Tag Archive for: treasury

The challenges of liquidity planning and forecasting

| 17-06-2019 | treasuryXL | Cashforce |

For more than a decade, liquidity and cash flow forecasting have remained in the top three challenges for CFOs and treasurers globally. This begs the question: why has this been a perennial challenge for so long? The reason: treasury operations today are, for the most part, a series of unintegrated systems, spreadsheets and silos between groups and other departments.

Companies are often faced with multiple ERPs, many entities, and different currencies. These make the task of managing liquidity a major challenge, not to mention a significant manual effort involving many people. The result: lots of time spent gathering and validating data while still not having a full, transparent view into the numbers. The volume, variety, velocity and veracity of data generated each day has made traditional analysis – using spreadsheets, for example – obsolete. It is just not possible to manually aggregate and analyse that much data with sufficient speed to be able to gain insight, and then turn that insight into action. To be able to do so you need the right set of tools.

WHAT SHOULD A TREASURER OR CFO BE ASKING THEMSELVES?

  • Can you identify all your sources of data that you need to make a cash flow forecast? Eg ERP (how many do you have, are they all on the same instance), CRM, bank statements, trend analysis, manual data (such as budgets).
  • How often do you refresh your short-term/mid-term cash forecast? (Daily, weekly, monthly, quarterly, or I don’t make a cash forecast).
  • How do you ensure no mistakes happen in your data capturing/consolidation?
  • How do you incentivise your subsidiaries? Local subsidiaries and users typically download information from their ERP, and upload in other types of files to HQ, or in SharePoint, or they will just send Excel files from all over the globe to HQ, which means it’s 100% manual. There’s no real alignment of the processes across subsidiaries and no audit trail at the local level.

WHAT TO CONSIDER?

  • Companies should ensure their information is system-based. In other words, they have full integration with their ERP, so they don’t have to manually download data (it should flow automatically).
  • Any augmentation of data should have an audit trail so that, ultimately, the group treasurer can see who did what, and when they did it.
  • Automate the process and deploy alert functionality, such as reminders for subsidiaries to post their local forecast, and for the group treasurer to look for it.
  • Ensure bank connectivity to enable comparison of actuals with forecast figures.

I HAVE THE DATA. NOW WHAT?

With this data, treasurers should now be able to answer these four key questions: what happened; why did it happen; what will happen; and what should be done?

  • Descriptive analytics answers the question, “what happened?” This is the most basic form of big data analytics, and provides a picture of past events.
  • Diagnostic analytics, “why did it happen?” Diagnostic analytics enables you to perform root cause analysis and use that information to prevent future repetition of events.
  • Predictive analytics, “what will happen?” Predictive analytics uses advanced algorithms – often with artificial intelligence and machine learning – to forecast future events.
  • Prescriptive analytics, “what should I do?” Prescriptive analytics tells you what the best steps are to achieve a specific result. Prescriptive analytics requires advanced machine learning capabilities.

 

 

Webinar: Optimize your payment processing security

| 13-6-2019 | BELLIN |

How to optimize your payment processing security via administrative control

This webinar installment takes a deep dive into the need for a centralized payments platform that maintains a hyper-focus on security. Join in as we discuss, how the essential synergy between technical security specifications and administrative controls creates optimally safe and efficient processes.

Webinar start: 27 June 2019 | 16:00 CEST
Webinar run time: approx. 20 min

Register here

Katja FranzPresenter
Katja Franz, Senior Treasury Consultant

A graduate of International Business at Fachhochschule Trier and European Business & language at National College of Ireland, Katja Franz has a background in treasury and cash management that has spanned the globe. With experience in banking and reconciliation at Hertz Europe, cash and credit administration at State Street Bank, as payment implementation specialist for Bankhaus August Lenz and as freelance consultant, she has brought success to projects across banking and treasury.

At BELLIN Katja has brought her experience and her passion to the BELLIN treasury consulting team, focusing on treasury management software, project management and process optimization. She is a keen team player who is committed to her work and always eager to learn something new.

About BELLIN

BELLIN is the global leader in technology for corporate banking and treasury. We provide solutions for the financial sector, catering to a range of clients from large multinationals to SMEs and banks. Founded by a treasurer, BELLIN has been championing innovation and out-of-the-box thinking since 1998. With the treasury software tm5 as the centerpiece, BELLIN makes a fundamental difference by offering solutions that zero in on the relationship between corporates and banks and cover everything from payments to FX, cash and risk management. BELLIN is an international company with offices on four continents, powered by a trailblazing fintech spirit and yet firmly rooted in the heritage of German craftsmanship and engineering. BELLIN delights 500 clients and over 80,000 users around the globe.

 

 

The (Im)possibility of Liquidity Planning

| 07-06-2019 | BELLIN |

Defining and establishing liquidity planning workflows

Liquidity planning is extremely essential. Companies can survive a certain amount of time without making a profit. However, they will go down within just a few days if they lack the necessary liquidity. Therefore, liquidity planning is high on any treasury’s agenda.

Suddenly, cash was in short supply. Everything ground to a halt. Indeed, the crisis of 2008 has shown how important it is for companies of all sizes and industries to plan with liquid assets. They have to ensure that liquidity fluctuations will be hedged adequately and that times of tight liquidity can be overcome easily. Even long-term profitability cannot always serve as a guarantee that financial markets will be able to provide sufficient liquidity in times of crisis – unless waterproof strategic agreements for financing liquidity shortages were concluded long before the crisis. Liquidity planning is not the same as planning a company’s cash balance. Instead, it forms a basis for strategic hedging decisions in interest, currency and commodity management.

When you begin dealing with liquidity planning in your business, you may be disappointed at first. You will not be able to transfer experience from a balance sheet and profit and loss (P&L) calculation. As a first step, you will need to define liquidity planning and set your treasury’s liquidity planning goals.

Liquidity Planning Versus Cash Management

Liquidity planning serves to illustrate cash flows from all organizational units over time. lt distinguishes between different cash flows, e.g. customer payments and HR payments. The timeline – the underlying planning horizon – usually includes the next six to twelve months. However, certain business models may require planning several years in advance. Never confuse liquidity planning with daily cash management, which focuses only on future balances of individual bank accounts and on creating daily cash forecasts.

