hulst, Blockchain expert Windesheim University of applied sciences

17:00 – 17:10     The logistics applications of Blockchain

Ron van Duin, professor of applied sciences, Rotterdam University of applied sciences

17:10-17:30        Best blockchain thesis award

17:30-17:45        A proven blockchain user case: Dutch & Belgian government: Waste transportation

Martijn Broersma LTO Network

17:45 – 18:00     Coffee break

18:00 – 19:00     Break out sessions

      1. Blockchain and the food chain
        Chair: Josanne Heeroma ten Katen (RUAS)
      2. Blockchain and supply chain finance
        Chair: Luca Gelsomino (UASW)
      3. Blockchain and fashion
        Chair: Chris van Veldhuizen (TMO)
      4. Blockchain and the off-shore industry
        Chair: Arthur Fellinger (RUAS)
      5. Blockchain and paperless document flows
        Chair: Martijn Broersma (LTO Network)

19:00-19:30        Wrap up

19:30-20:00       Social drinks

 

The event is a cooperation between the Masters of International Business the SIA-RAAk project Blockchain for SME’s and the National Blockchain Thesis Table. It’s aim is to disseminate knowledge acquired by applied research and stimulate the cooperation within the triple helix: business, research and education. For questions contact: [email protected]

 

Why are you still paying too much banking costs? There is a simple solution to save money

2-12-2019 | treasuryXL | Vallstein |

Do you have full transparency in your banking cost? Do you fully trust your bank(s)? You can easily save a significant amount of money and create strong ties with your bank(s) for a better relationship.

We interviewed Huub Wevers, Head of Business Development at Vallstein, he will take a deeper dive into the advantages of using WalletSizing® , give you a better insight and even shares a success story.

Can you tell something about WalletSizing® ?

WalletSizing® is a SaaS platform with a number of modules that gives Corporates full transparency on how much they spent on their banks and how profitable they are for their banks. A CFO would like to be able to drive the meetings with the bank supported by independent data showing exactly what a corporate is doing with the bank AND how profitable the corporate is for the bank. This is exactly what WalletSizing® delivers. WalletSizing® drives the focus and strategy of the meeting by showing how much a corporate is spending on their banks and how profitable they are for their banks. It ensures that a corporate gets value for money from their relationships with their banks.

An additional module of WalletSizing®, the bank fee edition is able to upload all bank invoices for cash management and comparing them with the original price agreements. Am I paying the price as agreed during the RFP phase?

WalletSizing® the Bankfee edition, can be used together with the other WalletSizing® modules or stand alone.

This module uploads all bank invoices (any format) for cash management and audits them with the original price agreements: Am I paying the price as agreed during the RFP phase? Are there unforeseen billing charges? I was not aware of these unusual situations like:

  1. a) manual payments,
  2. b) investigations,
  3. c) volumes… leading into continuous internal processes improvements.

WalletSizing® Bankfee edition is all about Automation, Control and Transparency, down to account level and including tailor made reporting for Auditors and Control teams. WalletSizing® Bankfee edition it is not a daily reconciliation system. It is an audit process that can be ran in different frequencies as those fits’ client requirements.

What is, in your perception, the biggest benefit of using WalletSizing® ?

Let me explain the following questions that WalletSizing® answers:

  • How much am I spending on my bank products & services?
  • How profitable am I for my banks?
  • Is the above fair?

The last question is the most important one and can be answered through the benchmarking capabilities of WalletSizing® and the underlying methodology. WalletSizing® is calculating the exact profitability on the basis of the relevant credit ratings, bank fees and the latest Basel III/IV regulations.

Another benefit is during the RFP or price revision process where the proposed prices from the Banks are also uploaded in the system and amongst other criteria, compared with the Vallstein Benchmark. This benchmark is a Vallstein property owned database with hundreds of thousands of data points collected over the last 20 years.

How does the customer project phase look like from start till actual use?

A typical WalletSizing® project takes 6 weeks where Vallstein will handle most of the work, typically 90%. We will gather all necessary data and integrate, translate and upload into the system. Through a number of workshops we ensure the client domain is 100% accurate and the client is versed in making the analysis and acting on it. “Having learned how to fish instead of just been given a fish” as the saying goes. During the project we will also set-up and agree how to continue maintenance of the system, ensuring an up to date system.

