Tag Archive for: treasury

Instant Payments deserves a quick adoption because it will reduce the costs and will benefit Corporate Treasury: education will give a boost.

| 25-11-2016 | Boudewijn Schenkels |

payments

 

Several use cases, like in UK and Australia, implementing Instant Payments proved to be a alternative to checks, cash and debit cards for retail and corporate customers, stated in the World Payments Report 2016 by CapGemini and BNP Paribas. Besides replacing these expensive payment types, Instant Payments will mean extensive benefits for Corporate Treasury.

“To boost the adoption of immediate payments, efforts are required in a number of areas including value-added services development, education of the main stakeholders, and upgrading of merchant and corporate infrastructures”.

For education matters the Payment Report advises the marketplayers (banks, industry organizations, and regulators) to invest in educating key stakeholders including corporates, merchants, and end-customers on the benefits of instant payments. “For example, banks could inform corporates and merchants of the required infrastructures, the ease of transaction, benefits including instantaneous funds and receipt, and how instantly available funds can be better managed.”

Treasury Benefits are specified as:

1. Payments can be initiated at last moment before due date leading to:
– Reduced settlement times and availability of funds for longer durations
– Enhanced liquidity management
– Cost savings as a result of fewer adjustments
2. Implementation of Instant Payments will lead to improved financial control and budgeting for Corporates due to certainty of payment status (irrevocable);
3. Real-time systems generate data, which will help treasurers map companies’ cashcows and financing operations with their stakeholders’ production lines in real time, which will make cashflow easier to manage and forecast;
4. The instant payment finality of Instant Payments reduces credit risk and the temporal risk created by time delay between payment and settlement. This enables instantaneous updates and a constant real-time view of cash positions for corporate clients;
5. Instant payments are expected to enhance the experience of corporates’ customers by providing faster services, real-time notifications, and immediate availability of funds.

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Boudewijn Schenkels

Senior Consultant Payments @ Payments Advisory Group

Kunnen banken zich opnieuw uitvinden of is het inderdaad Kodak revisited?

| 24-11-2016 | Jan de Kroon |

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Dat alle banken op dit moment stevig ingrijpen in hun business model en bedrijfsvoering behoeft geen betoog. Het staat immers dagelijks in de krant. De topman van ING geeft zelfs openlijk aan dat zijn bank zich transformeert naar een IT dienstverlener en ING is dus een van die banken die aast op over te nemen FinTech-bedrijfjes om het transformatieproces te versnellen. Ook de andere banken switchen in hun businessmodel en voegen zich in de ratrace.

Situatie uit zicht van de bank

Als belangrijk argument geldt steeds de verzwaarde regelgeving die het steeds minder interessant maakt het traditionele rentebedrijf te voeren in combinatie met een toezichthouder die banken op dat punt in de nek hijgt. Een veel meer bemiddelende rol en een vergoeding op provisiebasis lijkt het logische antwoord. Tegelijkertijd wil je als bank wel een beetje grip houden en dus een belangrijke rol in het verloop van geldstromen houden. Om daar nog iets aan te verdienen moet je dan wel mee in de technologie. En dus mee in de uitdagingen die FinTech bedrijven bieden.

Juist daar lijkt de historische vergelijking met Kodak op te gaan, waar oprichter Eastman alle nieuwe technologische innovaties wilde omarmen, op voorwaarde dat een filmrolletje een vast onderdeel was van de oplossing. Ook banken transformeren zich waarbij een zekere constante te vinden is in het regisseren van geld en betaalstromen. En alle oplossingen lijken dan ook innovatieve Fintech inhoud te moeten hebben.

Intussen is het nog maar de vraag welke banken nog echt weten wat de klant wil en wat die klant echt nodig heeft. Zo buitelen banken over elkaar heen met beloften over binnen hoeveel uur een financieringsaanvraag wel niet uitgewerkt is en hoe makkelijk je online je zaken kunt regelen. Daarbij wordt verondersteld dat de klant dat belangrijk vindt. Het is niet dat dat de klant het niet op prijs stelt; die gaat ook met zijn tijd mee immers. Feit is dat het niet meer is dan een hygiënefactor en geen onderscheidend kenmerk.

