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. Q: Could you discuss a particularly complex Treasury-related problem you’ve encountered in your career and how you navigated through it to achieve a successful outcome? 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…
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Introducing our Treasury Masterminds Board
We are happy to announce our Treasury Masterminds Board members, a panel of leading corporate treasury experts from around the world. This esteemed group will lend their deep domain knowledge and years of practical experience to guide and enrich the content and events we provide, give insights on treasury topics and discussions, and provide answers to questions in our treasury community. The Treasury Masterminds come from diverse backgrounds, geographies, and industries. But they all share a passion for treasury management along with track records of excellence and innovation in the field. We will frequently call upon their expertise through: Treasury Masterminds Board members Benjamin Defays Benjamin landed in Treasury by chance about 12 years ago, and it quickly became his passion. He started my journey with a CAC40 company, then switched to the largest private company in the US, and now he is with the world’s largest alternative asset manager. This gave him the opportunity to take part in 3 TMS implementations plus one for a trade finance platform, being in charge of FX risk, liquidity management, and solutions implementation with various cash pooling structures, trade finance activities, credit and collection management, but also automation activities such as RPA and various workflow tools to help monitor activities and measure performance, with managerial roles at different levels. He has 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. He teaches and co-founded various Treasury Management training programs Sebastian Muller-Bosse Sebastian is a young treasurer with a passion for treasury and technology. With experience in both banking and corporate treasury, he has transitioned into treasury consultancy and interim management, bringing a unique blend of expertise to his work. Dedicated to spreading knowledge and creating awareness about corporate treasury, Sebastian is particularly focused on reaching students, graduates, and young professionals. His tech-savvy approach and commitment to automation make him a valuable resource in today’s rapidly evolving financial landscape. Patrick Kunz Patrick is the founder and treasury consultant at Pecunia Treasury & Finance BV. A boutique treasury consultancy firm based out of the Netherlands. Servicing clients in the Benelux, Germany, Nordics, and wider EMEA. Patrick has seen more than 30 treasuries, from big to small, from profit to non-profit. He has 25 years of experience in his 15-year Treasury career. Patrick is both interim manager and consultant and also has a wealth of tech knowledge, having led several TMS, Payment Hub, and FX Hub implementations. Pecunia’s unique concept of working with 80+ freelancer associate interim consultants means they always have a suitable treasury, data, corporate finance, or cash management expert in their ranks at a competitive price. Jessica Oku Jessica is a Treasury & Finance Executive with over 12 years’ experience in Strategic Treasury, Banking and Finance, working for top banks and multinationals. With a proven track record of developing innovative financial strategies and optimizing portfolios for multi-million-dollar enterprises. Throughout my career, she has developed and executed initiatives that have redefined success and driven remarkable results. From optimizing the capital structure of a beverage multinational that led to savings of over $1 million to strategic negotiations that resulted in a 40% decline in finance costs, structuring diverse funding and debt instruments and derivatives, transforming individuals into product experts, achieving process efficiency across different strategic business units, and negotiating 5-year tax waivers on business pioneer status, her commitment to excellence is unwavering. Jessica has a passion for coaching talent and teams to drive transformational organizational change. She is currently driving impactful change as the Director of Fund Development at Women’s Health Coalition Alberta, Canada. She received an award in 2021 for the Professional Achiever’s Award 2020 (Business Outstanding Performance Award). Alexander Ilkun Alex is passionate about allowing companies to focus on developing their businesses. He achieves this by implementing best-practice Treasury processes, empowered by automation and visualization. Alex has been a regulator speaker at Treasury conferences regarding wider Treasury-related and emotional intelligence topics. Tanya Kuznetsova Tanya is Director of Treasury and Cash Cycle Transformation at Baptist Health Care, based in Florida, where she is responsible for implementing the best practices in cash management, working capital optimization, reducing costs associated with treasury operations and attracting capital. She has 20 years of treasury management experience in a variety of industries around the globe: transportation, retail & wholesale, and healthcare. As a treasurer and an independent consultant, Tanya has integrated technology advancements and improved processes into organizations of varying sizes, including non-profits under $1 billion and a $22 billion retail business with 13,000 stores. In addition, she advises high-tech companies on projects involving the newest technology applications in finance, such as AI, machine learning, and APIs. She holds the professional designation of Certified Treasury Professional. She is an award winner recognized for her achievements in implementing supply chain finance solutions. Tanya served as president and is currently a board member of the North Carolina Treasury Management Association. She contributes to the professional community as an educator and a speaker. She is the author of “Alice and the Treasury Island,” a book about career development and professional growth, as well as a number of online courses on fintech and digital assets. Royston Da Costa Royston is a Certified Treasury Professional (CTP) and an affiliate member of the Association of Corporate Treasurers (AffilACT). He has over 36 years’ experience working in Treasury. 21 of which he has had as an Assistant Treasurer at Ferguson, a NYSE (primary) and FTSE (secondary) listed company. He has extensive knowledge and skills in treasury technology, automation, foreign exchange, cash management, and international payments. Royston is responsible for the UK intercompany loan portfolio and continues to drive forward the group’s strategy on Treasury technology. He worked at Sky, Gillette, PolyGram, Seagram, and Vivendi Universal. Royston is a regular speaker at international conferences, focusing on Treasury technology. He is passionate about implementing Treasury best practices and enhancing financial and operational efficiency. James Kelly James Kelly is an accomplished senior finance executive with deep…
Treasury and Accounting: What is the Difference?
