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Invitation Open Evening: Fundamentals of Treasury Management | April 6 | Vrije Universiteit Amsterdam
30-03-2022 | treasuryXL | VU Amsterdam | LinkedIn |
Are you up for the next step in your career? Would you like to further develop your knowledge, skills and professional view on this fast-changing world?
The Vrije Universiteit Amsterdam invites you to join the Online Open Evening on Wednesday, 6 April 2022.
Get inspired by our program manager Robert Dekker and ask your questions during a live stream Zoom session.
Fundamentals of Treasury Management 19.00 – 20.00 hrs.
Sign up for the Online Open Evening
This is what graduates say about the course
Ahmed Fathi Ahmed – EMEA Sales Advisory Cash Management – BNP Paribas: ‘The certification Fundamentals of Treasury Management is an excellent way to build a solid background in a Treasury Management field. Indeed, it allows me to develop a very finest and an efficient toolbox with regards to International Cash Management, Supply chain and Trade Finance. That has helped me to better serve the large corporate that I manage in my company. Furthermore, I was thrilled to meet talented treasurers and professors which expanded my corporate network.’
Next course starting May 2022 More information & registration.
We are looking forward to welcoming you!
Best regards,
Herbert Rijken
Programme director
The 6 main benefits of adopting an in-house bank
30-03-2022 | treasuryXL | Nomentia | LinkedIn |
An in-house bank is a group or a legal entity that provides banking services to different business units within the organization. The in-house bank replicates the services that are typically provided by banks. The in-house bank offers solutions for payments, liquidity management and cash visibility, payments on behalf (POBO), collections on behalf (COBO), FX requests, funding, and working capital to business units.
Source
When organizations are looking for a way to improve cash flow processes, cash visibility, and reduce bank fees, the in-house bank can be a great alternative compared to working with countless banks internationally.
While the in-house bank is not an option in every country due to regulations, when it’s possible to use it, it will decrease the company’s vulnerability to regulatory changes as these could negatively impact business operations. Organizations are not only protecting themselves against regulatory changes of countries, but also against changes on the bank’s side for example when it comes to updating new payment file format standards.
What are the top 6 benefits of an in-house bank?
Among the many benefits of implementing an in-house bank, centralized control, improved liquidity management, reduced banking fees, automated bookkeeping, globally harmonized payment processes and full visibility into subsidiary balances are perhaps the most important ones that organizations can realize.
1. Centralized control
Centralized control by the group is by far the biggest benefit of adopting an in-house bank to help with topics such as global payment processes, financing, investments, corporate-wide FX risk exposures, and hedging.
An in-house bank is especially favorable for companies with large amounts of cash or when there’s a constant need to move money between subsidiaries and the group. While the group gains a bigger control, business units and subsidiaries will have their own sub-accounts within the in-house banks. The balance limits are set and reviewed centrally based on the organization’s treasury policy by the group.
The group will be able to minimize global payments that include foreign exchange or cross-border payment fees as all the transactions can be conducted centrally instead of going through local payment processing third parties. With an in-house bank, there’s clearer visibility into the overall net positions per currency to manage and it’s possible to hedge FX risk at the group level for currency protection and fewer hedging transactions.
Also, subsidiaries do not necessarily need to go to banks for loans, but instead, the loan can be funded by the organization. Lending money to the subsidiaries can be significantly cheaper than paying high-interest rates to a third party like a bank or a creditor. Centralizing the internal financing to the in-house bank provides an easy way to document the processes for compliance as well as the process becomes more simple as all the applications will go through the group.
With a centralized in-house bank, treasury will have greater control over all the treasury processes, and this could significantly improve the liquidity position of the company.
2. Improved liquidity management
Through the in-house bank, liquidity can be centrally managed and the group can decide whether external funding is required based on the cash position. With centralized reporting, the group does not only have better real-time visibility into the available cash, but decision-making becomes faster as the result of the available information. This is also beneficial for subsidiaries and business units as they will be able to receive funds a lot faster as a result of the automated cash pooling. This also ensures that there is adequate liquidity when and where it is needed instead of having excess amounts of cash on the accounts of subsidiaries that do not necessarily need the money at that point.
