Tag Archive for: treasury

The size and shape of your treasury team

| 09-11-2017 | Pieter de Kiewit |

Treasury TeamLast week I received a call from one of my clients. Over the last years, I found several members for their team. Given the transition they are in, they were looking for benchmark information to shape their treasury team and make it future proof. This has kept me thinking and I started gathering information in order to give a proper answer. As to be expected, there is no standard template resulting in an easy answer. Even for more evolved job types like sales or accounting this is a hard question, corporate treasury is too young and small for sound statistics.

To make my analysis workable, I decided to measure the size of the team in a straightforward headcount. When talking about shape, I would like to work with the main functional areas: cash management, risk management, corporate finance and support. Of course this is an oversimplification. I think the following variables are the most relevant.

To start with the obvious: size matters. Size in revenue, number of employees, number of countries active in, number of currencies used, number of payments are all related to size of the treasury team. Not 100%. Senior management requesting detailed and up-to-date information requires a bigger team. We see this especially with organizations in turbulent situations, internally or in dynamic markets. Treasury teams that recently started, do not yet have a focus on efficiency and tend to be bigger. The willingness to invest in modern IT solutions on one hand creates a bigger team: key users and treasury IT managers, on the other hand it replaces staff doing manual work.  Finally improving aspects like segregation of duties and back-up typically create a bigger team.

Moving forward to the shape of the treasury team or perhaps the size of the various functional areas, I observe that the industry and company status have their impact. Typically, companies with a dynamic balance sheet, due to distress or growth (autonomous or take overs) need a bigger corporate finance function. A longer balance sheet in a capital intense industry requires a bigger team. In this area I also see an increase in project and customer finance teams contributing in the structuring of business deals.

Companies with diverse and dynamic payment flows need bigger cash management teams. Especially corporates with an ambition towards strong centralization require extra central staff. They need stronger software support, communicate a lot with subsidiaries and have to understand the business. If achieved, central cash management can be managed by few.

I observe a decrease of number of staff working in FX and interest risk management. Corporates are more risk averse, markets are transparent and ICT enables STP processes. In parallel other types of risk increase the workload: counter party, commodities, insurance, etcetera. Big data and business modeling is having its impact.

This blog does not have the ambition to be comprehensive, the above could be more thorough. Furthermore I could elaborate on aspects like control, IT and especially back office and settlements. Should they even be in your treasury team? I think the topic deserves further attention and could be researched by more than one graduate student.

What are your thoughts? What obvious aspect should be included? I look forward to your reactions,

Pieter de Kiewit

 

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

What do you want to know about Treasury?

| 30-10-2017 | treasuryXL |

It has always been our mission to promote Treasury as a profession and to increase the awareness of Treasury within business. Currently there are more education choices for students to study and appreciate Treasury, but we still felt there was a gap – knowledge for anyone who was genuinely interested in learning more about Treasury.

With this in mind, we decided to proactively launch a new initiative – Treasury for non-treasurers. We consider this as our call to action.

Who are these people?

These can be students; career professionals in other disciplines who are curious; people in the finance industry who are considering either a career change or specializing in the field of Treasury; anyone who just wants to understand what a treasurer does on a day-to-day basis.

What is our aim?

Having always written for the professional, we were confronted with the challenge of getting our information across to people who do not have in depth knowledge. After a lot of research and analysis we decided that the best approach would be to attempt to simply explain the workings of Treasury, without going into too many technical details.

What will be in our articles?

With our knowledge, that relies also on the invaluable input of our expert community, we are considering a framework encompassing such topics as:

  • Treasury department – roles and responsibilities
  • Financial products for trading – Spot FX, Forwards, Options, Futures
  • Financial products for liquidity – deposits, loans, commercial paper
  • Financial products for financing – private placements, bond issues, equity
  • Cash flow forecasting – models and procedures
  • Working Capital Management – payables, receivables, inventory
  • Risk management – interest rate, FX, commodity, credit, liquidity, operational
  • Fintech – Treasury Management Systems, inhouse, exchanges
  • Cash concentration – physical sweeps, notional pooling, overlay structures
  • Education – study, on-line courses, sources of data
  • Economic and political – inflation, unemployment, leading and lagging indicators

This is a comprehensive and challenging list – but not impossible – which will, hopefully, increase people’s understanding and perception of the treasury function.

What we need?

Feedback – and plenty of it please.

These articles will not be written chronologically but, if there are certain topics that you wish to have explained then please do not hesitate to contact us. It is only with your input that we can truly create a service to meet your demands. We think we know what you would like to know, but only you can tell us!

What next?

Hopefully, when the series is a success, we can consider publishing e-books. Credit would always be given to those they have taken their time and effort to impart their knowledge and wisdom to others.

Who are you?