How fast can customers experience the impact of WalletSizing® after implementation?

Already during the implementation clients will be able to get benefits from the system by detecting missing bills. After an implementation, clients can immediately review their bank relationships and typically will reach very significant savings in their banking costs through that. And on the long run, clients will have more transparent and better relationships with their banks. When you have clarity on how much you are really paying, you have time to talk about more strategic topics with your banks.

What was your biggest challenge with WalletSizing® ?

The biggest challenge with WalletSizing® we had over the last 20 years is the data quality of the banks and the speed at which they deliver the data to our clients.  Fortunately this is improving due to invoice standards like CAMT.086 and a more shared belief in transparency in the market place. Things have changed for the better and we hope that we have and are contributing to that.

Can you share a great WalletSizing® success story?

A client of ours implemented WalletSizing® Bank Fee Edition. We Started with 9 Banks, 12 countries and 170 different accounts. We have now made the bank process completely automatic. Banks are sending the required and detailed fees data on a quarterly basis and this data is being uploaded into the system.

We found no unique and individual product codes across the banks. Product descriptions are not clear and fees are not consistent across the same billing items and accounts. This has been resolved completely by the system which is now automatically mapping all billing items into unified product names and codes. It is more easy now to compare different banking terms and conditions and market benchmark. Needless to say significant savings and 100% transparency has been achieved.

After this implementation the client agreed that they now had done the difficult part of Bank Relationship Management (Cash Management Fees) and were interested to pursue the analysis of the full banking wallet across all their banks. An exercise to understand the current situation, reduce the number of banks, but with full visibility across all banks on how much business and how profitable they were right now. In the end the client reduced their number of banks from 17 towards 9 and have an even spread of their business (Wallet) across all their banks.

visit Vallstein.com

You are only one step away from saving a lot of money

Huub is thrilled to help you. Fill out the contact form and we arrange a call for you.

Thrilled to take the next step with the redesign of our website

| 19-11-2019 | by Kendra Keydeniers |

In 2016 we launched our website with the goal to bring everybody who is interested in corporate treasury into our community. We are convinced many will benefit from bringing treasury expertise to a broader audience and experts having in-depth and up-to-date knowledge.

Every day we post new articles and blogs for our readers and if you like scrolling through your timeline you can see our latest news via social media. Friday is our recap day and all of our subscribers receive our weekly newsletter just before the weekend will start. So much is happening constantly.

Over the last months we looked back and discussed with treasury and community management experts how to move forward. As a result we made changes to our site in order to act future proof.

How to inform Treasurers and Non-Treasurers
In the past we tried to make a split between content for treasurers and those who have to deal with treasury not being an expert. We named the last group non-treasurers. This distinction seemed to make sense but in reality was not very practical. A lot of information is relevant for both groups, not all treasurers are experts in all treasury sub categories and there are non-treasurers who have in-depth knowledge.

We also assumed treasurers and non-treasurers use different social media channels, visit different events and consume different products & services. As it turns out this is partly true, there is a huge overlap in their media consumption and this is a good thing. A social media post about forecasting where the treasurer, the controller and the CFO respond is valuable for all.

Our analysis is that a lot of our valuable content does not reach all relevant audiences.

Website redesign
The most important change we made in our site is the first investment to enable further relevant steps. We have introduced an overview of the most relevant topics. With input from experts we had to make choices between being comprehensive and being an attractive read. We created an overview serving both the treasurer as well as the non-treasurer. As an example, cash pools will often be a treasurer topic, working capital management a topic also for non-treasurers and both groups will enjoy a good read about FX management.

The set of topics is not cast in stone. With your input we can tweak and adjust in order to be trendsetting and -following. Do know that reorganising all blogposts and other content in order to put them in the right category is quite a choir: over the years we posted about 700 blogs!

Topic overview:

What is next?
Building upon this investment we will initiate further initiatives. Answering questions about specific topics and offering tailormade information can be done. This is a good thing for both our reader audience, as well as our partners. It will be easier to get detailed insight, as dossiers will be organized in a sensible structure and relevant further info can be offered.