Of course, from time to time, organizations still need external funding for investments, but then it’s also easier to qualify for funding with better terms as a group than as a stand-alone subsidiary.
3. Reduced banking costs & fewer banking partners
Getting started with an in-house bank will mean that the external banking cost will be reduced to the minimum so it’s a lot more cost-effective than using external banks globally. It’s also possible to save on bank transaction fees since the internal transactions do not need to go through external banking partners.
Centralizing the banking relationship management to group treasury can also increase negotiating power, so the enterprise can get better prices and improved services.
4. Automated reconciliation and improved month-end process activities
In-house bank users can auto-reconcile incoming payments and collections for higher efficiency. In a similar manner, inter-company cash flows can be also executed and posted. Balance reconciliation and reporting can be automated by fetching all account statements from the banks and allocating the transactions to the subsidiary’s in-house bank accounts. The rules of allocation can be set on a bank, company, or even an account level.
5. Harmonized payment processes for all internal, external, and on-behalf-of payments
Using an in-house bank can remove the need for a separate netting solution. Instead, with an in-house bank, you can create the exact same process both for internal and external payments. When the internal payments remain internal and they do not require receivable-driven netting, you gain benefits such as always up-to-date bank account statements and fully automated reconciliation of internal transactions.
Subsidiaries also benefit from the harmonized payment processes. They won’t lose value dates and the month-end closing can be automated.
Payments-on-behalf-of (POBO) minimize the reliance on external bank accounts by subsidiaries. With POBO, subsidiaries continue to process payments in the same way as before while using the debtor’s in-house bank account number.
With Collections-on-behalf-of (COBO), it’s possible to define allocation rules based on transaction details to allocate cash to in-house bank accounts. With virtual bank accounts offered by external banks, it is easy to set up an automated COBO process.
6. Full visibility on subsidiary balances
Without a centralized control that an in-house bank offers, the group treasury has often had the challenge of the lack of visibility into the cash balances of the subsidiaries. With an in-house bank, it’s possible to manage multiple cash pools to gain full visibility on subsidiary balances.
It is more beneficial to pool all cash and credit balances instead of having cash lying idle on the accounts of the subsidiaries. Business units may run net credit or debit balances in the subaccounts and either earn or pay interest on the net debit/credit balances.
When the group needs to borrow money to the business units, they can set their own interest rates that can even vary based on the subsidiary’s size and profile.
Should you implement an in-house bank?
There’s no simple answer to this question. It should be a strategic decision and should be aligned with your organization’s roadmap.
To identify whether the in-house bank is the right solution for you, carefully evaluate your current processes: what is working and what could be improved? Could some of the above-mentioned benefits make your operations more profitable by controlling the organization’s cash centrally?
Of course, you may already have a good solution for example for liquidity or bank fee management, but if you have business units and subsidiaries globally and you are going to invest heavily in development, you deal with local taxation, transfer pricing, you may want to consider the option of implementing an in-house bank in the near future.
Before you make a decision, you should also be aware of the regulations of all the countries you are operating in, whether POBO & COBO are allowed in those countries, and what paperwork you need to move forward with an in-house bank.
Implementing an in-house bank is a significant undertaking as it will require buy-in from many departments, however, in the long-term, you will be able to build better processes, improve visibility, and save money.
Robotic Process Automation – the Do’s & Don’ts
29-03-2022 | Philip Costa Hibberd | treasuryXL | LinkedIn |
What are 3 key do’s and don’ts to keep in mind in your RPA journey? Find out in this article I wrote, which was originally published in the Summer Edition of the Zanders Magazine.
This article was originally published in the Summer Edition of the Zanders Magazine. Are you interested in knowing more about Process Automation in the realms of Finance, Treasury and Risk Management? Feel free to reach out to me on LinkedIn.
Original Source
Last year’s spring, we organized a ‘jargon-free’ breakfast session to explore what robotic process automation (RPA) is all about. We had a look under the hood of a complex, hard-working robot and shared experiences on how to make the journey of deploying a digital workforce as smooth as possible. Find a brief summary below, covering (briefly) what RPA is about, what are the 3 main stages of the RPA journey, and what are the key do’s and don’ts per each stage.