The quality of balance sheet and P&L planning is determined by its accuracy. The better the planning, the more accurate the predictions. In the relationship of balance sheet and P&L to liquidity planning, the most important factor is the end result: both plans should result in the same balance at the end of a period. To ascertain this figure alone, a treasury department would not need to create its own liquidity plan. Yet from a treasury perspective, the projected balance is only a means of checking plausibility at the end of the planning horizon. Even the smallest change in an underlying transaction or payment can lead to significant changes in the final result, without affecting overall corporate success or reducing the quality or even sense of liquidity planning as a whole.

A Basis for Hedging

Determining a precise cash balance at the end of a particular planning horizon is not the goal of liquidity planning. Its focus lies on analyzing the differences between an original plan and a rolling plan. The treasury department bases hedging decisions on the original plan. Then, it examines the reliability of these risk management measures. If the treasury finds significant inconsistencies, it can swap or create new foreign exchange deals, negotiate new credit lines or revise the maturities of interest­ bearing transactions.

Liquidity planning is possible. However, it is impossible to plan liquidity in terms of cash on hand at a particular date. With this different goal in mind, liquidity planning becomes the basis for strategic hedging decisions. Only a liquidity plan that is kept up to date can provide information on when to expect cash flows in foreign currency,  when group companies need more liquidity within the  planning period and when excess liquidity will be returned.

Interest and Currency Risk

Liquidity planning is not just about liquid assets, however. Flawed planning can have negative side effects, particularly with regard to financing and related interest. High interest rates can reduce income and reserve assets of companies that are notoriously short, i.e. always in a position of net debt. At the opposite end of the spectrum, companies in a «long» position, i.e. those who have sufficient liquidity to finance their ongoing business, miss out on interest earnings. They rarely consider such opportunity interest.

Interest topics aside, liquidity planning also deals with the somewhat more complex issue of foreign exchange risk. Currency exposure can also affect cash on hand. The media frequently circulate striking examples, although they often wrongly blame derivatives for lack of liquidity or financial losses. In any case, it is important to note that a shift in exchange rates may have a decisive influence on the liquidity development of companies active in countries with foreign currencies.

Liquidity planning made easy in tm5

With tm5’s cash and liquidity management solution, users benefit from real-time liquidity management across your entire corporate group.

Our technology lets you make short-term or long-term liquidity forecasts across all subsidiaries in the corporate group. Be prepared for all eventualities.

  • Make use of scenario planning via detailed financial reports that enable you to stay on top of cash flow management
  • Generate payment forecasts in different transaction currencies
  • Define your individual planning categories
  • Conduct plan comparisons
  • Use your own capacity for effective planning, whether it be a matter of days – or years – into the future
  • Consolidate planning data across all subsidiaries within your corporate group
  • Use a reconciliation matrix to resolve intercompany conflicts
  • Aggregate liquidity planning on a group-wide level
  • Calculate hedging ratios and your company’s refinancing strength based on any possible scenario.

Product: Cash & Liquidity Management

Room to Breathe

No company can exist without liquidity planning: it would be incapacitated within just a few days. Primary liquidity risk factors take a company’s liquidity – its room to breathe. Cash management is essential for short-term planning horizons. In the medium and long term, companies require a liquidity plan, a prerequisite for meaningful risk management, which is cleanly separated from corporate financial planning. These two topic areas deal with interest and currency management from different perspectives. Companies need to ensure a basic liquidity supply, consider supply costs and take into account possible fluctuations caused by currency exchange factors.

Martin Bellin

Founder & CEO at BELLIN

Blockchain-as-a-Service: accelerator for adoption

| 04-06-2019 | Carlo de Meijer | treasuryXL

Blockchain technology has attracted growing interest from various businesses from large corporates to SMEs. But a large scale adoption by corporates and others has long time been hindered by the lack of options. But that is changing.

When interacting with the blockchain they have now two options. They can either set up their node directly, thereby removing the “invisibility cloak” of blockchain. Or they can decide to let someone else do that for them. And here comes BaaS or Blockchain-as-a-Service in scope. BaaS or Blockchain-as-a-Service is comparatively a new blockchain technology, that can be easily integrated in existing corporate infrastructures.

The global Blockchain-as-a-Service Market is set for a rapid growth. According to a recent survey, the Blockchain-as-a-Service is expected to register a CAGR (Compound Annual Growth Rate) of over 15%, during the forecast period (2019-2024), reaching around USD 30,6 billion globally by 2024.

We are not surprised by the emergence of Blockchain-as-a-Service. This overall Blockchain-as-a-Service market has seen accelerated growth with the coming up of creative innovations for blockchain and a faster growing customer demand. The growing demand for this new way of delivering blockchain services is attracting a wide field of new providers in the BaaS market, offering gigantic entryways for advancement.

Why BaaS?

Why do businesses need Blockchain-as-a-Service? Blockchain technology is on rise and business are increasingly willing to adapt to this technology. So far, however, the impact of blockchain disruption has been rather limited.

The companies that really want to use it, may encounter a number obstacles. The resources and expertise needed to develop new blockchain technologies has been a major hurdle for businesses that want to adopt the blockchain.

Blockchain technology is rather knew and relatively unknown. The technical complexities and operational overhead involved in creating, configuring, and operating the blockchain, and maintaining its infrastructure, often act as deterrents to its mass adoption.

Corporates are still far away from understanding the future of blockchain technology and the complexity of setting up of blockchain networks. Its implementation in terms of any technological change entails organizational risks.

Blockchain requires huge investment when it comes to setting up infrastructure and maintaining it. It is much more resource intensive, as compared to traditional databases.

 What is BaaS?

A Blockchain-as-a-Service platform is based on, and works similar to, the concept of Software as a Service (SaaS) model. It is a full-service cloud-based offering that enables customers including corporates to leverage cloud-based solutions to build and use their own blockchain applications and smart contracts and functions that will be hosted on the BaaS platform.

The BaaS platform would deal with the always confusing and labour-intensive back end activities for corporates and/or their business. They will provide all the necessary infrastructure and operational support to ensure that the blockchain applications run smoothly.

The platform will manage all the necessary tasks and activities to keep the infrastructure agile and operational. In other words, it allows the blockchain part of the technology to be relatively invisible for corporates.

Blockchain-as-a-Service providers are, therefore, key for large-scale blockchain adoption across businesses as they enable companies to adopt the blockchain without having to spend as much money as they would have to if they were to develop blockchain solutions on their own.