Enabling the match between subject matter experts with those who need input will be easier. You will know who is the expert in FX, trade finance, TMSs, et cetera. Broadcasting from these experts through social media channels can be done better: we will steer away from “spray and pray” and will be sharpshooters.

We are excited about these changes and are thrilled for the upcoming period. Will you join us and do you have any further input? Thank you and see you in our topical environment.

On behalf of Team treasuryXL,

Kendra Keydeniers
Community & Partner Manager at treasuryXL

Cash Management in the Age of Digital Transformation

| 15-11-2019 | TIS |

Treasury Leaders Summit – London 2019

The Treasury Leaders Summit provides senior treasury and finance professionals with access to in-depth research, analysis and the opportunity to discuss key issues impacting the profession with senior level peers.

Our partner TIS will also be part of this Summit. Visit TIS at their stand and discuss your business case.

TIS Co-Founder, Jörg Wiemer, will hold a session about “Cash Management in the Age of Digital Transformation”. This will take place on Tuesday, 19th November at 4.30 PM GMT.

Also, do not miss our session on Day 2 with our customer HUGO BOSS. Get valuable insights on how they found the perfect-fit solution for their corporate payments processes.

This session will take place at 12.30PM GMT.

Request a meeting by filling out the form here.

Date:
19th – 20th November 2019

Location:
Leonardo Royal Hotel London City, 8-10 Coopers Row, London, EC3N 2BQ

 

Top 10 Treasury Priorities in 2020

| 29-10-2019 | TIS |

It’s webinar time! Our partner TIS will organize their next webinar on November 20, 2019.

The evolution of the Treasury function continues to accelerate with process automation and AI touching all aspects of Treasury Operations, and expectations to deliver more value across the enterprise.

How do you leverage technology to mitigate time spent on non-value add activities?

How do treasury professionals build the right relationships to deliver forecasts that matter, manage cash and bank relationships, and manage financial risks while communicating with impact to deliver business analysis that impacts performance?

Join Giancarlo Laudini, SVP Global Sales & Marketing Operations, TIS and Ernie Humphrey, CEO, 360 Thought Leadership Consulting to discover our ten priorities for Treasury teams for 2020 to tackle in order to deliver strategic value while facilitating a culture of collaboration and data-driven decision making within and beyond Treasury

 

Register here!

Date: Wednesday, November 20, 2019

Timing: 5.00 PM – 6.00 PM CET

 

 

 

 

 

 

Blockchain: the 10 Commandments for CIOs

| 25-10-2019 | Carlo de Meijer | treasuryXL

In my last blog about Gartner and Blockchain I mentioned the importance of the role of CIOs. They are supposed to play a leading role in determining if this technology could be of use for their business. Great question is: are CIOs already prepared for that role. In this blog I will sum up ten commandments for them that should be prerequisites for successful implementation of blockchain technology in their company.

1. CIOs should study blockchain, potential benefits, opportunities and use cases for their business

In order to get grip on blockchain and what it could mean for their business, CIOs should investigate what blockchain really is, that means the ins and outs, its characteristics, how it works, how to integrate blockchain into existing legacy systems etc. CIOs should put real thought into how this technology could potentially benefit the business, asking themselves why they need it, and what value it offers over legacy database or other technologies

While in the next few years blockchain will mostly affect how an organization executes its business, longer term  blockchain will eventually change the core of a business. They therefore should start focusing beyond solely on how this technology is being used today. CIOs should look for opportunities to leverage blockchain technology for deeper business changes that can drive real value.  They should focus on areas where blockchain could strengthen the organization’s value proposition. CIOs should figure out which use cases are most appropriate, , and propose projects that could truly differentiate the organization.

2. CIOs need to understand how blockchain will impact key parts of the business

The opportunities for blockchain technology are massive. It can significantly impact many parts of the business. The most important question for CIOs is how these changes might affect the enterprise and how can the organization exploit the technology?