Please feel free to contact us and let us know more about you:

  • What is your profession/vocation?
  • What industry do you work in?
  • What interests you about Treasury?
  • Are you interested in making career choices?
  • Need help for your company, but are too small to have in-house expertise?
  • What do you think about the finance industry?
  • What do you think about the EURO?
  • How about Brexit?

So, come back regularly and watch this space!!

Tell me and I’ll forget. Show me, and I may not remember. Involve me, and I’ll understand.

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Introduction core team Treasurer Development

| 19-10-2017 | treasuryXL  | Treasurer Development |

Earlier we informed you about the Treasurer Development initiative. The members of the core team of Treasurer Development aim to contribute to raising the professional level of corporate treasury and increase acceptance and recognition of corporate treasury. Starting point for them is the treasurer as a person.

 

In the kick off meeting a core team was created; these are the members:

  • Janneke Nonkes, former group treasurer and coach
  • Robert Dekker, manager of the post graduate Register Treasurer program at the Free University in Amsterdam and treasury consultant at KPMG
  • Frans Boumans, responsible for the minor treasury management program at the University of Applied Sciences in Utrecht and former banker
  • Pieter de Kiewit, recruitment consultant and owner of Treasurer Search

All core team members work independently in this initiative. They do not represent each other or treasuryXL as a core team member. They aim to inspire, inform and deliver positive criticism. The opinions expressed by a member of the core team are attributed to that person and these opinions are independent and not necessarily shared and/or endorsed by all the other members. treasuryXL  is the communication platform for Treasurer Development. Blogs, discussions, round table meetings, curriculum build-up and adviser are all results that can and will be the result of Treasurer Development.

First initiative coming from Treasurer Development is a cooperation between Frans Boumans and treasuryXL. All of us will start blogging on related topics. Janneke and Pieter will develop a free of charge telephone quick scan in which treasurers can brainstorm about their career development. Robert will inform you shortly about curriculum developments in the Register Treasurer program. Both the Hogeschool Utrecht and the Vrije Universiteit will want to brainstorm with you about guest lecturing, internships and graduation projects.

So far, the first responses on this initiative are very positive. We are open for suggestions and look forward to informing you further.

treasuryXL

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Treasurer – So what is it that you do exactly?

| 11-10-2017 | Lionel Pavey |

A few weeks ago I took my daughter Charly to the Scouts on a Saturday morning – she goes every week and really enjoys it. I get a couple of hours to myself and normally do the weekend shopping in that time. 2 ½ hours later I went back to pick her up and whilst waiting I got talking to a couple of the parents from the other Scouts, about work, whilst enjoying cups of coffee and hotdogs. They asked me what I did and I explained my vocation as a Treasurer and Cash Manager.

“Yes” one said, “so you are the same as a bookkeeper really. What makes you different? What do you bring that others do not? What makes you special?”

Advantages and benefits of Cash Management

  • Cash is King – profit is an opinion. I can not make you more profit, but I can improve your cash flows and your understanding of them.
  • I can speed up the operations your company uses to administer its cash.
  • I can help you stay solvent.
  • I can address your working capital issues.
  • I can spot fraud.
  • I can estimate your cash position for any time in the future based on your data input.
  • I can obtain better terms and conditions with debtors and creditors.
  • I can warn you when trouble will be ahead if nothing is done.
  • I can analyse the best loan deals for your financing operations.
  • I can make detailed cash flow forecasts that you can show to your banks when negotiating with them for loans or banking facilities.
  • I can reduce costs.
  • I can pay your bills more quickly.
  • I can improve your liquidity.
  • I can reduce your administrative work flows.
  • I can enable you to recycle your cash more quickly.
  • I can reduce your inventory holdings.
  • I can let you know when your future financial commitments have to take place.
  • I can help you maintain good relationships with your creditors.
  • I can optimize your cash at all times.
  • I can reduce your borrowing costs.

You need to generate enough cash from your activities to pay your suppliers, repay shareholders and/or investors and have money left over to invest and grow your business. Be honest, to do all that you need professional support and guidance allowing you to concentrate on growing your business.

They looked at me and said “So you are not really a bookkeeper then.”
I looked at them and smiled – mission accomplished!
“Now you know what a cash specialist can do for you and your company. So, give me a call when you think you need help with any of these issues.”
It is a good feeling when you positively change someone’s perception about what your job actually entails.

I told them what I can do, but did not say how. Are you interested in the how? Go to Rent a Treasurer.

 

Lionel Pavey

 

Lionel Pavey

Cash Management and Treasury Specialist

 

 

Does your treasury have a digital mindset?

| 25-9-2017 | Patrick Kunz |

 

In an previous article I have talked about the IT changes that make life easier for a treasurer in the future (or now already). In this article I want to talk about the digital mindset of the person using the IT – the treasurer. Treasury is a numbers game. We treasurers use these numbers to optimise the cash or risk of the company. We make money with money. These numbers have to come from somewhere in the organisation and it is usually never treasury itself.