How does BaaS work?

BaaS would work similar to that of a web hosting provider. BaaS is like a blockchain module toolkit and utility system under the Blockchain Engine for which their users pay a fee.

In BaaS, an external service provider sets up all the necessary blockchain technology and infrastructure for a customer. By paying for a fixed BaaS subscription or consumption, a client pays the BaaS provider to set up and maintain blockchain connected nodes on their behalf. A BaaS provider thereby handles the complex back-end for the client and their business.

The BaaS operator also takes care of support activities like bandwidth management, suitable allocation of resources, hosting requirements, and provides security features like the prevention of hacking attempts.

Leveraging BaaS model, the client can now focus on their core job – the functionality of their blockchain – instead of worrying about infrastructure and performance related issues.

BaaS for who?

Blockchain-as-a-Service is ideal for organizations that wanted to outsource their technological aspects, and are not involved in understanding the working mechanism of the blockchain.

According to the earlier mentioned survey, the financial services industry is expected to occupy the largest market share. Blockchain-as-a-Service offerings are already revolutionizing this industry, as banks and financial service companies are among the most heavily invested enterprises exploring blockchain technology.

This is due to the many, highly valuable decentralized applications of blockchain technology, thereby giving rise to new business models in various areas, such as cross-border payments, remittance, exchanges, internet banking, trade finance, Know Your Customers (KYC), and risk and compliance.

The market is also gaining traction with SMEs that have not the sources to do that on their own. As these are increasingly working online, efficient blockchain services are increasingly required to secure the identity of digital entities and online authentication of personal identities, which drives the demand for Blockchain-as-a-Service offerings.

What may BaaS bring?

Allowing someone else to take care of the complex backend of blockchain ecosystem for corporates, allows corporates or their business to benefit from blockchain technology without really having to deal with blockchain technology.

Instead of creating and running their own blockchains, a business, large or small, can now simply “outsource” the technical complex work and focus on its core activities.

The BaaS format allows companies to familiarize themselves with blockchain technology before making conclusive business decisions about its use.

With BaaS as a cloud-based service, users will be able to develop their own blockchain based products like smart contracts, various applications and services without any setup requirement of the complete blockchain based infrastructure.

If BaaS speeds up, it can lead to real savings for companies. A study by Accenture found that blockchain technology could help banks reach cost savings to reach as high as 38 per cent, or around $12 billion.

 Top BaaS providers

The potential of Blockchain-as-a-Service has been recognized by some of the world’s largest software and technology companies. The interest of many businesses in implementing blockchain and the real difficulties of doing so have triggered several tech companies and cloud providers to now offer Blockchain-as-a-Service (Baas) to businesses that prefer to outsource the development of blockchain solutions.

The list of leading Blockchain-as-a-Service providers is growing, illustrating the growth in the dynamic on-demand tech sector. End 2015, Microsoft became one of the first companies to develop this service. The company has been adding BaaS modules to their cloud-computing platform, Azure, that is  focused on the Ethereum blockchain.

The Linux Foundation last year released Hyperledger Fabric 1.0, a collaboration tool for building blockchain distributed ledgers, such as smart contracts, for vertical industries. IBM has also built their own BaaS service, a Hyperledger Fabric BaaS system based on the Bluemix Cloud Platform. They are focused more on private consortium blockchains.

There are other big names as well that are betting on Blockchain-as-a-Service. Like Oracle Autonomous Blockchain Cloud Service, Amazon Web Services (AWS), HPE Mission Critical DLT and SAP Cloud Platform Blockchain. Of special note in this field is the work being done by R3. R3 has created Corda, a Distributed Ledger Technology (DLT) designed specifically to respond to the needs of financial institutions that use this technology.

Most recent BaaS platforms

Microsoft Azure Blockchain Service (ABS)
Microsoft this month announced the launch of Azure Blockchain Service, which is aimed to simplify the formation, management and governance of consortium blockchain networks. Azure, basically, offers Blockchain-as-a-Service (BaaS) by providing several easy-to-deploy, enterprise-ready templates for the most popular ledgers, including Ethereum, Quorum, Hyperledger Fabric, Corda and more.

Azure BaaS, in a nutshell, represents not just a public cloud hosting provider for distributed ledgers, but an organic and integrated low-cost, low-risk platform for building, delivering and deploying decentralized blockchain applications technology.

“Azure Blockchain Service deploys a fully-managed consortium network and offers built-in governance for common management tasks such as adding new members, setting permissions and authenticating user applications.” Microsoft

J.P. Morgan’s Ethereum platform, Quorum, will be the first ledger available in Azure Blockchain Service, giving both companies’ customers the ability to deploy and manage scalable blockchain networks in the cloud.

“Because it’s built on the popular Ethereum protocol, which has the world’s largest blockchain developer community, Quorum is a natural choice. It integrates with a rich set of open-source tools while also supporting confidential transactions, something our enterprise customers require.” J.P. Morgan

“Quorum customers like Starbucks, Louis Vuitton, and their own Xbox Finance team can now use Azure Blockchain Service to quickly expand their networks with lower costs, shifting their focus from infrastructure management to application development and business logic.” Mark Russinovich, chief technology officer at Microsoft Azure

Amazon Web Services (AWS)
Launching a managed blockchain service late last year, Amazon is now opening Amazon Web Services (AWS) for general availability. This new service is developed on top of open-source frameworks like Hyperledger Fabric and Ethereum.

Customers simply choose their preferred framework, add network members, and configure the member nodes that process transaction requests. Its Amazon Managed Blockchain takes care of the rest.

“Amazon Managed Blockchain takes care of provisioning nodes, setting up the network, managing certificates and security, and scaling the network. Customers can now get a functioning blockchain network set up quickly and easily, so they can focus on application development instead of keeping a blockchain network up and running.” Amazon

It is a fully managed service designed to help companies quickly set up blockchain networks of their own that can span multiple AWS accounts that are scalable and easy to create and manage and configure the software, security and network settings.

“This can be done with a few clicks in the AWS Management Console, doing away with the typical cost and difficulty of creating a company network”. Amazon

Already companies like AT&T Business, Nestlé and the Singaporean investment market the Singapore Exchange have signed on to use the company’s services.

