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Working with industry leading organisations, experts, governments and universities, BCR Publications delivers expertise in factoring, receivables and supply chain finance to a global audience.
BCR has long been a beacon of innovation and excellence in the realm of receivables finance, playing an instrumental role in shaping the industry’s international landscape. Through its comprehensive conferences, insightful publications, and thought leadership, BCR has facilitated crucial dialogues and connections among industry professionals, driving forward the development of receivables finance globally.
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Is cash still king?
| 11-06-2018 | by Patrick Kunz |
All treasurers and most financials know the statement “cash is king”. I do not have to explain the meaning; it is best for a company to have cash above any other forms of (accounting) income. Not talking about the problems of not having any cash. Having cash makes a company stronger and opens possibilities to use this cash (dividends, M&A) and cash is also needed to pay the bills.
However, since several years we are living in a world where interest rates are negative. So it costs money to own cash. It is suddenly costly to be a bigger king. This has some implications for companies and treasuries.
Active cash management
Because it is expensive to have and hold cash it is important for treasurers to know where all the cash is and what the position is. Only holding the cash and doing nothing means that the cash balance will decrease because of negative interest. It therefore makes sense to look into options to reduce the cash level. This does not necessarily mean spending the money!
Several options include:
Of course above options are examples and depend on the specific company. Most important aspect in doing above actions are the cash flow forecast. The actions you are taking now have an impact on your future cash position so if some actions are good for now they should also be beneficial in the future situation. Simulations and forecasting software can help with this. For example a simulation on your credit lines, changing interest rates and changing payment terms can be very interesting.
Floors and term
If you are with your bank for a long time there is probably nothing agreed about negative interest rates on your cash as this was not foreseen by banks 10 years ago. This gives you an opportunity to negotiate with the bank on your term for having cash. Some possibilities I have seen with my clients:
Invest
Another option to reduce the interest charge on your cash is to invest the money. This is a sensible topic as most treasurers are risk averse. The more return is expected the higher the risk associated to the investment. Cash at a bank is considered fairly safe (given the cash is divided over several banks with a good credit rating and depending on the amounts). Furthermore the liquidity of the investment is important. Cash is readily available. If you invest the money it first has to exchanged or transferred to cash which can take time or can have an impact on the return. Most treasurers are prudent on investments and/or internal rules do not allow these.
Cash is still king
Overall looking at above cash is still king. For every company it is better to have cash then to be short on cash. However, having too much cash can hurt a company too as the return on cash balances is very low and in most cases negative. In these times the value of a treasurer looking at the cash balances and optimizing it uses (and return) is big. So does your company not have a dedicated person looking at the (excess) cash and the optimization of the cash now and in the future (cash forecasting) then it might be the time to a assign somebody on this task. In most cases the return on this person if positive (even though the interest rate is negative).
An external treasurer or flex treasurer can be of help too.
Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV
Blockchain and Trade Finance: how it could work
| 07-06-2018 | by Vincenzo Masile | treasuryXL|
How can trade finance operate leveraging a Blockchain based infrastructure to drive efficiencies, reduce cost base and open up new revenue opportunities?
It is vital that the international trade flow is smooth and transparent but this is not always the case for the below reasons:
Current Isues
Blockchain can help as follows:
Blockchain Advantages
Part of the gain from digitization lies in cutting costs: transactional and overheads. Digitization should also free the flow of finance to firms starved of it, partly by helping banks’ compliance with anti-money-laundering rules.
Vincenzo Masile
Treasury Expert/Credit Risk Manager
New style post executive education in Treasury management & Corporate Finance at the Vrije Universiteit Amsterdam
| 06-06-2018 | by Herbert Rijken |
For more than 20 years the Vrije Universiteit Amsterdam is running a postgraduate executive program in Treasury Management. The educational design of this program is unique in treasury management education. It aims to stimulate development as an academic professional. It mixes useful academic knowledge for practitioners with hands on knowledge useful in daily practice of treasury professionals. To make this happen the program is at an academic master level and much time spent in interactive sessions with various academic and professional experts in the field of treasury management and corporate finance.
The curriculum has recently been modified for a better fit with young finance professionals willing to boost their career with high Master level post graduate executive education.
1) The curriculum has been re-organized in 6 clear defined modules which all can be completed in 1.5 years.
2) The scope of the curriculum has been broadened by a more clear focus on Corporate Finance in 2 modules, so the name of the program has become Treasury Management & Corporate Finance.
3)In September 2018 this program will be given entirely in English to connect to the increasingly larger community of non-Dutch speaking finance professionals in The Netherlands. But also, English is becoming more common in the treasury business.
4) The curriculum has been designed in such a way exemptions apply to applicants with Dutch RA and RC qualifications.
After finishing the program you will receive the certificate of a Registered Treasurer which is well recognized in the treasury community. Partners of the program are KPMG, Orchard Finance, PwC and Zanders Treasury & Finance Solutions. Senior affiliates lecture in the program. The program is also strategic partner of the Dutch Association of Corporate Treasurers and TreasuryXL.
For more information see our website:
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