An Interview with Benjamin Defays, Board Member of Treasury Masterminds

Q: Let us know you, Benjamin. Tell us a little bit about your journey into treasury. How did it all begin for you?


I landed in Treasury by chance about 12 years ago, and it quickly became my passion. I started my journey with a CAC40 company, then switched to the largest private company in the US, and now I’m with the world’s largest alternative asset manager. This gave me the opportunity to take part in 3 TMS implementations, plus one for a trade finance platform.

And also FX risk, liquidity management, and solution implementation with various cash pooling structures, trade finance activities, and credit and collection management. I was also in charge of automation activities such as RPA and various workflow tools to help monitor activities and measure performance, with managerial roles at different levels. I have been a board member of the Association of Corporate Treasurers of Luxembourg (ATEL) for several years, in charge of education and the sustainability of the Treasury function. I teach and co-founded various Treasury Management training programs.

Q: What specific skills do you believe are essential for success in treasury management, and how have you developed and utilized these skills throughout your career?

In the evolution of treasury management, there has been a transformative shift from the traditional perception of treasurers as detached consultants to an integral part of strategic decision-making within organizations. Today, successful treasury management demands a multifaceted skill set that extends far beyond conventional financial acumen. At their core, treasurers function as risk managers, meticulously navigating the complexities of financial markets to safeguard the company’s assets and ensure stability in volatile environments. However, they are also indispensable strategists, adept at aligning treasury initiatives with overarching business objectives to drive growth and profitability.

Hyper-specialization is crucial in today’s dynamic landscape, where treasurers must possess an intricate understanding of various financial instruments, regulatory frameworks, and technological advancements. This expertise empowers them to optimize liquidity, manage funding efficiently, and mitigate risks effectively. Moreover, treasurers serve as trusted advisors to the CFO and the board, offering invaluable insights into financial performance and implications for strategic decision-making. They act as liaisons between different stakeholders, synthesizing complex financial data into actionable recommendations that drive informed decision-making at the highest levels.

In the modern business paradigm, treasurers are not just custodians of financial resources; they are strategic business partners, deeply entrenched in the operational intricacies of the organization. This requires a profound understanding of the business landscape and the ability to tailor treasury solutions to meet specific needs, thereby enhancing the company’s competitive edge. To excel in this evolving role, treasurers must embrace a culture of continuous learning and adaptability. The pursuit of lifelong learning is essential to staying abreast of industry trends, regulatory changes, and technological innovations. It’s not enough to rely solely on past experiences; treasurers must constantly challenge themselves to learn, unlearn, and relearn, positioning themselves as pioneers rather than conservators in the ever-evolving treasury landscape.

Furthermore, effective communication skills are paramount for treasurers to articulate complex financial concepts in a language that resonates with senior management and other stakeholders. Clear, concise communication fosters collaboration and ensures alignment across different functions, facilitating informed decision-making and driving organizational success. Lastly, while treasurers are adept at managing external risks, it’s imperative not to overlook the importance of managing internal risks, including career development and professional growth. By proactively investing in their own development, treasurers can future-proof their careers and remain indispensable assets to their organizations.

In essence, the modern treasurer embodies a blend of financial expertise, strategic vision, and adaptive leadership, playing a pivotal role in shaping the financial health and strategic direction of the organization.

Q: In your opinion, what are the most significant challenges facing Treasury departments in today’s business environment, and how do you approach addressing these challenges?

In today’s business world, Treasury departments encounter significant challenges. As highlighted by Charles Darwin’s insight: ‘It is not the strongest of species that survives, nor the most intelligent, but the one most responsive to change.’ Woodrow Wilson’s remark, ‘If you want to make enemies, try to change something,’ underscores the resistance often faced when change is introduced. The primary hurdle for Treasury departments is adapting to change effectively. We must recognize that change is inevitable and view it as an opportunity for growth. Embracing change involves thinking outside the box, avoiding routine, and seeking innovation.