Ardor (ARDR)
Ardor is one of the latest in the growing field of contenders for Blockchain-as-a-Service (BaaS) providers. It provides the blockchain infrastructure for businesses and institutions to leverage the strengths of blockchain technology without having to invest in developing custom blockchain solutions.

Ardor is a BaaS platform that will allow corporates and others to use the Nxt blockchain, an advanced blockchain platform. It separates security from functionality by creating multiple chains. Ardor offers a main chain that handles blockchain security and decentralization. It provides customizable child chains that come ready to use, out of the box, for various business applications.

When customers want to implement a new project on Ardor, they can create a child chain. The child chain holds all the functionality and customizability supported on the Nxt blockchain. However, it is still linked to the main chain and derives its security and decentralization from using the main chain for verification.

The developers of Ardor are the same company behind the open source Nxt project. Ardor however goes beyond Nxt to solve critical issues of blockchain growth, scalability, and customization. Ardor includes every feature supported by the Nxt blockchain, but it changes the architecture of how new blockchains get implemented.  

Towards decentralised BAAS solutions

BaaS however has some limitations though. An inherent tension seems to exist between the decentralized promise of blockchain and the more centralized nature of Amazon’s and other providers fully managed BaaS services.

BaaS should be seen as a means to an end, and necessarily involves adding some centralization to blockchain, which is never ideal. The purpose of blockchain is however to have decentralized solutions to centralized problems. This could be the banks as much as it could be any trusted middleman.

What does the ideal version of BaaS look like? BaaS is an essential step to be able to bring blockchain mainstream. But in a perfect blockchain world, we would not have centralized BaaS.

It could possibly look like Ardor and Nxt, where BaaS is front-loaded into the fundamentals of the blockchain. Alternatively, MIMIR Blockchain Solutions are creating the world’s first Decentralized Ethereum Service Provider (DESP). They are using Proof of Stake mechanics to allow for decentralized BaaS. Instead of having one entity set up all the blockchain infrastructure for a corporate, MIMIR creates a system where the multitude of nodes can work together to share blockchain access to the growing number of corporates and others  who want access to blockchain. Instead of relying on a centralized party to share blockchain access, MIMIR relies on a distributed model where all connected nodes can get paid to do the heavy lifting for people.     

Forward thinking

The arrival of Blockchain-as-a-Service or BaaS is an interesting development in the blockchain ecosystem that is indirectly aiding the blockchain adoption across businesses. Definitely, creating, maintaining and managing a new blockchain solution will be easier with BaaS.

Though BaaS does still require one to rely on a centralized third party, it is a strong step towards bringing blockchain technology to the world. BaaS may be the necessary catalyst that can lead to a much wider and deeper penetration of blockchain technology across various industry sectors and businesses.

BaaS will set the blockchain future trends by making it more feasible and solving the existing problems of the industry. As more businesses look for convenient and cost-effective ways to leverage blockchain technology, it is likely that BaaS offerings will continue to proliferate.

“Taking the burden of difficulty out of the equation” will allow a wide range of businesses and industries to adopt blockchain into their existing platforms.

Though there is still a long way to go, for many companies, BaaS is – at this moment – the best way to begin the blockchain journey. Keeping an eye on the space can help corporates to  choose the right BaaS provider for their business needs.

 

 

Carlo de Meijer

Economist and researcher

 

Executive Treasury Management & Corporate Finance session

| 31-5-2019 | Vrije Universiteit Amsterdam |

An information session has been scheduled for June 26, 2019 at 19.00-19.45. For more information or registration for this session, please contact [email protected].

KEY FACTS ON THE PRO­GRAM

The post-graduate Executive Treasury Management & Corporate Finance programme combines two finance disciplines: Treasury Management and Corporate Finance. These disciplines largely overlap and are inextricably connected.

This post-graduate executive programme has now been running for more than 20 years at Vrije Universiteit Amsterdam. It is a unique programme both in the Netherlands and abroad.

As from September 2018 the programme will be delivered entirely in English to appeal to the increasingly large community of non-Dutch-speaking finance professionals in the Netherlands.

Participants successfully completing this post-graduate executive programme will be awarded with the title of Registered Treasurer. This title is well-known and widely recognized within the treasury professionals’ community.

The curriculum consists of 6 modules, each of which covers a clear sub-discipline in Treasury Management and Corporate Finance. Each module comprises approx 8 lecture days on Thursdays (from 15:30 until 20:00). It is an intensive and efficient 18-month programme.

The post-graduate Executive Treasury Management & Corporate Finance programme is a strategic partner of the Dutch Association of Corporate Treasurers (DACT). Partners in the programme are KPMG, Orchard Finance, PwC, and Zanders Treasury & Finance Solutions. Senior affiliates are programme lecturers.

Exemptions apply to alumni of Dutch RC and RA programmes.

LOCATION

Vrije Universiteit Amsterdam
Agora complex
De Boelelaan 1105
Amsterdam

CONTACT

Investment Management (IM) & Chartered Financial Management (CFA)
Emiel Erbé
[email protected]
020-5986118

Risk Management for Financial Institutions (RFMI)
Michelle Habets
[email protected]
020-5986159

Treasury Management & Corporate Finance (TM&CF)
Myrthe Scholze
[email protected]
020-5987231

 

 

Cashforce develops AI-powered cash forecasting module

| 27-05-2019 | treasuryXL | Cashforce |

CASHFORCE ‘S INTELLIGENT CASH FORECASTING ENGINE HELPS COMPANIES TO CREATE MORE ACCURATE FORECASTS BY LEVERAGING THE POWER OF ARTIFICIAL INTELLIGENCE.

May 22, 2019 New York, NY – Cashforce continues to innovate in treasury digitalization by developing its next generation A.I.-powered Cash Forecasting module, offering accurate forecasting for CFO’s & treasurers struggling to gain better cash visibility and forecasting accuracy. Originally part of a project of the AFTE (French Association of Corporate Treasurers) to disrupt various aspects of treasury, Cashforce got involved to explore how Artificial Intelligence could improve the cash forecasting process. For the initial proof of concept, Cashforce worked closely with a large, globally operating corporate to make this a reality using their financial data.