BIG data

Big data is a hot topic in treasury but for treasury it was around longer. The treasurer needs to get their input information for all over the company. Cash inflow from sales, cash outflow from procurement and investment teams, HR etc. All this data needs to be gathered. The digital minded treasurer thinks about optimal ways of gathering this data: automatically. The treasurer starts its day with the actual cash balances and then looks forward. He/She basically needs to predict the future. How great would it be if all this data would be available with the push on a button. An ideal world ? Maybe, but it is possible. Bank statements can be automated to be loaded collectively or in a Treasury Management System. The treasurer starts the day with up to date cash balances, and he has not started working yet as this was automated. He then updates the cash forecast. How? By pushing update in his cash forecasting system. Sounds too easy? True, it took weeks to find out where to find the needed input information and to automate getting this data grouped together and in a structured way. But a digital minded treasurer knows that the data is somewhere in the organisation; it only needs to found and linked to the treasurers information recourses so it is always available. The treasurer only has to check the validity and the quality of the data and see if it needs improvement. In this way the digital minded treasurer can automatically create a cash forecast and continually improve it. A cash forecast should be ready before the second morning coffee. In an ideal world it would be ready with a push on a button. Artificial intelligence makes it possible. The digital minded treasurer is steering it.

Process improvements

The digital treasurer looks at ways to improve its document flows and payments. Not only looking at costs but also looking at how many (manual) interventions are needed. FX deals can be setup to straight through processed (STP) while blockchain would make it possible to improve the speed of payments or document flows globally. Everything is connected, as payments go from a process to straight through and instant it has an immedicate effect on the cash availability and forecasting. While now the bank is the place to go for bank accounts and payments this might not be the case in 10 years. The digital treasury might be able to setup his own bank in the future. By using technology.

The future

The treasurer makes sure that he is on the steering wheel while technology makes it possible for him/her to check his surroundings so he does not crash. A bigger front window makes for a better view forward (forecasting), a higher max speed makes for quicker travel (updating changes in forecasting), adaptive cruise control saves effort on speeds control (automatic updating and AI, STP). The treasurer knows he needs to keep the engine running to keep moving. He also realises that he does not need to be a mechanic to do this; however he needs to be able to tell the mechanics quickly why the car is not moving as the treasurer wants it to be so the mechanic can fix this. Or maybe the digital treasurer might change the car for a plane in the future, or even a rocket?

It is clear that technology and treasury are interconnected. Already now and even more in the future. A treasurer therefore needs a digital mindset to survive and keep up with the information needs of his department and the company as a whole. And it’s not rocket science (yet).

Patrick Kunz 

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

 





 

The IT savvy treasurer

Saving on FX deals? Often neglected but potentially a “pot of gold”

How much are you paying your bank?

 

HU Treasury Papers – Digging into the treasury hot topics

| 15-9-2017 | treasuryXL |

In earlier blogs we informed you about the minor treasury management at the Hogeschool Utrecht and the new Treasurer Development initiative. Together with you we will start connecting the dots in an exciting way and kill two or even more birds with one stone. This is how.

Currently, with your input, we are compiling a list of hot topics in treasury. If you did not complete the one-question-survey, please do so. Your opinion is important. The top 8 of this list will be handed over to the students attending the minor treasury management at the Hogeschool Utrecht. For each topic, one student or a small group will write a 400 word report, based upon literature and web studies. A report typically will be a description of the topic that can also be read by laymen as well as relevant current developments. These reports will be published as blogs on www.treasuryXL.com under the name “HU Treasury Papers” and used for educational purposes in their program. A number of experts from our community have already volunteered to help with editor and/or referee services for the articles.

Doing so, students will learn about corporate treasury. Most likely these blogs will be an excellent read for non-treasurers wanting to learn about the fundamentals. Together with experienced experts, these blogs can be stepping stones into internships and perhaps even first jobs.

If you are interested, this is how you can contribute:

  • Complete the survey;
  • Read and comment on the website or in social media;
  • Think about internships in your organisation;
  • Offer your time, expertise and/or network as a guest lecturer or expert in treasury internships.

You can respond to us at treasuryXL or contact Frans Boumans (e-mail: [email protected]) at the HU. We will further inform you and look forward to your input.

Annette Gillhart – Community Manager treasuryXL

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First 100 days of a treasurer

| 11-9-2017 | TIS (Treasury Intelligence Solutions GmbH) – Sponsored content |

When a government official enters into office, the 100 days in the new role are closely observed by all. Similarly, the first impressions left by a new treasurer are often long lasting and critical to success further down the road. In most cases, after the first three months, all stakeholders have formed their opinion.

