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What corporate treasury can learn from corporate insurance
15-06-2018 | Treasurer Search | TreasuryXL |
One of the many benefits of being a recruiter is that every meeting is a lecture of an expert about his professional life and developments. An excellent way to learn and keep up-to-date. Every second week I try to transfer this knowledge to my colleagues in Team Treasurer Search and the risk topic often gets attention. I also want to share my observations about insurance and treasury with you.
First, perhaps a bit cynical, why is corporate insurance reporting to the group treasurer more often? The importance and professional level of insurance is increasing, this is also acknowledged by CFOs. To prevent their span of control becoming too big, they delegate the profession to legal, procurement and recently often to treasury. Many treasurers are not motivated by insurance tasks and ignore the overlap that exists. Traditionally the risk types “market risk” and “liquidity risk” create primary tasks for treasury departments that often motivate the candidates I meet. Recently counterparty or credit risk gets a bigger role, not only with financial services companies. My recent conversations with corporate insurance managers brought me new insights in how risk can be analysed and managed.
In previous blogs I wrote that “new school treasurers” distinguish themselves by better connecting with their business partners and provide understandable solutions that make sales, operations and finance happy. Insurance managers were already forced to talk with the business their whole life. If an insurance manager does not understand what his business partners do, he will not be able to make a proper assessment of the risk. And that does include all types of risk: staff getting sick, goods not being supplied, tornados, computer viruses, politicians starting embargos, etcetera. They are closer to enterprise risk managers than treasurers are. By now there are practical and scientific strategies to mitigate various risk types. Insurance managers know.
In my perception treasurers can learn from insurance how to connect to business partners and help them finding solutions for complex and diverse problems. Do you think me setting them on a pedestal is right or am I too positive?
If you want to find out more about Treasurer Search and their services visit their company profile on treasuryXL.
Geld ontvangen uit het buitenland: wat zijn de kosten voor een webwinkel?
| 13-06-2018 | by Pieter de Kiewit |
Dat leek me een relevante vraag in de opbouw van een nieuwe e-commerce activiteit. Wat betaal ik, wat betaalt mijn klant? Een tamelijk frustrerende exercitie waarover onderstaand meer.
Als leek heb ik geleerd dat in de wereld van webwinkels er vele softwares worden gebruikt. Gelukkig is er al veel gestandaardiseerd en zijn interfaces in grote hoeveelheden aanwezig. Websites, voorraden, bestellingen, klantbestanden en ook boekhouden en betaalsystemen worden modulair aan elkaar gekoppeld voor verrassend lage prijzen.
Partijen als Adyen en Mollie, ook wel PSPs (payment service provider) genoemd, leveren plug & play oplossingen die het mogelijk maken dat je klanten kunnen betalen via kanalen die jij kiest. Hierbij kan je denken aan credit card, ideal, paypal en vele anderen. Internationaal is er een lappendeken aan kanalen ontstaan die voor een individuele ondernemer niet te managen is. Dus je geeft je eigen rekeningnummer aan de PSP, zij leveren software die je in je website integreert en het geld van je klanten stroomt naar jouw rekening.
De verdienmodellen van PSPs bestaan uit variaties in maandelijkse abonnementen en betaling per transactie. Redelijk transparant. Nu weten de meesten van ons dat je credit card gebruiken geld kost. Minder van ons weten dat ook degene die geld int via de credit card, bijvoorbeeld een winkelier, ook substantieel afdraagt aan de credit card company. Als privé persoon zijn we in Nederland niet gewend dat we moeten betalen voor geld overmaken, zakelijke bankklanten doen dat wel. Verder is het zo dat valuta omzetten geld kost. Vaak wordt een service fee in rekening gebracht, daarnaast is de aankoopkoers anders dan de verkoopkoers: als je naar de bank gaat en €100 omzet naar $ en het op dezelfde dag terug wisselt, hou je veel minder dan €100 over. Zelfs als er geen service fee is.
Met deze kennis klopte ik als MKB-er aan bij diverse PSPs en legde hen de volgende vraag voor: “als mijn product €500 kost en een klant koopt het in de US met $ via credit card, wie verdient er dan hoeveel aan?” en “zal ik in dit scenario minder dan €500 krijgen of zal de desbetreffende klant omgerekend een opslag moeten betalen?”. Geen van de aangeschreven PSPs kon of wilde me beantwoorden.
Ik heb besloten in de opstartfase niet door te vragen, ook omdat de uitwisselbaarheid van PSPs gemakkelijk is en mijn verkoopvolume in deze fase laag zal zijn. Voor hen die, net als ik, e-commerce ambities of al succes hebben, lijken me dit relevante vragen. Hou er rekening mee en ik benieuwd naar ervaringen en expertise. Bij voortschrijdend inzicht meld ik me weer.
Pieter de Kiewit
Owner Treasurer Search
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