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The treasurer and data
| 13-12-2016 | Lionel Pavey |
This analysis has to be performed with various internal data management sources, together with external data such as foreign exchange and interest rates. Originally this was done with rather large static data like annual budgets, but nowadays there appears to be a change in sentiment towards more proactive rolling forecasts.
The treasurer has a multitude of tasks including cash flow forecasting, hedging of foreign exchange and interest rates, investing excess funds, acquiring funding, advising on liquidity and financial risks, maintaining relationships with financial institutions. To be able to do all this requires a good continuous flow of internal data, together with an understanding of data analysis.
Treasurers need to be more proactive and interact and understand the requirements of all departments and divisions within the company. They need to be able to zoom in and out between the macro and micro levels and gain a better understanding of the business fundamentals through the whole scope from procurement to sales.
The 5 biggest challenges
So, just a few extra activities on top of the normal roles of forecasting, negotiating, risk management, and people management.
It is clear that the duties of a treasurer are many and that the job is a very special one requiring both proactive and reactive skills. For all of this to work, companies have to get all relevant staff to think the same way and understand the importance of continuous, timely and accurate data. Good structured data analysis can transform a company’s understanding of its business and provide important insight into its workings. This can lead to better knowledge of customers’ requirements, working capital flows, comparing internal data to industry or sector trends, changes to strategic thinking etc.
There are 2 sorts of data scientists: First those who can extrapolate from incomplete data….
Lionel Pavey
Cash Management and Treasury Specialist – Flex Treasurer
Bank Relation Management
| 12-12-2016 | Maarten Verheul |
There is a lot to say about bank relation management. And there are a lot of things in a bank relation that could be better. Send every information to the bank in time and do not wait until the bank asks for the information that is needed. Do not make them nervous.
Simple, do not sent your annual report to the bank, but make an appointment and speak about it. Do not wait for a reminder of the bank if you have something you have to deliver every month like inventory statement or accounts receivable statement, but communicate if you are late and when you expect to do it.
There is a lot to do nowadays. For example the ratios you have to report quarterly – do not come in default with this. Sent the ratios in time and do not wait until the bank asks for the ratios. Do not make them nervous.
Bad communication most of the time is also the cause that a company goes from normal management to special management of the bank. Not only the financial reports are the cause of going to special management of the bank. Three months ago I met a retailer whose business was transferred from normal department to special department of the bank because of bad communication. He waited until the bank asked for the annual report. Be proactive towards the bank, that is good for the relation. My advice: ‘Give your annual report to the bank when it is ready.’ Two weeks ago he told me that his shop was closed by the bank. The shop owner had his annual report ready in January, but waited till the bank asked for it in September – with all the consequences.
Therefore a daily cash statement and a CF Planning is important. Companies that do not do that, sometimes do not know that they are running out of cash and they sent more payment transactions (in value) to the bank, than the bank can execute. The bank notices that of course. That is bad for your bank relation and before you know you are in the special management department of the bank. So cash management is a part of your bank relation management.
Make a payment statement every week, that indicates what you are going to pay. Make a note when you made a payment promise. The best is to give Accounts Payable a budget every week and let them make the payment statement. This will help you to have a payment batch with a value that is not higher than the value of cash.
A lot of companies pay too much interest on their loans. Good Bank Relation can help you to lower the interest rate. Small companies pay sometimes 300 points above 3 months Euribor rate and bigger companies pay only 60 points above 3 months Euribor rate. That is 2,4% more interest. There are always things to discuss with your bank that can decrease your rate. For example, you did a sale lease back of your real estate and because of that the equity of your company improved a lot. That is certainly a reason to decrease your rate. Another reason can be your annual report and sometimes a long term good relation can be a reason. But most of the time this is how it works with a bank: when you do not ask you do not get anything.
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Rentederivaten in de ban… of toch niet?!
| 9-12-2016 | Rob Bekker |
Wij hebben onze expert Rob Bekker gevraagd om kort in te gaan op de ontwikkelingen rond rentederivaten:
Al enige jaren lijken rentederivaten volledig in de ban gedaan, wellicht mede door de veelal negatieve aandacht in de media. Daarnaast gaven de ontwikkelingen op geld- en kapitaalmarkt niet direct aanleiding om in te dekken tegen stijgende rentes (vanuit leningperspectief bekeken dan). Nu het er (opnieuw) op lijkt dat de rentebodem is bereikt, is het toch zinvol om concreet na te denken over de renteafdekkingsstrategie die men binnen een onderneming wil toepassen.
Staan er toekomstige investeringen op stapel die financiering behoeven, dan zijn er prima renteproducten te hanteren om binnen het risicoprofiel (én strategie) van een onderneming de rentelasten op flexibele wijze in toom te houden. Zorg dat u weet wat u te doen staat als de rente daadwerkelijk weer gaat oplopen. Regeren is vooruit zien.
Met de binnenkort van de Derivatencommissie te verwachten nadere uitwerking van het herstelkader zal in elk geval duidelijk worden hoe de toepassing van rentederivaten, die in het verleden op onjuiste basis of onjuiste gronden heeft plaatsgevonden, dient te worden gecorrigeerd. Daarbij zullen de banken dan een passende compensatie moeten gaan aanbieden aan haar cliënten binnen de specifieke doelgroep. Dit zal naar verwachting opnieuw veel aandacht in de media opeisen, maar hopelijk in het juiste perspectief en dus zonder rentederivaten in de ban te doen.
Rob Bekker
Associate Partner at Treasury-linQ”