“While our platform is already globally recognized for providing accurate cash forecasts, we keep on exploring how we can further improve our view on the future. By including A.I. into the mix, we will provide both the CFO, Finance and Treasury departments with even more accurate, efficient and best-in-class cash flow analytics and cash forecasting solutions along with a single version of the truth” commented Nicolas Christiaen, CEO Cashforce.

As an example, Cashforce’s ‘Buffer-algorithm’ will back-test its current Cash flow forecasting model and re-apply these results onto the current model. In addition to the application of smart logic such as customer & vendor payment behavior, this will result in much more accurate forecasts. Companies will be better able to predict the cash outcomes and avoid surprises.

Mark O’Toole, Head of Cashforce for the Americas, commented “By including a feedback loop into the forecast algorithm, Cashforce is able to accurately predict customer payment behavior, unexpected invoices, growth, seasonality and the like.”

After this first release, Cashforce is already working on a next version of the A.I.-driven forecast, by looking at more complex patterns. Several methodologies are currently being explored, ranging from basic methods such as time-series to more complex concepts such as deep-learning and neural networks. At the same time, client feedback is coming in and this gives Cashforce a lot of inspiration on where to improve and what proposition is bringing more value.

As a ‘next-generation’ Cash Forecasting & Working Capital analytics platform, Cashforce helps finance and treasury departments save time and money by offering accurate cash flow forecasting & flexible treasury automation and significant working capital improvements. Cashforce is unique in its category, because it allows users to drill down to the transaction level details and the system integrates seamlessly with ERP systems & banking systems. In addition, an intelligent simulation engine enables companies to consider multiple cash flow scenarios and measure their impact. As a result, finance and treasury departments can be turned into business catalysts for cash generation opportunities throughout the company.

Cashforces’s innovation around big data & analytics for cash management and liquidity has made them unique by bridging the gap between the CFO, finance and treasury.

About Cashforce

Cashforce is a ‘next-generation’ digital Cash Forecasting & Treasury Platform, focused on analytics, automation and integration. Cashforce connects the Treasury department with other finance / business departments by offering full transparency into its cash flow drivers, accurate & automated cash flow forecasting and working capital analytics. The platform is unique in its category because of the seamless integration with numerous ERPs & banking systems, the ability to drill down to transaction level details, and the intelligent AI-based simulation engine that enables multiple cash flow scenarios, forecasts & impact analysis.

Cashforce is a global company with offices in New York, Antwerp, Amsterdam, Paris & London and provides Cash visibility to multinational corporates across various industries in over 120 countries worldwide.

 

10 of the Best | The ACT Annual Conference 2019

| 24-05-2019 | treasuryXL |

What an incredible two days it has been, action-packed and full of celebrations. Very fitting for the special edition of the 40th anniversary ACT Annual Conference.

With over 1,100 people under one roof at Manchester Central, the ACT experienced so many positive moments. They would like to share the top 10 highlights so far…

1 | A ‘REMARKABLE’ OPENING

The conference opened with an impressive keynote address from leading broadcaster and journalist Jon Snow, during which he said if there were a collective noun for treasurers it would have to be ‘a remarkable’.

2 | LARGEST TREASURY EXHIBITION

This year’s conference boasted over 85 exhibition stands, making it the largest in the UK and one of the biggest in Europe. There were many banks, suppliers to treasury and service providers on tap for our delegates.

3 | BUSINESS OF TREASURY

ACT launched the annual Business of Treasury report at the conference. Based on a survey of senior treasurers around the world, the report paints a vivid picture of treasurers’ priorities, fears and the issues they’re about to face. Read more.

4 | 40TH GALA DINNER

This year’s conference marked the 40th year. They celebrated the ACT’s anniversary during a very special Gala Dinner, filled with entertainment, great food and company. They also took this chance to present to a select group of individuals who became either Fellows or Honorary Fellows this year. Read more.

5 | ACT GRAPHIC ILLUSTRATION

This year they were lucky to have the very talented Caroline Chapple illustrating live during a very busy and bustling two days of conferencing. Look out for the finished version – coming soon on the ACT website!

6 | TREASURY HUNT 2019

All attendees had a chance to win an Amazon Echo and Amazon vouchers while collecting points on the event app. Congratulations again to our Treasury Hunt prize winners: Dave Burnside, Fiona Rose and Shujat Mirza.

7 | SPEAKERS’ CHAIR BLOGS

The speakers’ chair, Peter Matza, led two days of insightful discussions on stage, so who better placed to round up the days events (in his own words). Read his blogs here.

Day one blog                Day two blog

8 | SUPERB SUPPORT

The ACT is thankful for their sponsors, exhibitors, delegates and speakers. Many great conversations were had and new connections forged over the two days.

9 | #ACTAC19 TRENDING IN MCR

#ACTAC19 generated lots of buzz on social media! According to Twitter, it was one of the top trending keywords in Manchester on day 1!

10 | THE BIG REVEAL

Last but not least, the ACT is really excited to be taking the ACT Annual Conference to the brand new ICC in Newport, Wales on 12-13 May 2020.

the ACT Annual Conference 2019 starts today

| 21-05-2019 | treasuryXL |

The largest treasury and finance conference and exhibition in the UK will start today in Manchester. Bringing together over 1,100 treasury peers, 100+ expert speakers and 80+ exhibitors.
New challenges need new solutions. That’s why this year the ACT will challenge the audience to think differently, take the leap and embrace disruption with an open mindset for innovation and change.

As the focal point of the corporate treasury calendar, the ACT Annual Conference brings together leaders in treasury and finance to provide you with the timely insights you need in today’s fast-moving market.

All under one roof, over just two days.

Watch the 2018 conference highlights video below for a good impression of the event…

Blockchain and Stable Coins: opening the crypto markets?

| 20-05-2019 | Carlo de Meijer | treasuryXL

In my recent blog about IBM’s Blockchain World Wire I mentioned the use of Stable Coins as settlement instrument for global payment transactions. Not many are familiar with the term Stable Coins, because it is a relatively new type of cryptocurrency.

The Stable Coin market is however hotter than ever. In recent months, Stable Coins have seen remarkable growth in both size and variety. Today, with over 120 projects on the market, there is growing thinking that Stable Coins may trigger the mass adoption of cryptocurrency payments, thereby opening the crypto currency market. Facebook recently came with its WhatsApp Stable Coin. Even a traditional bank like JP Morgan has entered this market, with their own Stable Coin-like product named JPM Coin.