Treasury and accounting are two closely related sectors within an organization. If they are not well understood, they can easily be confused and misinterpreted. While there are some similarities between these two functions, there are distinct differences as well. In this article, we’ll take a closer look at the differences between Treasury and Accounting and the roles they play within an organization. Defining Treasury and Accounting What is Treasury? Before we delve into the differences between these two functions, we need to define what they are. Treasury is a department within an organization that links the company to the financial markets. It is often part of the finance department. The major difference between treasury and accounting is that treasury focuses more on the business’s financial strategy and long-term plans. In contrast, the Treasury team focuses on the short-term management of financial assets. Its responsibilities include evaluating new ventures and determining their impact on the business. It also analyzes the performance of products and services in the market, forecasting cash payments, and anticipating challenges of low cash flow. Typical Projects carried out in Treasury What is Accounting? On the other hand, accounting handles the process of summarizing financial transactions into useful reports to maintain control over transactions. Accounting is about past performance and how it impacts the organization in the present and future. It involves auditing financial records, maintaining transactions in proper order, compiling annual reports that evaluate financial performance, managing accounting systems and processes, and analyzing tax implications. Typical Projects carried out in Accounting What is the Relationship Between Treasury and Accounting? Even though accounting and treasury are different, they both help manage and decide on financial matters. A treasurer can help a company make decisions that may improve its financial well-being, and an accounting department prepares financial reports to enhance management’s operations. However, treasury and accounting have different objectives and goals relative to an organization’s financial reports. A treasurer’s focus can be ensuring the company’s financial reports are positive and meet the goals of an organization. Employees in the accounting field focus on keeping track of an organization’s performance and auditing financial reports to see if the company has met various targets. Key Differences between Accounting and Treasury Definitions The primary difference lies in their definition. While accounting focuses on summarizing financial transactions in useful reports to maintain control over transactions, treasury management focuses more on the business’s financial strategy and long-term plans. Roles Different roles exist in each career path. A career in treasury may involve roles such as treasury manager, treasury analyst, finance manager, chief financial officer, or finance manager. People in accounting may have other positions such as senior accountant, inventory accountant, junior accountant, cost accountant, or forensic accountant. The exact role you hold may depend on the company you work for. Focus Treasury and accounting have different objectives and goals relative to an organization’s financial reports. A treasurer’s focus can be to ensure a company’s financial reports are positive and meet the goals of the organization. Employees in the accounting field focus on keeping track of an organization’s performance and auditing financial reports to see if the company has met various targets. Positions in Accounting vs Treasury There are different roles in each field, with different responsibilities and average base salaries. A career as a Treasury Assistant is an entry-level treasurer role. As a treasury analyst, you may track a company’s financial actions, such as credit income, liquid assets, and cash flow. A financial controller’s position can help oversee a company’s investment and budget and reduce its financial risk. A director of finance oversees many of the financial operations of a company. On the other hand, an accounts payable clerk is responsible for recording, verifying, and maintaining transactions. An accounting officer can forecast future financial performance, track expenses, examine and prepare financial reports, and assess financial operations. The accountant prepares and maintains financial reports, prepares tax returns, evaluates financial operations, recommends best accounting and financial practices, audits and analyzes financial performance, and compiles and presents financial and budget reports. Also Read Join our Treasury Community Treasury Mastermind 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. Notice: JavaScript is required for this content.