CIOs need to start thinking about what value blockchain can add to their organization and how to tackle the challenges over the next five years. They should plan for incremental evolution of their own blockchain strategies. For that they should carefully look at the stages in which blockchain  technology is situated. The Gartner Blockchain Spectrum distinct four phases: blockchain-enabling; blockchain-inspired; blockchain-complete and blockchain-enhanced. We are now half way i.e. in the blockchain-inspired phase. Technologies in this stage combine some elements of blockchain, but lack two core elements:  decentralization and tokenization (see my blog: Gartner Blockchain Spectrum: a great tool for CIOs March 18, 2019).

3. CIOs should look at the potential gaps, weaknesses and hurdles of blockchain

Blockchain is not there yet. And – next to that – this technology is not a panacea for all companies problems.  CIOs should be aware of that.  One of the main elements of blockchain is decentralization. It removes central authorities from the process and enables a level of trust between two parties who have never done business before. The definition of participant will – as a result – expand beyond individuals and businesses to include things like smart contracts, distributed ledgers, connected things and DAOs.

Blockchain will facilitate the interactions between all of these participants and enable a new society, but cannot solve all trust problems. CIOs therefore should create a map that highlights potential gaps and weaknesses.

CIOs should also be aware of the various hurdles that prevent massive adoption. It will take a number of years before this technology will enter the maturity stage. Considerable work needs to be completed in ‘non-technology-related activities’ such as standards, regulatory frameworks and organization structures for blockchain capabilities to reach the Gartner Hype Cycle Plateau of Productivity. This is the third stage now also including the previous lacking instruments: decentralisation and tokenization. In a recent blog, Gartner listed eight hurdles needed for the technology to deliver its promises, including technically scalable blockchains, advances in smart contract technology, transaction risk assurance, data confidentiality, and an efficient consensus algorithm.

For effective rollouts, CIOs also need to keep in mind that blockchain is not secure in and of itself. Blockchain is a complex technology, and can lack the clarity of oversight and auditability that more traditional systems offer. As a result, compliance and enforcement costs may increase with blockchain implementation, and some regulatory environments (such as GDPR) may require oversight that is difficult to achieve with the technology. This is exacerbated by a lack of common standards or legal frameworks. CIOs should look at methods to manage these blockchain-related risks.

4. CIOs should brief their CEOs on the strategic implications of blockchain

Company boards will have to make strategic decisions on blockchain in a climate of uncertainty. Many boards of directors will therefore call upon CIOs to brief them on blockchain due to current market hype. CIOs should therefore regular update their CEOs on new developments. The difficult task as a CIO is to explain the strategic implications of blockchain without getting stuck in its technical aspects. Board directors do not want a lot of detail. They just want the high-level issues, implications and suggested actions. CIOs should thereby focus on three main areas: a description of blockchain, frictionless markets and the cross-industry business impacts of a programmable economy. The reason for this is that blockchain has the potential to create cross-industry, transparent and frictionless markets, where transactions have almost no costs and restraints. However, be aware that the future business climate, risks and legal status of blockchain remain unclear.

5. CIOs should warn their board not to underestimate the impact of blockchain

CIOs should warn their board not to underestimate the impact of blockchain. Blockchain for most industries remains ‘mired between inflated industry expectations and general disillusionment’ with regard to how it can improve business processes. While most have heard about blockchain, few understand the technology and its implications for business. This bears the danger that they are underestimating the impact of blockchain. Enterprises run the risk of having their business disrupted if they do nothing about blockchain; however, undertaking a blockchain initiative carries risks too. It is important for CIOs to discuss the areas where blockchain will affect the board’s risk calculations.

CIOs should also determine and inform their CEOs whether blockchain could solve business problems and whether they really need this technology. Existing systems may look much more efficient, or could be managed cheaper compared to blockchain solutions.

6. CIOs should think and work towards a new blockchain-based business model

Once decided to implement blockchain in their company, the greatest challenge for CIOs will be thinking about and working towards a new blockchain-based business model. As blockchain is a collaborative issue, main question for CIOs is, how they could come up with a business model in which companies in an industry can agree on common standards and operate together.  This asks for a strategic approach. By focusing on a number of key areas early in their blockchain efforts, CIOs can lay the foundation toward successful execution. These areas include: make the blockchain business case, build an industry ecosystem, determine the rules of engagement, and, navigate regulatory uncertainty.