Automation is key to addressing routine tasks, allowing us to focus on strategic initiatives. By adopting agile, digital solutions and streamlining processes, we can improve efficiency and resilience. Standardization, simplification, and strong internal controls are essential for ensuring financial integrity. Furthermore, treasurers must enhance their business partnerships and technology skills to meet evolving demands. This includes leveraging data analytics for insights and collaborating across departments.

As the role of treasury expands, we must adapt to new responsibilities such as managing working capital, addressing ESG considerations, and navigating emerging payment methods in B2C transactions. By embracing change, utilizing technology, and expanding our skill sets, treasurers can successfully overcome challenges and drive organizational success.

I encountered a complex challenge revolving around the management of thousands of bank guarantees annually. This activity was pivotal for our operations, as it was a prerequisite for receiving payment from customers, many of whom demanded bank guarantees. However, this process was draining our working capital and causing frustration and misunderstanding within the organization. Managing over seven credit lines with predominantly manual processes meant our Treasury team spent excessive time on low-value tasks, with little visibility for management due to the absence of key performance indicators (KPIs).

To address this, I prioritized breaking down the barriers between the Treasury and the business units. I initiated several team-building sessions, drawing insights from relevant literature, to foster mutual understanding of the intricacies and risks associated with bank guarantees. This collaborative approach significantly improved communication and efficiency. Simultaneously, we explored technological solutions to streamline operations. Implementing a trade finance platform allowed us to consolidate our credit lines into a single system, reducing costs and enhancing reporting efficiency. By leveraging Swift connectivity, we automated the issuance of bank guarantees and letters of credit, optimizing working capital and bolstering customer satisfaction.

Introducing robotic process automation (RPA) for request filling further liberated our team to focus on strategic advisory roles rather than mere execution. Additionally, we utilized PowerBI to structure data and establish KPIs, enabling us to scrutinize bank performance and demand better service. To enhance workflow management and communication, we deployed a PowerApps-based workflow tool, eliminating reliance on emails and providing real-time visibility into request statuses for the business units. Through these initiatives, we transformed our Treasury operations, driving efficiency gains, enhancing strategic focus, and fostering better collaboration across the organization.

Q: How do you stay updated on changes and developments in the field of treasury management, and how do you incorporate this knowledge into your professional practice?

I’m very much engaged in local treasury associations. As a board member of the ATEL (Luxembourg Association of Corporate Treasurers), I take care of the education and attractiveness of the function. I participate in several conferences a year in the field of treasury, network as much as possible, read magazines on treasury, read articles on LinkedIn, etc. There’s so much out there to keep me tuned and focused. For me, this is a question of professional survival. 

Q: Can you walk me through your approach to cash flow forecasting and liquidity management? How do you ensure accuracy and reliability in your forecasts?

When it comes to cash flow forecasting and liquidity management, the cornerstone of my approach lies in the synergy between technology and a deep understanding of business dynamics. Leveraging technology is pivotal; it enables seamless integration between invoicing systems and banking platforms, providing real-time insights into financial inflows and outflows. By automating processes and applying rules such as average days of sales outstanding (DSO), you ensure forecasts closely reflect the reality of the cash position.

However, while technology plays a vital role, it is complemented by in-depth knowledge of the business. Understanding the nuances of your operations allows you to refine and validate forecasts effectively. Rather than solely relying on automated outputs, you actively engage in verification, fine-tuning, and analysis to enhance the accuracy and reliability of forecasts. Furthermore, I recognize the importance of agility in forecasting. By embracing machine learning and AI algorithms, you continuously refine predictive models, adapting to evolving market conditions and internal dynamics.

It’s worth noting that technology isn’t a panacea; it’s a facilitator. The goal is to leverage technology to streamline data gathering and processing, empowering Treasury teams to focus on value-added tasks such as scenario analysis and strategic planning. The aim is to foster a culture where forecasting isn’t just a monthly exercise but an ongoing dialogue, enabling people to stay ahead of changes and make informed decisions in real-time. Ultimately, this approach blends technological innovation with a deep-rooted understanding of your business, ensuring cash flow forecasts are not only accurate but also actionable, driving informed decision-making and strategic agility.