Why is there such a hype in talking about this phenomenon? And what are Stable Coins? How do they work and what should you know about it in terms of use cases, benefits and risks.

Why Stable Coins? 

But first of all: why Stable Coins? The cryptocurrency market such as for Bitcoin, Ether and others suffers from high volatility and unpredictable price fluctuations. They are struggling to maintain a decent valuation against the fiat. Last two years we have seen the market capitalization of the crypto reaching a high of almost 1 trillion USD before bouncing back to less than 200 billion USD. Most of the coins are down 80% from their all-time highs.

This volatile nature is one of greatest criticisms directed towards the crypto market. Because of this high volatility, Bitcoin and most cryptocurrencies are inconvenient for daily transactions. The demand for cryptocurrency is mainly fuelled by speculation and trading. Retail merchants on the other hand are sceptical of accepting the crypto as a medium for financial transactions. 

There is however a growing desire to bring stability to the cryptocurrency market. The  current market sentiment is turning more towards less price-volatile options. It is thus not surprising  that interest in Stable Coins is on the rise.

“Unlike cryptocurrencies such as Bitcoin, which are highly volatile, stable coins provide people with the pragmatic, helpful benefits of a cryptocurrency, without having to worry about distressing price changes since they are grounded in the real world.” Brigitte Luginbühl, CEO of SwissRealCoin

What are Stable Coins? 

A Stable Coin is a cryptocurrency with all its intrinsic functionality, but does not suffer from the vulnerabilities of market fluctuations and price volatilities. They fall into the category of payment tokens, whose main purposes are store of value, medium of exchange, or unit of account. Like other cryptocurrencies, Stable Coins aim to become global, fiat-free money that is programmatically issued and tracked with the use of blockchain technology.

A Stable Coin refers to a class of  cryptocurrencies that is pegged to a tangible, or stable, asset such as fiat money (which is specifically USD) or precious metal (which is generally gold). The idea of backing a cryptocurrency with a tangible asset is to reduce the price volatility associated with standard cryptocurrency. Since the Stable Coin is correlated to the gold or fiat, its valuation is fixed in relation to that underlying asset.

In theory, this makes Stable Coins ideal and usable as a store of value and a basic medium of exchange. They provide cryptocurrency traders and investors with an easy and simple way to keep value without losing to price swings. In doing so, digital coins may become far more practical for everyday use, and it may encourage global adoption.

Models of Stable Coins

To “get rid” of the volatility of the cryptocurrency market, different variations of Stable Coins have been introduced. Thereby a number of alternative types have emerged, backed by a multiplicity of assets, ranging from baskets of cryptocurrencies to physical assets. Most Stable Coins fall into one of the following models: fiat-collateralized, asset-based, crypto-collateralized, or algorithmic.

A. Fiat-collaterised

Fiat-collaterised Stable Coins are the most popular form of Stable Coins. They are fully backed i.e. on a 1:1 ratio by existing fiat currencies in real bank accounts such as the USD that is held in reserve by the Stable Coins’ issuers. The coins represent a claim on the underlying fiat currency.

How do they work?
Stable Coin working is quite simple. They are backed by a company or a central entity. This company or central entity manage the acceptance of new fiat and issues a corresponding amount of the fiat backed tokens. The issuing company holds assets in a bank account or vault (or works with a third party provider that does so on their behalf.  The company or the central entity is the custodian of the fiat reserves, and it backs all the tokens.

A degree of trust in the central entity is created by third-party audits – validating that fiat reserves are kept equal to the token supply. If the holder wishes to redeem cash with his tokens, the company or central entity will wire transfer the fiat money to the holder’s bank account and the equivalent coins will be destroyed or taken out of circulation.

Pros and cons
Stable Coins have a fiat backed structure and their operations and working are simple to understand. Since these are backed by a stable fiat currency, there is not much fluctuation in the prices.

But, these fiat-based Stable Coins are issued by centralized entities with their own governance protocols and, in the case of full custody integration, can be vulnerable  to fraud activities. This is very much against the concept of decentralized crypto. Additionally, not all fiat currencies are stable, as the fiat that underlies them, may not be stable itself.

Examples
Most known examples of fiat money-backed Stable Coins are dollar-based including Tether (USDT), TrueUSD (TUSD), USDCoin (USDC) and Gemini Dollar (GUSD).

 B. Asset-based

Asset-based Stable Coins are backed by some type of commodities. The most common commodity which is collateralized is gold. Gold backed Stable Coin represents a specific value of gold. The physical gold in itself is stored in a trusted third party’s vault.

How do they work?
Asset-based Stable Coins work similarly in cases where the coin is backed by fiat money (see above).

Pros and cons
As these Stable Coins are backed by real assets they provide stability. In a way, the commodity has been tokenized. This brings greater liquidity and price discovery. The coin holder has the advantage of recoursing to the underlying asset. They can redeem these assets at the conversion rate to take possession of the real assets.

Just as in fiat money backed Stable Coins, they are governed by centralised entities. So some of the very concepts of crypto and digital currencies are defeated in this type of stable coin. The holder is dependent on the vendors and custodians. This can result in a single point of failure at some time. This system is also dependent on the audit and assessment by the third party, underscoring the purpose of cryptocurrency.

Examples
Examples of commodity-backed Stable Coins are Digix gold (DGX) and Petro Coin. DGX is dependent on the market value of gold and is fully redeemable at any point in time.  The ownership/custodianship status is tracked on the Ethereum     Blockchain. Petro Coin is a Stable Coin backed by the oil reserves of Venezuela.

C. Crypto-collateralised

Crypto-collateralized Stable Coins are backed by a mix or basket of other digital currencies like Bitcoin or Ether.

How it works
Crypto backed Stable Coins require holders to stake a certain amount of cryptocurrencies into a smart contract which will then result in the creation of a fixed ration of Stable Coins.

In this type of coins, the volatility risk of a single cryptocurrency is reduced and distributed in a group of cryptocurrencies. The Stable Coins are over-collateralized to withstand the extreme price fluctuations.

Pros and cons
The benefit of this method is that it is decentralized and as a result adhere to the trustless, transparency and secure structure of the crypto world. Therefore they are not vulnerable to a central point of failure.