De wens van de klant

Wat wil die klant dan wel; welnu die klant wil vooral aandacht en een goed advies. Die klant snapt dat de bank efficiënter wil gaan werken want die tendens is er in zijn eigen onderneming ook. Wat die klant daarentegen niet begrijpt is dat de te bereiken efficiencygraad vooral de winst van de banken moet gaan verbeteren in plaats van de vrijgekomen financiële capaciteit te besteden aan effectiviteit van de dienstverlening. Afgezien van wat technologische verschillen is er nu al geen wezenlijk verschil meer tussen de Nederlandse grootbanken in de klantbediening. In feite zoals dat bij de grote energieleveranciers al langer het geval is.

De zakelijke klant echt centraal stellen vraagt naar mijn mening vooral om het borgen van de oprechte aandacht voor de klant; one way or the other. Je terugtrekken op de technologie achter het IBAN nummer of vergelijkbare bewegingen zouden wel eens het nieuwe KODAK kunnen worden; geen producten en diensten zonder infrastructurele technologie. Wil de echte bank opstaan.

Jan de Kroon

 

 

Jan de Kroon

Owner & Managing partner of Improfin Groep

 

Why seems TMS market leadership to be a relay race?

| 23-11-2016 | Pieter de Kiewit |


geen-naamThe number of treasury management software brands I read about in resumes since 1996, the year of my first treasury placement as a recruiter, has continuously grown. In other markets market dominance has been more stable, BMW, Microsoft and Calvé have been able to keep long market leadership. What is so different in the TMS market? Without comprehensive research I can think of the following reasons.

TMS technology reasons

Technology is moving forward very quickly. Solutions are often based upon the possibilities new technology offers and not developed based upon client needs. Different backbone technology often comes with other providers, hence other TMS suppliers.

Integration after take-over

There is a number of small solutions that grew to be successful over time. The founders of the companies that offer these solutions often choose to sell after a number of years. This because they are technology driven and cannot handle the marketing and operational hassle. Or the other way around: after successful sales they have to build a better product and do not have the technological staff. Or they just want to cash. The bigger companies that take over are not capable to absorb the smaller without losing the warm connection with the clients. Service and flexibility go down, prices go up. Sales staff is demotivated after a setback in remuneration. Support does not know the application. The clients go to the next supplier.

Marketing reasons

Last but not least, successful start-ups that work with partners in various countries are not able to share the wealth of success. Discussion over equity, profit sharing and ownership are often deal breakers. In this market there is not one dominating expansion strategy that has been the success formula: own staff is not strong enough or too expensive, partner sales is often not based upon enough commitment or lacks a proper contractual basis.

What do you see in the market of TMS suppliers?

Pieter de Kiewit 

 

 

Pieter de Kiewit
Owner Treasurer Search

 

To be or not to be – what happens next to the Euro?

| 22-11-2016 | Lionel Pavey |


In the last few weeks, there have been many news articles published, by well-known people, about the state of the union:

  • Frits Bolkestein (former European Commissioner) – monetary union has failed. In 10 years there will be a large D-mark block in northern Europe
  • Joseph Stiglitz (Nobel prize winner Economics) – the euro’s days are numbered
  • Otmar Issing (former chief economist ECB) – one day the Euro “house of cards” will collapse
  • Jacques Delors (former president of the EC) –  at some point, Europe will be hit by a new economic crisis. We do not know whether this will be in six weeks, six months, or six years. But in its current set-up, the euro is unlikely to survive that coming crisis.

End of the Euro?

More than 15 years after its creation, has the Euro run its course? After countries put all their effort into meeting the convergence criteria, did they forget to look at the diverging competitiveness between themselves?

There are numerous political elections and referendums in the next year – Italian constitutional referendum, elections in Austria, France, Germany and the Netherlands. There appears to be a rise in anti-European sentiment expressed by both voters and politicians. After the perceived surprise results in the Brexit referendum and the presidential elections in America, it would be prudent to consider all possible outcomes.

