BCR Publishing
We are the leading provider of news, market intelligence, events and training for the global receivables finance industry.
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.
Corporate governance – it is all about the rules
| 08-03-2018 | treasuryXL |
Corporate governance helps to define the strategies of a company, and highlight how these strategies will be implemented throughout the policies, procedures and working processes. Normally, Treasury statutes are drawn up by treasury and management – detailing the accepted methodology to perform the approved tasks – whilst responsibility and approval is granted by the directors. Once agreed upon, the statutes have to be observed by staff carrying out their duties and responsibilities.
As the treasury function is highly complex – both in financial products as well as regulatory frameworks – both directors and management need to fully comprehend the functionality as well as the implications of different financial products and services. The onus lies on the treasury department to ensure that other stakeholders not only have enough knowledge about the products, but also awareness and understanding of the relevant risks. This is vital to ensure that the right decisions are made at the highest strategic level.
Directors and management need to understand:
Operational controls to protect the business from fraud
Risks inherent in approved financial instruments
Strategies used to identify and mitigate financial risk
How risk is measured and reported
Potential exposure as a result of the agreed policy
Acceptance that not all risks can be qualified and quantified
The influence of external factors – market risk, counterparty risk, interest rate risk etc.
Proactive role of the Treasury
Quick recording of all transactions
Ensuring with controllers that all financial products are correctly input for accounting purposes
Implementation and management of agreed Treasury policies
Determining if bank covenants are being maintained
Ensure compliance with all external regulatory frameworks
Collaborating with auditors – both internal and external
Policy is influenced by strategy and objectives. The role of Treasury is to help to fulfil those objectives. Treasury has a dual function – it both mitigates risk as well as being the source of risk. Treasury enters into financial transactions on behalf of the business in order to mitigate risks; however, something like an unauthorised trade could subject the business to financial loss.
It is essential that directors and management understand both the risks that treasury manage, together with the potential risks that those transactions can create.
From dull numbers to smart data: A new era of cash visibility is dawning
| 06-03-2018 | TIPCO | Sponsored content |
For the last decade or so, many treasury departments have focused on getting their hands on the data required for establishing daily, or at least weekly, visibility of group-wide cash. Countless projects have revolved around collecting electronic bank balance data – think MT940 and others – and considerable time and resources have been invested in automating and speeding-up data retrieval from TMS, ERP, trading platforms and other source systems.
After all, besides bank balances, data on bank and IC loans and deposits, intercompany clearing accounts and other financial positions needed to be incorporated as well to allow for a realistic assessment of the group’s financial status and available headroom. However, reporting based on these data has remained a painful exercise for most treasury teams as it typically involved exporting information from various, isolated data silos to numerous spreadsheets containing a plethora of handcrafted reports. The result: the number of hours spent on consolidating data, updating reports and correcting errors often reached double-digits, on a weekly basis.
The first step: compiling information
In recent years, the provision of relevant data has become much more automated and common place since the goal of having electronic account statements of all bank accounts world-wide centrally available was high on the priority list of many corporates. Very often, this was part of a larger effort to streamline and centralise cash management and payments. In many cases, a TMS was introduced to replace Excel spreadsheets and the treasury modules of popular ERP suites started to offer more sophisticated features, providing corporates with a preference for all-in-one solutions with a viable alternative to a standalone TMS. A mix of tried-and-tested, file-based connectors and more sophisticated web-services allowed for even speedier data interchange between source systems such as TMS, ERP or trading platforms. And any data not centrally available to the treasury department was collected from subsidiaries – facilitated in the best case by easy-to-use, web-based applications. With this kind of information basis established, dedicated treasury reporting solutions were leveraged to achieve close to 100% visibility of cash. At the same time, the rise in business intelligence software allowed end users to easily retrieve data without having to resort to spreadsheets and accessing reports online or even via smart devices became the norm rather than the exception.
The next step: Turning information into insight
For many corporates, these steps were already a big leap forward. But what next, now that all the integration challenges have been mastered and information is readily available? Of course, the ‘data puddles’ turned ‘data pools’ mentioned above can be used for plain and simple financial status reporting. But, given that it is 2018 and self-driving cars will soon hit the road in California: should that really be it? For us, the answer is a clear ‘no’. Today, treasurers have access to a whole new range of applications which make use of information that is now more readily available than ever, and which leverage recent advances in technology such as artificial intelligence to provide value-added services to treasury depart-ments. While we are very careful when talking about ‘revolutions’ in treasury, the advances we want to highlight below surely are a noteworthy evolution. Until recently, data analysis in treasury was still very much a manual task. This no longer needs to be the case as smart tools greatly reduce the time needed for performing even in-depth data analyses, thus allowing more time to be spent on acting on the results of such analyses. Let us take you on a quick ‘tour d’horizon’ using five examples of how smart applications can take your cash visibility to the next level:
1. Policy checks
In a typical treasury policy, one finds numerous rules and regulations relating to the opening of new bank accounts, the maximum allowed number of these accounts, acceptable account purposes, etc. Why not replace email-based processes for new bank account requests with intelligent workflows that not only ensure an end-to-end audit trail, but which also ensure that new bank accounts are automatically fed into all relevant systems such as ERPs, TMS or reporting tools once finally approved.