First of all CIOs should give strategic clarity when presenting their business case. This should ensure that their blockchain initiative has a business purpose around which they and other participants can align. For that it is needed to identify the business value. To get the most out of blockchain, collaboration between (previous) competitors is key. This should result in building an industry ecosystem, aimed to meet industry-wide challenges. For that it is important that CIOs discover the benefits of collaboration.

A third area of attention is to determine the rules of engagement. Every blockchain will require rules and standards, particularly around what various participants will be able to access and how they can engage. CIOs should thereby explore potential blockchain models and chose that one that fits best. Finally, CIOs need to “stay agile” to meet regulatory requirements as they evolve in the years to come. They should understand the shifting regulatory landscape.

7. CIOs should focus on the various challenges when implementing blockchain

Despite the potential opportunities of blockchain technology, organizations still face a number of important challenges when it comes to implementing blockchain. CIOs should focus on these challenges, that should be identified well in advance, in order to get the best out of this technology.

A first challenge – and not the least one – is the possible lack of skills. Because blockchain is still young and not yet a mainstream technology, there are very few professionals with skills in this area. This asks for intensive education, setting up internal and external courses, hiring externals etc.

Another challenge is the non-existence of a  universal standard for blockchain. This limits the usability of blockchain in and between companies. Until you have standards, you really can’t share information in the classical sense. Though one uniform standard is still far away, Gartner predicts that there will be four main standards in about five years’ time. A third challenge is that blockchain must integrate with legacy technologies so that businesses can exchange information in a meaningful way. In some industries, this is a major obstacle. People just don’t understand the technology, or know what it is good for.

8. CIOs should continue to develop proofs of concept internally as well as part of market consortiums

In order to get grip on blockchain and what it can mean for their business, CIOs should continue to develop proofs of concept to test blockchain’s business worthiness. Thereby they should take into account that different industry domains (upstream, midstream, downstream and marketing) and functional areas (such as commodity trading, cash management, supply chains and data integrity) are expected to adopt blockchain on different timelines.

For enterprise success, blockchain needs to be a consortium effort – not something that is used only internally. CIOs should be aware that the transformative nature of blockchain works across multiple levels simultaneously (process, operating model, business strategy and industry structure), and its success will depend on coordinated action across multiple companies. The way to create a multi-company blockchain consortium however is a very difficult one.

9. CIOs should look to combine blockchain technology, Big Data Analytics, IoT and AI

Blockchain should not be looked at in an isolated way. In order to get the most out of blockchain technology, CIOs should investigate integrating this technology with other ones like Big Data Analytics, the Internet of Things (IoT) and Artificial Intelligence (AI).

Once blockchain has been combined with the Analytics, IoT and AI, blockchain has the potential to change business models forever, impacting both data and monetary flows and avoiding centralization of market power (see my blog: Blockchain and Big Data: a great marriage, January 29, 2019).

10. CIOs should be aware of the changing world in which business exist.

Finally, CIOs should be aware of the changing world in which business exist. Not only because of blockchain, but also triggered by other technologies. The reality is that blockchain and its core elements will radically alter not only the business world itself. The future might eventually lay in a more decentralised programmable economy, that may evolve into digital societies that have a legal standing equivalent to today’s corporates and individuals. These digital societies will set the terms of competition in the future. CIOs should realise that, not  only by developing the technology, but also the ethics and practices to exist in the digital society.

What does this all mean for CIOs?

CIOs are counted on for innovation in their company. Related to blockchain, there however will be a need to  a different approach, away from present blockchain tech-of-the-day approach to a more methodical one to innovation. This asks for a new type of CIO. To deliver, CIOs should realise and recognise that their ability to innovate is nowadays restricted by an organisation that lacks flexibility and agility. CIOs should instead become more flexible and agile and deliver an operating model that is fast, connected, and insights-driven.

 

 

Carlo de Meijer

Economist and researcher

 

Cashforce raises €5 million in series a funding led by INKEF Capital & Citi Ventures

| 18-10-2019 | treasuryXL | Cashforce |

Cashforce, a Fintech leader in Cash forecasting & Working capital management, announced that it has closed € 5 million in Series A funding. The growth financing round was led by INKEF Capital and Citi Ventures. The existing investors Pamica NV, the investment company of Michel Akkermans, and Volta Ventures, are co-investing and reinforcing their commitment to the company.