So what would happen if the currency union ceased to exist? We can look back in recent history to the breakup of both the Soviet Union in the 1990’s and the Austro-Hungarian Empire in the 1920’s. A split in the current Eurozone would appear to follow a North-South divide, leading to a revaluation of the currencies in the North and a devaluation in the South. Thanks to modern technology it would be possible to sell bonds of southern countries and move the proceeds to the north almost instantaneously. Despite the huge upheaval – rising inflation and unemployment, declining growth and investment, the situation would eventually normalize as can be seen in the new countries that were previously part of the Soviet Union. But this would all come at a very large price.

Consequences for companies

But what about the consequences for companies? If a contract existed between a Dutch company and an Italian company many questions would need to be answered – which contract law takes preference, in what currency should the contract continue, who bears the risks involved? What happens to a loan extended to a Spanish company by an Austrian bank and denominated in Euros that are no longer legal tender? It would be prudent to look at all the possible risks that a company could face if the Euro were to replaced by national currencies – what cross border contracts do they have, what is the impact to the company’s profit if the new currency devalues, what are the terms and conditions in existing loan documentation regarding covenants, how many new bank accounts would need to be opened to allow trading to continue.

Can the Euro survive? Personally, whilst the idea was good, the reality has been different. It requires a complete “One Europe” – monetary, fiscal, political, defence, law etc. Could this ever be achieved and do the people of Europe really wants this – now that is the question.

Lionel Pavey

 

Lionel Pavey

Cash Management and Treasury Specialist – Flex Treasurer

 

 

Online Treasury training programs: a new trend and options increase

| 21-11-2016 | Annette Gillhart |

online-trainingIf you are working as a treasurer and think about following a training you might as well look on the internet: an increasing number of programs are given online. We thought that it might be useful to check what’s on there and present a few.

A small selection of what we found

 

  • Hecht Consult Bank Training and Treasury Consultancy
    Michiel van den Broek is a financial expert and has hands on experience managing foreign exchange and interest risk. The last 10 years, Michiel has focused on training and has set up the Financial Training Hub. He has created custom programs and delivered training to hundreds of participants working for banks, financial supervisors and other financial institutions on subjects such as financial markets, asset & liability management and risk management. Michiel has published an e-book ‘Understand Banks & Financial Markets’ to introduce training participants in the world of finance. He offers training programs such as Financial Markets (Advanced), Banking Basics, Risk Management Basics, Compliance and Financial Markets, Introduction Asset & Liability Management, Bank Management and more. Read more
  • Coursera
    Free training programs! Coursera is an education platform that partners with top universities and organizations worldwide, to offer courses online for anyone to take. Their mission is to provide universal access to the world’s best education. Statement from their website: ‘Online learning plays a significant role in a lifelong education. In fact, a recent report by the U.S. Department of Education found that “classes with online learning (whether taught completely online or blended) on average produce stronger student learning outcomes than do classes with solely face-to-face instruction.’ Go and check the search term  ‘Treasury’. At the moment they offer two trainings: ‘Global Financial Markets and Instruments’ and ‘The Global Financial Crisis’. Read more
  • Treasury Services
    Next to other services they offer Treasury training and education in their Treasury Acadamy. The e-learning Treasury Academy enables participants of programs to decide when, where and how they want to follow training courses. Training courses are instantly available through their secured platform. They offer training programs on Foreign Exchange Risk Management, Foreign Exchange Options, Interest Rates and Interest Rates Risk, Modern Bootstrapping, Cash Management and more. Read more

Many more options

It is obvious that this is just a small selection of what can be found. There is more and options increase. If you do not want to follow courses alone you can consider peer assesments or blended learning, too.

Have you followed an online training program lately?  Please feel free to share your experience!

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annette-gillhartAnnette Gillhart – Community Manager  of treasuryXL

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How Bank Independency improves your Treasury Performance

| 18-11-2016 | PowertoPay |

bankgebouwenAs RBS in april 2016, ABN AMRO announced recently that they will lay off another 1500 employees worldwide and reduce services due to ongoing digitalisation. We came across an article of PowertoPay and in the light of recent developments you might find it interesting to read.