2. Compliance controls
Combined with smart request workflows as described above, regular, system-supported compliance checks further enhance group treasury’s grip on what is going on around the group. Whether these checks relate to the number, currency or counterparty of bank accounts or other financial positions, or the timeliness of data on authorised signatories in the system, outliers can easily be identified, and compliance can be swiftly restored.
3. Fraud detection
When electronic account statements are merely used as a means of importing end-of-day balances, much of their potential is lost. Based on smart search patterns, data provided as part of the remittance information can be used for valuable insights: Where in the group do frequent cash-based transactions occur? Banks’ business transaction codes (BTCs) or other related text snippets can point you in the right direction and responsible, local or regional finance staff can be notified automatically, using workflow-based notification processes so the background and soundness of such cash movements can be checked.
4. Performance KPIs
KPIs as a means of systematically measuring treasury performance are high on the agenda of many of the more advanced treasury departments out there. Whether they relate to the efficiency of core treasury processes (think request and approval workflows once again) or to other indicators such as the overall number of bank accounts, the percentage of accounts included in cash pooling arrangements, the share of trapped cash in overall cash – to name only a few basic KPIs: a well-compiled set of such figures that covers not only cash management but other areas as well – presented in the form of a clearly laid out KPI dashboard, finally provides the treasurer with a strategic steering wheel.
5. Bank fee controlling
You wonder what bank fee controlling has to do with cash visibility. The short answer: everything. Regular, system-supported bank fee analysis is not only about penny pinching but equally about developing an in-depth understanding of what is going on further up the process chain. A strikingly high number of fax payments in a country where you wouldn’t expect them? Fees titled ‘Others’ which amount to thousands of euros every month? If nowhere else, then you’ll find this information in the electronic fee statements (e.g. camt.086) provided by your bank. A smart analysis tool allows you to interactively drill down from cruising altitude to the line item level and within minutes you can reach out to either your bank’s customer service, your subsidiary or both to clarify what’s going on.
If you would like to know more and find out how technology can help you go one step beyond cash visibility and ease your daily life as a treasurer, get in touch with us. We are looking forward to helping you unleash your data’s full potential.
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Italian general elections – the end of la dolce vita?
| 05-03-2018 | treasuryXL |
The main issues appear to be the economy and immigration. The arrival of more than half a million immigrants since 2013 has upset many Italians and led to politicians increasing their rhetoric on the subject. Mr. Berlusconi has concluded that immigration is a social time bomb and has advocated a policy of mass deportation. His comments are shared by many other political parties – though not all. Electoral manifestos have included such populist tracts as increasing the minimum wage and tax allowances, reduction in income and corporate tax, increase spending on public welfare and, ambitiously and without detail, a reduction in sovereign debt by 40 percentage points in relation to GDP within the next 10 years.
Italian economy
Italy has seen a faltering economy over the last 10 years. Their annual GDP growth rate has rarely exceeded 2% per year in that time. Industrial output is still 5% lower than before the crisis. This is in stark contrast to their peers in Europe who have mainly all recovered and now have industrial output higher than before the crisis. Reforms have seen more than 1 million jobs created since 2014, but more than 60% of these are part-time jobs. Unemployment has fallen but the rate of unemployment is still over 11%. One third of Italians aged between 25 and 29 remain unemployed.
Sovereign debt has increased over the last 10 years. Outstanding debt now exceeds EU 2.2 trillion and the ratio of debt to GDP is over 130%. The banking sector is also affected. More than 15% of all loans to businesses and consumers are now recognised as non-performing loans. Additionally, at the end of 2017, Italian outstanding debt arising from Target2 balances was approaching EUR 440 billion.
So, Italy has the 2nd largest debt to GDP ratio in the EU, largest ratio of bad debts at commercial banks and the largest outstanding negative balance at Target2. The only sensible way to prevent the levels of debt from becoming unsustainable would be for the Italian economy to grow faster that their historical average – a well-meaning definition, but one that looks very remote in the present economic and political climate.
Italian politicians have increased their anti-EU rhetoric recently, stating that the current situation cannot continue – both economically and in relation to the number of immigrants. How they think the EU will change at a time that they are facing more internal pressure from dissatisfied member states is a mystery.
First results should arrive around lunchtime on Monday 5th March 2018 – only then will we know what the future holds for Italy, the EU and the Euro.
The image of Italy, for some, is of La Dolce Vita as seen in the famous film of 1960 by Federico Fellini. The vision of Anita Ekberg in the Trevi fountain – once seen, never forgotten.
But the moral of the story was the unsuccessful pursuit of love and happiness.