Crypto backed coins are considered transparent because transactions are recorded on the public blockchain with full transparency and accountability. They are efficient in the sense that conversion from one crypto to another is quick as it occurs on the blockchain.

On the other hand they are volatile and complex. Since the underlying asset is a cryptocurrency itself, it is inherently much more volatile as compared to other types of Stable Coins. Also, there are multiple complex elements which can trouble the minting process of these stable coins.

Examples
The most prominent example of crypto backed Stable Coins is Dai. DAI does not rely on any central entity and lives on the blockchain. Its  face value is pegged to the USD. It achieves stability by using an autonomous system of smart contracts.

 D. Algorithmic (or Seignorage) Stable Coins

The most complex and less popular model are algorithmic Stable Coins. These Coins are not backed by collateral at all. Instead, they use various mechanisms to expand or contract their circulating supply as necessary to maintain a stable value.

Algorithmic Stable Coins are based on smart contracts (and other mathematical -based algorithms) where people put up collateral in a cryptocurrency (like Ethereum). This to back the value of a Stable Coin pegged to a fiat currency. With this method, there is no need for know your customer (KYC) measures to be put in place because there is no need for a counterparty to maintain reserves or redeem money from.

How it works
These types of Stable Coins maintain stability using an algorithm. This means that the Stable Coins are not actually backed by real-world assets. Instead, trust in the system is reliant on the expectation that the coins will gain a certain amount of future value (similar to Bitcoin).

These models are generally created with two tokens: the first is a Stable Coin, and the second is related to a bond, thus promising income if the Stable Coin rises in price. By purchasing the bond with the Stable Coin, supply is decreased. As the total demand for the coin increases, a new supply of stable coins are created to reduce price back to stable levels. The main objective is to keep the coin’s price as close as possible to USD 1.

Pros and cons
The advantages of these type of Stable Coin are that they are decentralized, they have an absence of collaterals and lastly, they are kept at stable prices.

On the other hand, these are the most innovative of Stable Coins but also the most complex and thus difficult to create these successfully.

Examples
Basis (formerly known as Basecoin) is an example of this type of Stable Coins. Basis is pegged to the value of USD through algorithmic adjustments of the coin supply. Prices are monitored using the Oracle system.

Use cases for Stable Coins

Stable Coins promise many of the same benefits as other cryptocurrencies – like cheap transactions and rapid settlement – without the price volatility typically found in the crypto markets. Through that combination, Stable Coins could satisfy the demand for high-quality fiat currencies in parts of the world with limited access to the global financial system.

Various use cases have been proposed for Stable Coins, including mobile app payments, alternative currencies in emerging markets and global payment systems. Currently, the most common use of Stable Coins is for crypto traders to move between investment positions seamlessly and create leveraged positions, without added volatility.

Stable Coins also could be useful for crypto exchanges that want to offer fiat-based trading pairs while reducing their engagement with legacy financial institutions. Another interesting use case, is one of coupon and dividend payments in the up and coming digital securities space. This may enable to receive coupon payments in real time via a Stable Coin directly into a smartphone’s digital wallet.

Benefits of Stable Coins

Just like any other cryptocurrency, Stable Coins may offer both benefits and risks  connected to each alternative governance and price-stability models. The main goal that Stable Coins strive to create is an optimal currency in terms of  price stability, scalability, privacy, decentralization and redeem ability.

Unlike Bitcoin or other cryptocurrencies, Stable Coins are more immune to price fluctuations because they are pegged to tangible and more stable assets, like the US dollar (USD).

“An optimal cryptocurrency should have the following four traits: price stability, scalability, privacy, and decentralization.” “Short-term stability is important for transactions and long-term stability is important for holding.” Forbes

“Stable coins are one of the keys to bringing the benefits of cryptocurrencies to everyday people, both in terms of price stability and decentralization of capital.” Rafael Cosman, founder and CEO of TrustToken,

These benefits give it a better chance of mass adoption, compared to existing crypto currencies. This will be especially relevant for people living in countries with unstable monetary systems, where residents are often exposed to hyper inflation and uncertainty.

Stable Coins development could also be of help for the general population in economic and/or political uncertain countries. If the fiat money is converted into Stable Coins it will ensure that the value of money is preserved.

The adoption of Stable Coins may also  support capital market formation and can be used in new applications for decentralised finance on the blockchain. These include lending and derivatives markets because without borders and volatility, it becomes easier to lend money.

Traders and investors can change between cryptocurrencies, without being exposed to  asset volatility. Stable Coins enable traders to keep value stable against a fiat currency, usually the dollar, while they’re in-between trades.

Finally Stable Coins may help in reducing the risk of high price movements. They can be used in the cryptocurrency market as a hedge against bitcoin and other top cryptocurrencies.

 Main risks of using Stable Coins

There are however a number of bottlenecks that could limit the adoption of Stable Coins. First of all, there is the counter-party risk. By trusting a third-party keeping a cryptocurrency stable, the dollars or other fiat currencies could be fractionally reserved instead of fully backed. In this case, a bank run could cause the price of the coin to drop dramatically.

There is also the centralisation risk. Centralisation risks mean the same monetary issues that fiat-currencies face when a central authority has the power to print money without oversight. Accounts can be subject of misappropriation, being blocked, or accessed by unauthorised third parties.

In the case of algorithmic based Stable Coins there is the risk of algorithm manipulations. As most decentralised Stable Coins are embedded  within smart contracts, there is a risk the algorithm which keeps the currency stable fails. Algorithms could even be manipulated by a third-party.

Stable Coins and Regulation

Thus far, Stable Coins have largely been got attention from regulatory agencies. There hasn’t been much discussion in the crypto industry about how U.S. securities and commodities laws might apply to Stable Coins. But also in Europe Stable Coins has got less scrutiny from a regulatory point-of-view up till no. But that may change.

As Stable Coins are seeing greater industry adoption, the US SEC and CFTC will likely take a harder look at their compliance status. But the main question is: how will those Stable Coins be characterised?

Given how dollar-backed Stable Coins are redeemed, the SEC might characterize them as “demand notes,” which are traditionally defined as two-party negotiable instruments obligating a debtor to pay the noteholder at any time upon request. Demand notes are presumed to be securities.

For its part, the CFTC might take the position that Stable Coins are “swaps” under Commodity Exchange Act Section. Under that definition, the CFTC might characterize Stable Coins as options for the purchase of, or based on the value of, fiat currencies.