As we emerge from the global credit crisis and banks are starting to (geographically) withdraw from some parts of the market, managing cash flow more effectively is a top priority for treasurers. Monitoring, analysing and reporting on underlying business cash flow and risk has become extremely important. Despite the changing role of the treasurer which resulted in new requirements, treasury must still determine the optimal organizational structure that meets both strategic goals and supports overall efficiency. These efficiency goals have created the need for centralized bank-agnostic solutions that aggregate all financial information onto one platform.

The evolved need for bank-independency

As competition increases in the payments market, banks need to create competitive differentiation, either in-house or in a shared model. Banks need to reshape their focus and keep a consistent client focus. A recent example of a bank that needed to reshape was the withdrawal of RBS from a large number of countries. RBS has made the choice of being a consumer bank for the UK and decided to end servicing the earlier acquired Global Transaction Banking customers.

The withdrawal of RBS from large parts of the market created the need for large corporates to investigate bank-independency and bank-agnostic solutions more thoroughly. A logical consequence, because how can you be certain that your bank will remain active in a specific country for over five years? Frank Nolden, CEO of PowertoPay states:  “If the financial crisis has taught us anything, it’s that no matter how big, banks can go bankrupt. Therefore, corporates want to decrease their risk on financial counterparts, because these counterparts might no longer exist in a few years”.

Reducing risk

In order to: 1) reduce the risk on financial counterparts 2) overcome the bottlenecks  3) reduce potential credit inefficiencies found within the use of single banks, corporate treasurers increasingly focus on bank-agnostic solutions. Connecting to multiple banks via a centralized bank-agnostic solution means lowering the risks of having to change and select new banks in the future, which allows corporates to have greater financial performances.

Succeeding with simple connectivity

Large corporates more often choose for developing channels and services that support a multi-banking, bank-agnostic approach. According to the CEO of PowertoPay, Frank Nolden, “the maintenance of all the different multiple technology systems have driven corporates to opt for simple hub connectivity through centralized solutions”. Many corporates have to connect to a myriad of bank portals with numerous security tokens to handle their treasury operations, which considerably increases risk. Bank-agnostic solutions automate, centralize and standardize globally these payment and cash management processes, allowing treasurers to make better, more informed and faster decisions based on real-time holistic insights, improving their performance.

Conclusion

Corporates are always seeking to increase the levels of operational efficiency. Maintaining all types of different multiple technology systems with low efficiency levels have driven treasurers to opt for bank-agnostic, centralized solutions. These solutions reduce the risk on financial counterparts, creating more streamlined and effective treasury operations.

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Reports: Journeys to Treasury, Treasury Systems Guide and The Future of Treasury Management Systems

| 26-10-2016 | treasuryXL |

A photo by Matt Duncan. unsplash.com/photos/IUY_3DvM__wA few interesting reports came out in the last couple of weeks: ‘Journeys to Treasury’, ‘Treasury Systems Guide 2016’ and ‘The Future of Treasury Management Systems’. We did some reading and decided we wanted to share these reports with the treasuryXL community. Let us know what you think! Did you see a report, article or something else that could be interesting for the treasuryXL community? Don’t forget to share!

 

Journeys to Treasury – BNP Paribas, EACT, PwC and SAP

In this day and age being a treasurer can be a challenge. BNP Paribas, the European Association of Corporate Treasurers (EACT), PwC and SAP have joined forces to form a thought initiative whose aim is to help finance professionals resolve some of the intricate puzzles that constitute the treasury of today and tomorrow. This resulted in the report: “Journeys to Treasury “.

Journeys to Treasury is a report that bases itself upon the understanding and knowledge of the challenges treasuries face today as well as the ability to anticipate the impact of transforming trends. In Journeys To Treasury, each of the four contributors offers their own expertise gained from their own journeys in this bumpy – yet encouraging – landscape, structured in 3 sections: Continued Innovation, Anytime, Anywhere Treasury and Cybercrime and Fraud.

Interested in reading the full report? You can download ‘Journeys to Treasury’ here.

Treasury Systems Guide 2016 – Bobsguide & GTnews

This bumper edition is full of features and commentary from industry experts, as well as our traditional functionality matrix that delves deep into what different treasury management systems are capable of.

With the recent decision to Brexit and the upcoming US election, it could mean that treasurers might have to sleep with one eye open in order to tackle potential fraud, manage cash visibility and meet regulatory requirements in these uncertain times.