Q: What strategies do you employ to mitigate risks associated with foreign exchange fluctuations, interest rate changes, and other market risks?

Mitigating risks associated with foreign exchange fluctuations, interest rate changes, and other market risks requires a comprehensive strategy that begins with a deep understanding of your business dynamics. Before considering external solutions or technologies, it’s crucial to align with your CFO to ascertain your firm’s risk appetite and hedging policy. Active participation in negotiations and contractual discussions with suppliers and customers is paramount. By advising business units on natural hedging strategies and advocating for measures such as price adjustment clauses or embedded provisions in pricing structures, you can mitigate FX risk at its source.

Should these measures prove insufficient, you may explore externalizing risks through traditional instruments like FX forwards and swaps. However, it’s essential to recognize the inherent costs of externalizing risks and view it as purchasing insurance against potential losses. These implicit costs need careful consideration. Furthermore, evaluating your currency exposure and frequency of transactions in different currencies can guide decisions such as establishing currency-specific bank accounts or negotiating pre-agreed margins with banks for FX operations. These proactive steps help minimize the impact of FX fluctuations on your financial position.

From a transactional standpoint, investing in a robust FX platform integrated with a Treasury Management System (TMS) such as FXAll or 360T can enhance efficiency and security. These platforms offer better rates, faster execution, and streamlined transfer management, contributing to overall operational effectiveness. By adopting a holistic approach that prioritizes understanding your business, actively managing currency exposure, and leveraging technology where appropriate, you can effectively mitigate market risks and safeguard your financial stability.

Q: How do you assess the effectiveness of a company’s treasury operations, and what metrics or key performance indicators (KPIs) do you consider most important in evaluating treasury performance?

When evaluating the effectiveness of a company’s treasury operations, several key performance indicators (KPIs) come into play, tailored to the specific focus and needs of the business. These may include:

  1. Exposure per bank: Assessing the concentration of financial exposure across different banking partners to mitigate counterparty risk.
  2. Timeliness to open/close bank accounts: measuring efficiency in managing bank account activities, reflecting agility in responding to business needs.
  3. Bank account connectivity (automated/manual): evaluating the degree of automation in bank account management processes to enhance efficiency and reduce manual errors.
  4. Bank fees: monitoring the cost of banking services and transaction fees to optimize cost-effectiveness.
  5. Error rate on Treasury payments: tracking the frequency of errors in payment processing, reflecting the accuracy and reliability of Treasury operations.
  6. Failed payments over total payments: Assessing the rate of failed payments relative to the total volume, indicative of payment processing efficiency.
  7. Manual/automated/loaded payments: Differentiating between manual, automated, and loaded payments to gauge the level of process automation and efficiency.
  8. Time to produce a report: Measuring the speed at which Treasury reports are generated, reflecting the efficiency of data management and reporting processes.
  9. Accuracy of the report: evaluating the precision and reliability of Treasury reports to ensure data integrity and decision-making.
  10. Interest earned per bank/over total cash/over total depositable cash: Assessing interest income generated from bank deposits relative to total cash holdings reflects the Treasury’s ability to optimize cash investments.
  11. Idle cash: Monitoring the proportion of cash reserves sitting idle, indicating opportunities for better cash utilization and investment.
  12. Centralized cash/total cash/total centralizable cash: Evaluating the degree of cash centralization to optimize liquidity management and funding efficiency.

By tracking these metrics, treasury teams can gain insights into operational efficiency, risk management effectiveness, and overall performance, enabling informed decision-making and continuous improvement in treasury operations.

Q: Collaboration and communication are essential in treasury roles. Can you provide examples of how you’ve effectively collaborated with other departments or external stakeholders to achieve Treasury objectives?