Since 2018, Cashforce has demonstrated hyper-growth by developing multiple partnerships and by streamlining Cash forecasting processes & Working capital management for enterprise customers globally. New offices have been opened in London, Ghent and Copenhagen in 2019, with others (Zurich, Singapore…) to follow soon.

This funding round will accelerate global growth and presence in new markets.

“With the help of Cashforce’s technology, the way cash flow forecasts are generated and Working capital is managed can be radically transformed. By addressing these deep-seated challenges for many corporates using automation and AI, Cashforce is well-positioned and has tremendous potential to significantly help enterprises,” commented Corné Jansen, Managing Director of INKEF Capital.

”There is an increasing appetite in corporate treasury for integrated decision support tools from their banks for the next investment, fund or hedge action going beyond what their existing systems can provide today. As a prerequisite step to delivering such solutions from Citi, we look forward to collaborating with Cashforce to significantly improve our clients’ ability to aggregate disparate data sets across their enterprise to help better manage their working capital and more accurately predict through algorithmic techniques their potential liquidity exposure. At Citi, we are running a number of experiments collaborating with our clients and fintechs – such as CashForce – empowering our clients’  journey towards Smart Treasury. This journey moves them beyond descriptive analytics to decision support and decision automation, offering the opportunity to realise the promise of full automation of operational treasury,” said Ron Chakravarti, Citi Managing Director, Global Head – Treasury Advisory.

Executive Chairman Michel Akkermans and CEO Nicolas Christiaen stated: “Cash forecasting still remains one of the most important challenges for treasurers worldwide. The last three years have been very fruitful for us, developing our solution and broadening our eco-system through partnerships with global banks, treasury consultants and bank connectivity partners. Our mission remains unchanged: delivering reliable technology that enables financial leaders to make high-caliber decisions. We are therefore very enthusiastic about our new global strategic banking partnership with Citi, jointly offering their corporate clients a crystal-clear future.”

About INKEF Capital

INKEF Capital is an Amsterdam-based venture capital firm that focuses on long-term collaboration and active support of innovative technology companies. INKEF Capital was founded in 2010 by Dutch pension fund ABP and with €500 million under management is one of the largest venture capital funds in the Netherlands. INKEF focuses on investment opportunities in Healthcare, Technology, IT/New Media & FinTech.

About Citi Ventures

Citi Ventures ignites change and reimagines solutions that drive economic progress for clients. Headquartered in Silicon Valley with offices in San Francisco, New York, London and Tel Aviv, Citi Ventures accelerates discovery of new sources of value by exploring, incubating and investing in new ideas, in partnership with Citi colleagues, our clients, and the innovation ecosystem.

About Pamica 

Pamica is the investment company of Michel Akkermans, is a serial entrepreneur in Fintech companies. Amongst others, he was the Chairman and CEO of successful companies such as FICS and Clear2Pay. After the global payment solution company Clear2Pay was acquired by FIS in 2014, he became an active investor and board member in several companies and private equity organizations, as well as a venture partner and Chairman of Volta Ventures.

About Volta Ventures 

Volta Ventures Arkiv invests in young and ambitious internet and software companies in the Benelux. The fund has € 55 million under management and is supported by EIF and PMV.

 

 

How are largest European companies managing their financial risks?

17-10-2019 | Stanley Myint | BNP Paribas

The second edition of the “Handbook of Corporate Financial Risk Management” has just been published by Risk books. The handbook is written with all risk management professionals, practitioners, instructors and students in mind, but its core readership are Treasurers at non-financial corporations. It contains 43 real life case studies covering various risk management areas. The book aims to cover both financial risk management and optimal capital structure and its contents.

Motivation for the book

This Handbook is based on real-life client discussions we had in the Risk Management Advisory team at BNP Paribas between 2005 and 2019. We noticed that corporate treasurers and chief financial officers (CFOs) often have similar questions on risk management and capital structure and that these questions are rarely addressed in the existing literature.

