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TIS – the single source of truth
| 29-03-2018 | treasuryXL | TIS Treasury Intelligence Solutions |
Why?
In today’s world, companies can find themselves with a physical presence in a multitude of countries and locations. In the current environment, a corporate treasury would need to log on to the website of every unique bank where they hold accounts and extract the bank statements for the previous day. Using separate bank tokens and log in protocols, this process can quite easily take up to 1 hour. Furthermore, all the separate data needs to be collated and then uploaded into 1 system, Various subsets of the information need to be given to different internal departments so that they can perform their daily tasks – reconciliation, data input and verification.
The reality
In the modern age, you could find yourself as a Treasurer, within a large complex organisation, consisting of a head office, subsidiaries, legal entities and shared service centres. The underlying platforms can consist of book keeping systems, ERP, HR and different databases. Additional data flows come from e-banking systems, TMS and stand alone projects. The output from all these systems are then used to connect to the banks. Furthermore, all these layers of connectivity can be subject to fraud or attack from outside sources.
TIS provides a single point of contact via a SaaS (Software as a Service) platform that connects to all these systems, thereby offering a simple and effective control over the data flows in real time.
Advantages
After this we were informed about how the system works in the real world. Bas Coolen is the global head of treasury at Archroma – a colour and speciality chemicals company based in Switzerland. They have a physical presence in over 35 countries and 3,000 employees. Formed 5 years ago, they wanted a minimal IT solution to their legacy banking operations. These operations stretch from Asia, via Europe to the Americas and involved many different banks. They concluded that no single bank could provide the service they required within every country and that they needed a solution. By adopting the platform offered by TIS, they have been able to implement a global system that encompasses all their bank accounts – this provides them with a single source of truth. Importantly, the security aspects can now be maintained from one source – all the relevant authorisation matrices are now contained in one platform, along with the capability to perform all global e-banking operations from one location.
TIS were joined at this seminar by Cashforce, who presented their Smart Cash Forecasting and Treasury system – that will be the topic of our next blog.
treasuryXL would like to thank TIS for allowing us to participate in this seminar. If you have any questions, please feel free to contact us.
Rainy day funds and moral hazards
| 28-03-2018 | treasuryXL |
Closer Integration
To achieve this target, it would require at least the following steps:
Her speech closely echoes that of her fellow countryman – President Macron. However, whilst receiving support from Mrs. Merkel when making his remarks, he also met with objections from other member states. Countries such as the Netherlands and Sweden voiced their objection to what they perceived as “far reaching” policies, whilst ignoring the fundamental problems and issues within the Eurozone. Their concerns are centred around the public perception of the Eurozone – there has been a growing tide of populist sentiment expressed at recent general elections, together with the continued fallout from the financial and sovereign debt crises that has impacted on the economic well being of the citizens.
Implementation of this policy – according to the IMF – would entail an annual contribution of about 0.30-0.35% of GDP per member state into a common fund. This fund would then pay out in the event of an economic downturn. Given the aforementioned level of disenchantment among citizens, it would not be easy to implement this policy within every member state. Furthermore, whilst pay outs would be conditional on member states meeting certain criteria, the Eurozone has shown in the past that their criteria has been ignored and no sanctions were enforced.
This common fund, whilst being ring fenced, could have an impact on the functioning of financial markets. Just knowing that there is a fund that needs to earn a return could led to distortions in money markets. Also, who decides when a member state can draw down from the fund – the EU, the ECB, majority decision of member states?
And then there is the potential problem of moral hazard. A country could pursue policies that are imprudent, safe in the knowledge that there was a communal fund to save them. Given the record of certain member states since even before the inception of the Euro to deceive, this is not a matter to be taken lightly. Even when countries have be found to have cheated they have always received the help that they need, regardless of all the stated criteria that are in place. Countries that are performing well will have to pay proportionally more into the fund than countries whose economies are not doing so well.
10 years since the start of the crisis and almost 20 years since the introduction of the Euro, we are no closer to a collective harmony than before.
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Peer to peer lending – just a fad or a change in the market?
| 27-03-2018 | treasuryXL |
Almost 2 years ago we reported that KNAB Bank had started a crowdfunding initiative to allow, mainly companies, to access an alternative area to fund their businesses, whilst at the same time allowing investors to directly participate in these loans and lend directly – via KNAB – to the borrowers. An extra incentive was that KNAB would directly participate in all loans – their role was not only as an intermediary and facilitator. Now is a good time to look back on their progress and refresh ourselves with the concept of peer to peer lending (P2P).
What is it?
It is an online service that matches the needs of the borrowers with that of the lenders. As the service is only related to lending and does not encompass traditional banking roles, the service providers are able to provide these services cheaper and more quickly than a traditional bank loan. The P2P service provider takes a fee – a margin on the interest rate and/or an annual service charge. In recompense, they enable the matching service to take place, administer the loan and ensure that the investors receive their money back – in the form of capital repayments and interest.
What are the features of the system?
What role does the intermediary play?
What are the advantages?
As the service is an online matching service, it is fast, simple and cost efficient, This leads to lower interest costs for the borrower and allows investors to directly access the loan market and earn a higher return on their money than traditionally obtained at the bank. Also, the administrative processing time can be a lot quicker than by a bank. The system also can appeal to the ethics of a lender – they have the opportunity to directly help a company that is looking to expand or who require finance for major investment. Furthermore, an investor knows exactly who is borrowing their money – depositing money at a bank does not detail how that money is used by the bank. There has been a political and ethical backlash to banks over the last decade in response to the perceived domination they have within the market. As a lender, it is possible to get yields of between 5% and 9% on your investment. This will be lowered by the costs that the intermediary levy – KNAB take a service charge of 0.85% per annum on the outstanding balance.
What are the disadvantages?
As a lender your money is not guaranteed. You bear all the risks and, in the worst case, could lose your investment. Despite all the due diligence that has taken place before the loan request was placed on the platform, it is still necessary to perform your own checks on the potential borrower – your criteria may be different to that used by the platform. You cannot demand early repayment from the borrower – money that you invest must be money that you can miss for the duration of the loan.
How is KNAB doing with their P2P?
Conclusion
For investors looking for an alternative investment with a longer duration, P2P can appear interesting. The risks are greater than depositing money at the bank, but the potential rewards far exceed the returns offered by banks. Additionally, for investors looking to approach the market more ethically, it does give the possibility of directly participating in someone else’s ambitions – knowing that your participation is having an effect on society. There are considerable risks, but these must be weighed up against the potential reward. Any investor needs to work out how much they can afford to lose on their principal investment against the higher return being offered.
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