In my experience, treasury serves as a catalyst for transformation and often requires significant IT resources, leading to a need for seamless collaboration and communication with other departments. To foster effective collaboration, I’ve adopted an approach that prioritizes open dialogue and mutual understanding. Instead of conventional formal meetings focused on day-to-day operations or specific projects, I’ve found value in organizing half-day team-building sessions. These sessions provide a platform for team members from different departments to freely express their perspectives, share frustrations, and offer suggestions and recommendations.

By creating a space for open communication and constructive dialogue, you foster mutual understanding and empathy among team members. This, in turn, cultivates a culture of collaboration and cooperation, enabling us to work together seamlessly towards common Treasury objectives. Furthermore, this approach fosters a virtuous cycle of mutual benefit, where enhanced collaboration leads to improved efficiency, innovation, and ultimately, the achievement of Treasury goals.

Q: How do you prioritize competing demands and allocate resources within a treasury department, particularly when faced with limited budgets or staffing constraints?

When faced with competing demands and resource constraints in the treasury department, it’s imperative to exercise discernment and prioritize effectively. One key strategy is to embrace the power of ‘no.’ Not every project or request can be accommodated without risking dilution of focus and effectiveness. It’s essential to have the courage to decline requests that do not align with key priorities and would divert valuable time and resources away from tasks that add significant value. Constantly evaluating what adds the most value to the firm is crucial. Before committing resources to any demand, it’s prudent to explore alternative solutions and assess their potential impact, thereby assuming the role of a strategic business partner rather than a mere executor.

Implementing a dashboard to monitor ongoing requests, their status, and their relative priority can provide clarity and aid in effective resource allocation. This allows for informed decision-making and ensures that efforts are directed towards initiatives that align with overarching business objectives. Furthermore, fostering a culture of challenge and open communication within the team is essential. Encouraging team members to voice their opinions and question ideas promotes critical thinking and innovation, while also mitigating the fear of speaking up. By challenging assumptions and soliciting input from the team, you can make more informed decisions and optimize resource allocation in line with strategic priorities.

Q: Regulatory compliance is a critical aspect of treasury management. How do you ensure that your organization remains compliant with relevant laws and regulations governing treasury activities?

Ensuring regulatory compliance in treasury management requires a proactive and multifaceted approach. To stay abreast of relevant laws and regulations, I prioritize continuous learning and engagement with the broader Treasury community. Attending conferences, benchmarking against industry standards, networking with peers, and staying informed through articles and news updates are essential components of my strategy. Active involvement in local and international treasury associations provides valuable insights and opportunities for collaboration. By leveraging these resources, I access a wealth of information and best practices to mitigate regulatory risks and ensure the organization remains compliant with evolving legal requirements.

Q: What do you believe sets apart an exceptional Treasury team, and how do you foster a culture of excellence within your team?

An exceptional Treasury team is distinguished by its mindset. I want to strive to cultivate a culture of continuous learning, challenging the status quo, and encouraging experimentation. Central to this culture is the absence of blame; I want to advocate for an environment where team members feel empowered to make mistakes and learn from them. This fosters a sense of psychological safety, enabling individuals to take risks, propose innovative ideas, respectfully challenge their peers and superiors, and foster a spirit of collaboration.

Furthermore, I like to emphasize the importance of ongoing learning, both internally and externally. Whether through treasury-specific training programs, online courses, or onsite workshops, I want to encourage team members to invest in their professional development. Additionally, I want to recognize the value of training on topics relevant to your business, as it enhances understanding and empowers individuals to contribute more effectively

Q: Can you share an example of a successful treasury initiative or project you led or contributed to, highlighting the impact it had on the organization?

A few years ago, I spearheaded a transformative initiative to transition our single currency notional cash pooling solution to a multi-currency notional cash pool. This strategic change was implemented swiftly, enabling us to seamlessly connect more than 13 currencies across EMEA.