This situation can and should lead to a fruitful collaboration between companies and their banks. Companies often come with the best ideas, but do not have the resources to test them. Leading banks, on the other hand, have strong computational resources, a broader sector perspective, an extensive experience in internal risk management, and the ability to develop and deliver the solution. So, if they make an effort to understand a client’s problem in depth, they may be able to add considerable value.

The Handbook is the result of such an effort lasting 14 years and covering more than 700 largest European corporations from all industrial sectors. Its subject is corporate financial risk management, ie, the management of financial risks for non-financial corporations.

While there are many papers on this topic, they are generally written by academics and rarely by practitioners. If we contrast this to the subject of risk management for banks, on which many books have been written from the practitioners’ perspective, we notice a significant gap. Perhaps this is because financial risk is clearly a more central part of business among banks and asset managers than in non-financial corporations. However, that does not mean that financial risk is only important for banks and asset managers. Let us look at one example.

Consider a large European automotive company, with an operating margin of 10%. More than half of its sales are outside Europe, while its production is in EUR. This exposes the company to currency risk. Annual currency volatility is of the order of 15%, therefore, if the foreign revenues fall by 15% due to FX, this can almost wipe out the net profits. Clearly an important question for this company is, “How to manage the currency risk?”

The book blends real corporate situations across capital structure, optimal level of cash, optimal fixed-floating mix and pensions, which are particularly topical now that negative EUR yields create unpresented funding opportunities for corporates, but also tricky challenges on cost of cash and pensions management

One reason why corporate risk management has so far attracted relatively little attention in literature is that, even though the questions asked are often simple (eg, “Should I hedge the translation risk?” or “Does hedging transaction risk reduce the translation risk?”) the answers are rarely simple, and in many cases there is no generally accepted methodology on how to deal with these issues.

So where does the company treasurer go to find answers to these kinds of questions? General corporate finance books are usually very shy when it comes to discussing risk management. Two famous examples of such books devote only 20 – 30 pages to managing financial risk, out of almost 1,000 pages in total. Business schools generally do not devote much time to risk management. We hope that our book goes a long way towards filling this gap.

Website

We invite the reader to utilise the free companion website which accompanies this book, www.corporateriskmanagement.org There, you will find periodic updates on new topics not covered in The Handbook. Much like the book this website should prove a useful resource to corporate treasurers, CFOs and other practitioners as well the academic readers interested in corporate risk management.

About the authors

Stanley Myint is the Head of Risk Management Advisory at BNP Paribas and an Associate Fellow at Saïd Business School, University of Oxford. At BNP Paribas, he advises large multinational corporations on issues related to risk management and capital structure. His expertise is in quantitative and corporate finance, focusing on fixed income derivatives and optimal capital structure. Stanley has 25 years of experience in this field, including 14 years at BNP Paribas and previously at McKinsey & Company, Royal Bank of Scotland and Canadian Imperial Bank of Commerce. He has a PhD in physics from Boston University, a BSc in physics from Belgrade University and speaks French, Spanish, Serbo-Croatian and Italian. At the Saïd Business School, Stanley teaches two courses with Dimitrios Tsomocos and Manos Venardos: “Financial Crises and Risk Management” and “Fixed Income and Derivatives”.

Fabrice Famery is Head of Global Markets corporate sales at BNP Paribas. His group provides corporate clients with hedging solutions across interest rate, foreign exchange, commodity and equity asset classes. Corporate risk management has been the focus of Fabrice’s professional path for the past 30 years. He spent the first seven years of his career in the treasury department of the energy company, ELF, before joining Paribas (now BNP Paribas) in 1996, where he occupied various positions including FX derivative marketer, Head of FX Advisory Group and Head of the Fixed Income Corporate Solutions Group. Fabrice has published articles in Finance Director Europe and Risk Magazine, and has a master’s degree in international affairs from Paris Dauphine University (France).