We also look into what’s happening with regulation in Europe, innovation in Asia and tax in the United Kingdom which tie into some of the topics discussed by the bank and the TMS provider we interviewed.

Interested in reading the full report? You can download it here.

The Future of Treasury Management Systems – FX MM

FX-MM brings together leading industry experts to discuss the future of Treasury Management Systems (TMS) and examine how technology is enabling Treasurers to ditch the data gathering and take on a more strategic role within their organisations.

Our panel examines how technology is also helping to democratise the use of TMS, with Software-as-a- Service offerings enabling corporates large and small to enjoy the benefits of the cloud and more user-friendly systems.

Interested in reading the full report? You can download it here.

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Did you came across something interesting for the treasuryXL community? Or are you interested in becoming a author? Contact us: [email protected]

Accountability foreign currency risks

| 19-10-2016 | Maarten Verheul |

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Sometimes in financial statements, I read that the income statement was negatively impacted by exchange losses. This seems unnecessary to me.

At the conclusion of each and every purchase order sales in foreign currency is a currency forward contract entered to avoid foreign exchange risks. Apparently, often to run the risk in the hope of some extra foreign currency earnings. Well, I can be brief about that. Your business is to sell your product or your service. Or, as they also say, “Every man to you.”

So, whose responsibility is it, that foreign currency is covered with a foreign currency forward contract? I say this is the responsibility of the Treasury department. Treasury should report this, at least to the management. If management decides that it is not covered, it will be their responsibility.

I even think that the Treasury department should report every single time. It may be that management decides not to do the act, because the risk is limited, but the next time the risk may be much greater.

The best scenario is when the management wants to exclude all risks with foreign currency and treasury delegates to hedge all transactions, buying and selling foreign currency forward exchange contracts. Then, there never is a doubt about what needs to be done and you won’t lose time consulting with management or directors.

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maartenverheultxlMaarten Verheul – Treasury Consultant

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Treasurer en controller; een paar apart ?

| 22-09-2016 | Jan de Kroon |

collaboration-1106196_640De treasurer en de controller zouden twee handen op dezelfde buik moeten zijn, maar de vraag is of dat in alle, of zelfs de meeste, gevallen wel zo is. Enkele uitzonderingen daargelaten, zijn de verschillen groter dan de overeenkomsten.

Kort door de bocht zou je kunnen stellen dat de treasurer zich met het financieren van de operatie bezig houdt aan de passiefzijde van de balans. De controller houdt zich dan bezig met vooral de operatie waarvoor die middelen aan de actiefzijde zijn aangewend en zorgt ervoor dat die cash ook weer beschikbaar komt voor de verschaffer van die middelen. Beiden spelen een belangrijke rol in de cash conversion cycle en als het goed is, stemmen ze hun belangen onderling goed af. De praktijk leert echter dat het in veel gevallen niet zo rooskleurig verloopt in de afstemming.

De treasury functie onderhoudt een brug tussen de financiële belangen van de eigen organisatie en ontwikkelingen op de financiële markten er buiten. Hij zorgt voor blijvende toegang tot bronnen van geld, beschermt vermogen en resultaat tegen financiële risico’s en beheert een superieure en kosten-efficiënte financiële infrastructuur. Daar is weinig op tegen te hebben; voorwaar een nuttige rol die op begrip van iedereen kan rekenen. Althans, dat zou je denken.

Toch gaat het in de relatie vaak verre van soepel. Meestal omdat ze niet alleen een andere taal spreken, maar ook elkaars wereld niet echt lijken te kennen; laat staan echt begrijpen. De treasurer heeft een groot belang bij juiste, tijdige en volledige positie informatie en verwacht die van de controller te ontvangen. Zich niet realiserend dat de controller het belang vast wel onderschrijft maar in zijn eigen business unit met een vergelijkbaar vraagstuk worstelt; hoe krijg ik in des hemelsnaam tijdig betrouwbare informatie uit de lijn en het primaire proces. Voor eigen gebruik in het veld, maar ook om een collega op het hoofdkantoor een plezier mee te doen.