RPA
RPA stands for Robotic Process Automation and is software that performs rule-based work, interacting with systems, websites and applications in the same way a human would. It is a powerful tool that, when applied to the complex industries we work in, allows us to focus more on the valuable activities that make our jobs interesting and less on the boring and repetitive tasks that no one wants to do. You can think of it as macros on steroids.
3 Stages of the RPA Journey
You can find the key takeaways from the Breakfast Session, in the form of do’s and don’ts, summarized below for each of the following 3 stages of the RPA journey:
The 3 Do’s and the 3 Don’ts
Proof-of-concept
✔Do: Have fun!
Did you enjoy playing with Lego when you were a child? Then you will probably enjoy tinkering with RPA. Just like with Lego, spend some time discovering all the different components that you have available and finding out all the different ways you can get them together to craft something useful and tailor-made to your needs. Did you like playing with Barbies better than Lego? That’s also great, don’t worry. Deploying RPA in your team will give you plenty of opportunities to put your role-playing experience to use. Understanding roles, responsibilities, objectives and requirements of a process and effectively communicating the benefit of automating via RPA are the pillars of a successful implementation.
❌ Don’t: Don’t forget to explore slightly more advanced components, such as queues, credential management tools, log management tools, robot orchestration and control rooms.
You don’t want to have to bulldoze and rebuild your shiny proof-of-concept automation in a later stage, just because you weren’t aware of these components. They will become critical once you have more than a few processes at hand.
To stay in the Lego metaphor: make sure to explore the features of the full Lego range and don’t just idle on the baby-friendly Lego Duplo.
Early Implementation
✔Do: Make sure processes and solutions are well documented.
I get it. You want to start building your bot as soon as possible. But make sure to first invest some time in drafting the following documents:
• A Process Design Document to capture at the very least the As-is process flow
• A Solution Design Document to capture how you intend to automate the process
You will be happy to have the former if (when?) you start having discussions on the scope of the work that the bot is expected to perform. It can prevent misunderstanding about what the process is all about and what the bot can do. You will be happy to have the latter if (when?) you have to do some maintenance on the bot that you are now developing. This blueprint will help you to quickly zoom in on the component that you need to tweak.
Good documentation will become even more important as your team grows. Imagine how much karma you will earn when someone in urgent need of fixing the bot finds and reads your clear blueprint!
❌ Don’t: Don’t automate sub-optimal processes.
Get everyone familiar with the concept of GIGO – Garbage In Garbage Out – and its less polite brother SISO. A bad manual process will become a terrible automated process, because robots can only act based on predefined rules. The rules can be as complex as you like but there can’t be any room for discretionary judgment. The untiring robots lack that.
Make it clear that a process needs to be streamlined and standardized before it can be a candidate for automation. If it’s not, someone will have to cross the jungle of “It has always been done this way”, which usually stands between a ‘Garbage Process’ and a ‘Good Process’. Who knows, it might turn out that many tasks and subtasks in the process weren’t needed after all.
Growth
✔Do: Set up a clear RPA Governance.
Once you hit the stage of growth, where your team is rolling out one bot after another, clearly defining the process of automating processes becomes even more important than clearly defining the process that you are automating.
Does the RPA team sit in IT or with the business? Who is responsible for what, in case of a malfunction? How are Audit, Compliance and Risk Management going to adjust policies to include the changes brought in by your new digital workforce?
❌ Don’t: Don’t forget Security.
While designing your RPA Governance framework, don’t forget the more practical side of Security.
You wouldn’t want to allow anyone the temptation of circumventing the four-eyes principle you already have in place. For example, you must make sure it is still impossible for anyone to input a payment to themselves and have it released by the unaware robot accomplice.
Define as soon as possible how you are going to create, assign and manage the credentials that your bots will need to interact with your existing IT infrastructure. Particularly in the case of unattended bots, it would be best to create specific users for your digital colleagues, with clearly distinguishable usernames. You might even consider going as far as letting your robot change all its passwords to ones of its secret liking as soon as it gets in production.
Philip Costa Hibberd
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