If Stable Coins are classified as regulated securities or swaps, there could be serious consequences for a large segment of the crypto industry. For example, Stable Coin issuers might have to register their offerings and comply with all the ensuing regulatory requirements. Similarly, a company or fund that conducts or facilitates Stable Coin transactions might have to register as a broker-dealer.

The SEC and CFTC aren’t the only regulators that may take an interest in Stable Coins. Only time will tell how other regulators worldwide will approach the regulation of Stable Coins, particularly if they’re used to avoid trade sanctions or other transaction reporting obligations.

 Asia ripe for Stable Coins

Stable Coins are looking to become a more attractive crypto solution, particularly in the Asia  Region. And that for various reasons.

According to a recent report by Remitscope, more than 50 percent of remittance flows worldwide could be attributed to countries from the Asia Region. Current traditional money transfers however are far from instantaneous or frictionless and often result in the end customer paying unnecessary transaction costs.

With interest growing, a Stable Coin with a well-developed user experience built into the remittance solution would greatly appeal to these markets. In Asia’s emerging markets, the technology’s application in the remittance sector is especially promising. Stable Coins via blockchain technology can improve the speed and stability of these transfers—particularly in countries where financial infrastructure is still in development.

Asian countries are well placed to adopt Stable Coins. It is encouraging that cryptocurrency ATM usage has grown and more cryptocurrency ATMs means improved access to Stable Coins, which will only help the ecosystem mature and evolve for the better.

It is also very likely that we will see more non-USD Stable Coins being tailor-made for Asia. The emergence of more non-USD Stable Coins will signal that the market is maturing further and ready for the benefits of Stable Coins globally.

The regulatory environment, without overt regulatory guidance in jurisdictions,  in the Asia Region is particularly favourable to encourage such innovation.

 What is needed to drive adoption?

To drive Stable Coin adoption, further development is needed in both cryptocurrency exchanges and various cryptocurrency services.

First, making it easy to digitally deposit and withdraw fiat currencies into and out of exchanges remains a huge hurdle to widespread adoption of cryptocurrency as the process is slow and transactions can take a long time or, if they are fast, involve expensive fees.

There is also still a need to solve issues surrounding settlement and velocity in fiat deposits and withdrawals into exchanges. Top exchanges generally take weeks to process transactions and this often leads to increased customer service tickets.

Another issue is the margins on cash to cryptocurrency exchanges. These are very high, sitting at 7-10 percent globally. Not only is it expensive to transact and exchange cryptocurrencies on exchanges, but it is also less convenient when needing to withdraw cash. That is why there is a premium on cryptocurrency ATMs.

Cross-border payments and converting cryptocurrency to cash should be made more convenient for users across the world. Stable Coins could reduce friction when sending money between counterparties as its often quicker, cheaper, and far more convenient.

To improve the user experience, money transfer companies should be encouraged to start integrating cash to crypto features in their respective locations. Overall, consumers will benefit the most from this increase in competition with more options in providers and more locations to conduct their exchanges locally.

In the long term, with more Stable Coins from various other currencies being made available, exchanges could become more liquid, enabling greater efficiency in the crypto ecosystem. Risks for companies dealing with cryptocurrency to fiat gateways will also be reduced as they no longer need to worry about banking relationships and can instead just focus on maintaining a cryptocurrency wallet.

Forward Looking

Stable Coins may have a great potential. The total addressable market for Stable Coins is essentially all of the money in the world, or approximately $90 trillion. Stable Coins are a crucial element in the world of cryptocurrencies, as they can bring stability. They may pave the way for wider acceptance and real potential for global adoption..

The technology is however still relatively young and will continually evolve, but it is clear that demand is there. Before full adoption is reached, Stable Coin developers will need to address the various concerns still in the market. The key is to create the optimal cryptocurrency including features such as price stability, decentralization, scalability, and privacy.

“Stable coins will ultimately give people enough confidence to start using cryptocurrencies for daily transactions.” “Stable coins are trying to strike the balance of not being dependent on a central bank, while also securing price stability”. Brigitte Luginbühl, CEO of SwissRealCoin

Ultimately, decentralised Stable Coins may pave the way for a new and modern  financial infrastructure  that will remove inefficiencies, reduce risk stemming from centralised parties and change the way we transact.

For Stable Coins to be accepted as a viable alternative to fiat currencies, however, they must first intersect and integrate into our current financial infrastructure.

 

 

Carlo de Meijer

Economist and researcher

 

Webinar: How to streamline your banking landscape

| 14-5-2019 | BELLIN |

The expert guide on how to streamline your banking landscape with the perfect combination of banks, channels and formats

This webinar sheds light on the complexity of diverse bank connectivity options for each corporation. What channel or combination of channels are you going to use to connect to your banking partners in a process- and cost-efficient way? Will you capitalize on host-to-host connections or will you be taking advantage of SWIFT, get your own BIC code and become bank-agnostic? Find out about various options and multiple ways of combining them to eventually configure the custom-tailored payment setup that perfectly suits your treasury’s needs.

Webinar start: 6 June 2019 | 16:00 CEST
Webinar run time: approx. 20 min

Register here

Presenter
Anton Wahl, Senior Treasury Consultant

Anton Wahl is Senior Treasury Consultant and Payments Specialist at BELLIN and in charge of various projects. He has extensive experience with international SWIFT, H2H and EBICS payment implementation projects. Anton joined the BELLIN team in 2008 and first worked for the Service & Support Team before changing to Consulting & Implementation in 2015. He is a certified SWIFT Specialist for Corporates and obtained the designation Certified Payment Professional from Frankfurt School of Finance.

About BELLIN

BELLIN is the global leader in technology for corporate banking and treasury. We provide solutions for the financial sector, catering to a range of clients from large multinationals to SMEs and banks. Founded by a treasurer, BELLIN has been championing innovation and out-of-the-box thinking since 1998. With the treasury software tm5 as the centerpiece, BELLIN makes a fundamental difference by offering solutions that zero in on the relationship between corporates and banks and cover everything from payments to FX, cash and risk management. BELLIN is an international company with offices on four continents, powered by a trailblazing fintech spirit and yet firmly rooted in the heritage of German craftsmanship and engineering. BELLIN delights 500 clients and over 80,000 users around the globe.