Anders dan de gemiddelde treasurer is echter de controller een vogeltje dat minder goed gebekt is en mede daardoor niet altijd lijneenheden kan overtuigen van nut en noodzaak van tijdige prognoses op basis waarvan de treasurer zijn randvoorwaarden beter kan inregelen. Om dat op te lossen en betere positie-informatie te verkrijgen uit de operatie, is een aantal elementen van belang:

1. Zorg er voor dat treasurer en controller elkaar beter leren begrijpen. Dat kan door meer in te spelen op business partnership dan ‘leverancier-afnemer’;

2. Zorg voor een beter financieel economisch bewustzijn bij de lijn. Dat kan door bijvoorbeeld het hanteren van feedback en feed forward technieken maar ook door het benoemen van lokale treasury referenten in het primaire proces;

3. Zorg dat de verantwoordelijkheden scherp zijn gedefinieerd. Daarmee zorg je dat tenminste iemand zich verantwoordelijk voelt voor de juiste positie op het juiste moment;

4. Een periodieke treasury nieuwsbrief kan helpen bij het vermijden van ‘ver-van-het-bed-shows’ en het verkleinen van de communicatie-kloof.

Zo komen de handen weer op één buik.

Jan de Kroon

 

Jan de Kroon

Owner & Managing partner of Improfin Groep

Why companies still use Excel

| 25-08-2016 | Lionel Pavey |

spreadsheet2
Do you still rely on spreadsheets in your daily treasury operations? We have read multiple articles on this subject lately and we decided to ask our community: Why do treasurers still rely on spreadsheets? Yesterday Jan Meulendijks gave us his opinion on the topic. Today expert Lionel Pavey talks about the benefits of using Excel in your company.

Why do companies use Excel?

Cost – it is part of the Microsoft Office Package; low maintenance costs

Use – everyone has some level of proficiency with Excel

Versatile – data can be customized to your own requirements

Simplicity – comes preloaded with over 400 different formulae, though far less than 100 are truly needed for Treasury purposes

Training – most people learn on the job, no need for expensive courses to help people use the software

Flexible – give the same data to different people and see how they uniquely extract the data they need to answer their queries

Compatibility – all relevant data that is present on standalone accounting software etc. can be exported into Excel and adjusted for individual purposes to achieve the desired results

Problems with Excel?

Ignorance – getting staff to comprehend the route from input to output

Errors – not incorporating checks and balances that can highlight discrepancies

Individualism – is the output only for your consumption or is it passed on down through the chain, enhanced and then passed on again?

Disarray – everyone applies different fonts, layouts, conditional formatting. Should be a company policy in place to determine how data is collated and presented

Uncertainty – why do people insist on hiding columns and rows?

Duplication – the same spreadsheet data is present on many PC’s at the same time with subtle but significant differences. Someone has to own the original document

Solutions?

Dedicated BI software – expensive, no value outside of the present company normally, requires regular maintenance, multiple departments have to sign off before it can even be implemented, constant reviews of whether the correct modules are present, system updates

Design Structure – implement a company policy clearly dictating how “shared” spreadsheets are to be designed.

Input Structure – agree who delivers what, to whom, when and in the agreed format

Share results – allow other people to see how their data has been incorporated into the final reports so they can appreciate the significance of their contribution

Ownership – define who owns what part of the process (their level of responsibility) and who owns the spreadsheet

Reports – ensure that the end users clearly define what they require at the start. 10 versions of a spreadsheet before they get what they wanted means they did not know what they wanted or did not communicate clearly

Conclusion

Excel is well known, robust, versatile and understood. For cash flow forecasting 4 or 5 secure “master” spreadsheets can allow for most situations – daily cash flow recording, future cash flow forecasting, agreed budget, capital expenditure plans, funding commitments. These have to be well protected and isolated on the hard drive. Everything is a trade off – nothing will give you 100 per cent accuracy. However, if you can relatively simply design the required spreadsheets then data is always up to date and available when needed. This covers the 80 per cent of the time maxim– the other 20 per cent you will have to work harder to achieve. Excel is not going away – every new versions even more functionality that allows us to achieve the required level of input more easily whilst ensuring that the output can be better analysed and interpreted.

 

Lionel Pavey

 

Lionel Pavey

Cash Management and Treasury Specialist