Sounds familiar? We know that the first 100 days in a new job are known to be crucial in setting the right course. The challenge facing treasurers is to acquire a quick overview, identify company-critical risks, introduce necessary measures at short notice and, at the same time, convince the new boss that they are also able to set the right strategic course.
In our Executive Briefing, our treasury experts share their experiences and provide tips and insights to support you in the first 100 days of your latest position.

TIS (Treasury Intelligence Solutions) GmbH

 

Building a cash flow forecast model

| 5-9-2017 | Lionel Pavey |

 

No company can sort out its funding and investment requirements without having a cash flow forecast. This gives valuable insight into potential bottlenecks where there is a shortage of liquidity that needs to be addressed in order that the company can continue its day-to-day operations whilst optimizing its cash position.

2 methods

There are 2 methods to be a model – indirect and direct.

Indirect uses the balance sheet and, as such, will contain non-cash items like depreciation and bad debts. Direct uses the projected receipts and payments shown at specific moments in time.The indirect method is handy for long term forecasting beyond 1 year as it shows the money required to finance capital intensive investments and projects.

The direct method is essential for short term analysis up to 1 year as it shows the money for operational activities and working capital. As a cash flow forecast is mainly used for the direct needs of a company, it is prudent to use the direct method.

What steps need to be taken to transform a budget into a cash flow forecast via direct method?

  1. Adjust the budget to remove all non-cash items
  2. Analyse historical data to obtain seasonally adjusted cash flows for operational activities
  3. Integrate the standard payment terms for creditors and debtors and adjust the cash date
  4. If there are no clear trends within the month, spread the amount evenly over the month
  5. Where pay dates are hard – wages, taxes etc. input these into those dates
  6. Calculate the operational cash flow
  7. Incorporate expected investments
  8. Incorporate existing financing obligations (principal and interest)
  9. Never forget the BTW (VAT)!
  10. Analyse the forecast for shortfalls or periods of excess liquidity

As this is an exercise that incorporates all departments within a company, it is essential that full support is given by management to the design and implementation of the process. No one person can collect and collate all the data – this requires continuous input by controllers and treasury staff.

How to design the forecast?

  1. Establish clearly defined criteria and processes
  2. Define the role and cooperation required by all parties, whilst highlighting the benefits
  3. Ensure commitment from all parties
  4. 1 data source only – data must be presented in 1 format on agreed dates
  5. Structure – all data is delivered on time to a central point, normally the treasury
  6. Keep it simple – do not over design the model
  7. Give constant feedback to all stakeholders so that they can see how their contributions matter
  8. Question the validity of the data – is it created by a bottom-up approach or has a simple top-down approach been taken without looking at the individual components that make up the forecast
  9. Stress test the data – build simple scenarios (best and worse) whilst making simple assumptions such as debtors extending payment times, fall in sales, increase in demand etc.
  10. Never sit back and think that your task is done. This is a living model that needs to be constantly monitored and adjusted where necessary
  11. Do not punish – many people are reluctant to provide forecasts out of fear that they will be wrong. Use the model to educate and focus stakeholders onto the reality of their cash positions as opposed to their bookkeeping positions. It is all about timing
  12. Remember – if you do not have it, you can not use it. There is nothing more harmful for a company than running out of cash, regardless of what the company accounts are telling you!

If you want to know more about this topic you are welcome to contact me.

Lionel Pavey

 

Lionel Pavey

Cash Management and Treasury Specialist

 

 

 

Introduction of a new initiative: Treasurer Development

| 1-9-2017 | treasuryXL |

Already over a year treasuryXL facilitates information exchange about corporate treasury. Contributions are, amongst others, about the development of the treasurer as a person. Due to the improved economy we notice a rising interest in this topic. Education, competence development and labour market are the most obvious examples. This is why we start the Treasurer Development  initiative.

Treasury education

In treasury education we see a rising interest from universities (also of applied science) which results in young graduates with treasury expertise. Both courses with certifications, like RT, ACT or CTP, are discussed as well as compact, result oriented trainings. Especially quick knowledge about FX and risk is in demand. The number of on-line trainings is quickly rising.

The ambition of many treasurers to have a bigger business impact results in a higher demand for training and coaching. Skills you do not learn in class. Questions like “what communication style works with an average and my CFO” or “how do I convince colleagues in an operating company to change their working methods” deserve a tailor made approach.

The labour market is tilting, the number of vacancies is rising. The way employers and employees find each other has changed over the last decade. Social media have a huge impact. Candidates do not only think about the next step but also about their career as a whole and the place their job has in life.

Treasurer Development Initiative

From this perspective a small group of professionals with relevant expertise came together to start the Treasurer Development Initiative. Questions like “how can we raise the professional level of corporate treasury and increase its impact” and “how can we introduce treasury in places where it has an added value”  will be considered from the perspective of the professional.

In our next blog we will introduce the group and inform you about first plans. If you want to contribute, please let us know.

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