The impact of this initiative was profound. We experienced significant efficiencies in managing interest rates and FX risks, as well as optimizing daily cash and liquidity management processes. The benefits exceeded even my initial expectations, delivering tangible value to both the Treasury team and the organization as a whole.

Q: How do you approach the selection and implementation of treasury management systems (TMS) or other financial technology solutions to streamline treasury processes?

When selecting and implementing treasury management systems (TMS) or other financial technology solutions, it’s crucial to adhere firmly to your requirements while maintaining a detailed and clear vision of your objectives. Avoid the temptation to pilot various solutions; instead, focus on precisely defining your needs and objectives. Requesting product demos and ensuring alignment between the solution and your requirements is paramount. Insist on engaging with the top talent from the provider during the implementation phase to maximize success. Building ample buffer time and resources into your project plan is essential to managing expectations effectively. This allows for flexibility in addressing unforeseen challenges and complexities that may arise during implementation.

While engaging operational teams in the process is vital for their buy-in and understanding, it’s important to maintain a dedicated project team separate from daily operations. This team can provide focused oversight, support operational teams, and communicate regularly with internal stakeholders. Securing support and sponsorship from the CFO is critical. Their endorsement not only facilitates discussions with other stakeholders but also helps overcome resistance to change and reluctance to embrace automation. This support is instrumental in driving the successful implementation and adoption of new technology solutions.

Q: What about AI, LLM, Machine Learning, RPA, coding? What is the role of a treasurer in it? Should we know all about it and learn it or only know the basics? Do we even need it?

As treasurers, our role is not to become proficient coders, but rather to leverage technology to translate data into actionable insights and automate processes. Familiarity with tools such as Automation Anywhere, OCR, PowerBI, PowerApps, Tableau, OSIsoft PI Vision, Infor Birst OEM, Alteryx, and JavaScript libraries like D3.js can significantly enhance our ability to scale data and drive innovation. It’s important to emphasize that, while technology is essential, data quality remains paramount. Quality data is the cornerstone of successful digital transformation and serves as our ‘digital asset.’

I advocate for treasurers to possess a broad understanding of these technologies. While we may not need to code, having a strong appetite for technology and a thirst for knowledge is crucial. As catalysts for change and innovation, we must challenge existing processes and seek opportunities for automation. Personally, I’ve experimented with RPA and machine learning, and the results have been transformative for Treasury operations. Despite the initial investment, the returns in terms of efficiency and effectiveness are substantial, making the adoption of these technologies a wise investment.

The future of treasury management is evolving rapidly, demanding a new set of skills and capabilities from treasurers. Key success factors now include the development of business partnerships and technology skills, along with a deep exploration of data analytics. Treasurers must remain open to change and transformation to meet the demands of a dynamic landscape. The breadth of a treasurer’s responsibilities spans cash management, bank account management, short-term investments and funding, intercompany netting, trade finance, and more. However, retaining and finding the right talent has become increasingly challenging, as the treasury function remains relatively unknown within many organizations.

To address these challenges and boost the effectiveness of Treasury teams, several strategies can be employed. These include robust training and development programs, offering role rotations or secondments within the Treasury Department, and enhancing communication and collaboration both internally and externally. Automation is key to enabling treasurers to do more with their time, fostering agility, digitalization, and resilience. This shift towards automation, standardization, and simplification is essential for staying competitive in an ever-changing landscape.

As the function continues to evolve, treasurers must embrace a forward-looking mindset, leveraging data analytics for real-time insights and decision-making. Soft skills such as convincing abilities are also becoming increasingly important, particularly in advocating for Treasury initiatives with senior leadership. In the era of digital transformation, treasurers must champion the dematerialization and digitization of treasury processes to enhance resilience and leverage data effectively. By ensuring the Treasury’s involvement in data strategy discussions and harnessing the power of data, treasurers can drive value and better inform strategic decision-making for the organization’s future success.

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Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information.

May 9, 2024

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