Content:

Introduction

1 Theory and Practice of Corporate Risk Management *

2 Theory and Practice of Optimal Capital Structure *

PART I: FUNDING AND CAPITAL STRUCTURE

3 Introduction to Funding and Capital Structure

4 How to Obtain a Credit Rating

5 Refinancing Risk and Optimal Debt Maturity*

6 Optimal Cash Position *

7 Optimal Leverage *

PART II: INTEREST RATE AND INFLATION RISKS

8 Introduction to Interest Rate and Inflation Risks

9 How to Develop an Interest Rate Risk Management Policy

10 How to Improve Your Fixed-Floating Mix and Duration

11 Interest Rates: The Most Efficient Hedging Product*

12 Do You Need Inflation-linked Debt

13 Prehedging Interest Rate Risk

14 Pension Fund Asset and Liability Management

PART III: CURRENCY RISK

15 Introduction to Currency Risk

16 How to Develop an FX Risk Management Policy

17 Translation or Transaction: Netting FX Risks *

18 Early Warning Signals

19 How to Hedge High Carry Currencies*

20 Currency Risk on Covenants

21 Optimal Currency Composition of Debt 1:

Protect Book Value

22 Optimal Currency Composition of Debt 2:

Protect Leverage*

23 Cyclicality of Currencies and Use of Options to Manage Credit Utilisation *

24 Managing the Depegging Risk *

25 Currency Risk in Luxury Goods *

PART IV: CREDIT RISK

26 Introduction to Credit Risk

27 Counterparty Risk Methodology

28 Counterparty Risk Protection

29 Optimal Deposit Composition

30 Prehedging Credit Risk

31 xVA Optimisation *

PART V: M&A-RELATED RISKS

32 Introduction to M&A-related Risks

33 Risk Management for M&A

34 Deal-contingent Hedging *

PART VI: COMMODITY RISK

35 Introduction to Commodity Risk

36 Managing Commodity-linked Revenues and Currency Risk

37 Managing Commodity-linked Costs and Currency Risk

38 Commodity Input and Resulting Currency Risk *

39 Offsetting Carbon Emissions*

PART VII: EQUITY RISK

40 Introduction to Equity Risk*

41 Hedging Dilution Risk *

42 Hedging Deferred Compensation*

43 Stake-building*

Bibliography

Index

Note: Chapters marked with * are new to the second edition

7 New Register Treasurers

| 15-10-2019 | by treasuryXL | Kendra Keydeniers

Each year a new class starts with the two year RT program at the Vrije Universiteit (VU). That means that every year we can welcome new Register Treasurer (RT) graduates into the World of Treasury.
On October 3, 2019, the VU was proud to announce that they honored 7 new Register Treasurer graduates.

The post-graduate Executive Treasury Management & Corporate Finance programme at the VU has now been running for more than 20 years. The graduated RT’s of 2019 were part of the 21st class.

The RT programme and its benefits

The programme consists of 6 modules. Treasury (Financial) Risk Management and International Cash Management are traditional treasury disciplines. Corporate Finance is part of the Corporate Financial Management and Capital Markets and Funding module. The embedding of the treasury and corporate finance function in corporate organizations is discussed in the Treasury Organization module. An overview of relevant aspects in financial law and fiscal law is given in the Financial and Fiscal Law and Regulations module.

Each module is concluded with an exam. All modules are organized in such a way to allow for sufficient preparation time for assignments and exams.

5 key main benefits of the programme:

  1. Broad perspective on the corporate treasury and finance disciplines
  2. Master level and state of the art
  3. Interactive sessions
  4. Useful career development opportunities in a different setting
  5. Get connected to the treasury community
A career boost for the RT graduates

The main objective of the programme is to teach high-level courses that boost participants’ professional skills, knowledge and expertise in Treasury Management and Corporate Finance. Graduates of the RT programme recognize opportunities for exciting developments, are able to think out of the box and contribute to in-depth discussions with senior management and board members, which will lead to new career development opportunities and boosts job satisfaction.

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:

Graduated as a RT and ready for a new treasury challenge?

Being a RT opens doors to new challenges more easily. Are you looking for an interim or a permanent position? Do you want to work in a small business or rather prefer a big corporation? If you want to make a switch in your career and you are open for a new adventure than I would highly recommend to contact our partner Treasurer Search. Treasurer Search is a successful treasury recruitment company, founded 10 years ago with consultants that have experience in treasury recruitment up to 20 years.

Do you have any questions about the RT programme? Are you a RT who want to share your career development via an interview? Or do you have any other related questions or remarks about the RT topic? You can contact me directly via:

Kendra Keydeniers
Community & Partner Manager at treasuryXL