Navigating Financial Flux: CFOs Perspective on Strategic Treasury Management
This article is written by Kyriba While corporations have enjoyed an unprecedented financial boom for years, the recent volatility in global markets is an indicator of changing times that could bring sharply rising interest rates and the end of cheap money. The recent demise of Silicon Valley Bank is a wake-up call to the purpose of capital and liquidity requirements and the importance of strategic treasury management. In addition to macroeconomic developments, there are other significant changes afoot. Technology is transforming the way we live and work, with ChatGPT passing 100 million users in just two months and becoming a social media phenomenon. To gain maximum agility in this complex environment, CFOs need to transform their finance operations. One of the best places to embark on that transformation is in the area of Treasury Management, which delivers a low-risk, high-yield value proposition for driving automation, improving working capital, and mitigating risk. Strengthening Treasury’s Role as a Business Enabler “At the highest level,” explains Douglas Bettinger, executive vice president and chief financial officer of Lam Research, “treasury’s role is to optimize cash generation in a way that maximizes the value of the company.” In a large enterprise, executive leadership thinks a great deal about the balance sheet, while line-of-business managers focus more on profit and loss (P&L). “I plug my treasury people into areas of the business that need more attention on cash generation.” In this way, treasury can sensibly use the balance sheet in ways that enable new, profitable business activity. There are many ways Bettinger’s treasury team contributes value to the company beyond routine block-and-tackle treasury functions: As a global enterprise, it is important to hedge against currency fluctuations. This not only helps deliver on P&L but also delivers the cash flow that must come from different parts of the business. “We hedge different balance sheet exposures and revenue streams in different currencies,” Bettinger says. “Treasury is in a unique position to manage that.” Nobody else in the company focuses on the currencymanagement piece.” Bettinger’s company creates hedge ladders, where they look out four, three, two and one quarter, with different exposures hedged in each quarter. Another valuable treasury function involves taking advantage of the balance sheet to enable business that might not otherwise occur. For instance, it may be possible to set up a leasing arrangement for a customer that does not have access to capital it needs to purchase equipment. “We use our balance sheet in a prudent way to protect the asset and at the same time accrue new business,” explains Bettinger. “My treasury people are uniquely positioned to make those risk tradeoffs for the corporation.” Managing the cash conversion cycle is another valuable treasury function that includes managing collections so that money comes in as quickly as possible while stretching out payables. Optimizing cash conversion is a balancing act that ties closely to inventory management, which involves setting targets and objectives for cash consuming inventory and making decisions about where to place that inventory. “How you balance the debt-to-equity ratio and optimize the capital structure of the balance sheet affects your ability to fund different activities in the business,” Bettinger says. Treasury is the Value Center of the Enterprise Cash management in an airline business is challenging for many reasons, especially for an international company. Unpredictable weather events, volatile fuel prices and the challenge of operating with many currencies can significantly impact revenue, cash and profitability. Marina Chase, CFO (Ag.) of Caribbean Airlines, says that treasury has experienced big changes in recent years. “It’s still cash management,” she says, “but treasury has moved away from the traditional operational functions. It is no longer back office.” In Chase’s organization, modern treasury-management tools have helped treasury become both a knowledge center and a risk-management center for the business. With treasury serving as a knowledge center, all divisions turn to treasury for real-time information related to operational activities. For example, this can include real-time information that’s needed for payments, and providing information about different laws and restrictions that affect transactions in different countries. Treasury also provides information to support strategic decisions, such as evaluating the cash flow and profitability of current and potential new routes. Because there are so many variables that can seriously impact the business, risk management is a critical treasury function. “We are able to manage risks, especially around currency exchange,” explains Chase. “These are not risks limited just to interest rates. We also have to deal with repatriation risk. The efficiency of cash flow and managing cash have a lot to do with getting your money in real time. Because of laws and restrictions in different countries like Venezuela and Cuba, there are different ways that we have to comply with regulations in order to access our working capital.” Treasury has become a value center in the enterprise. “We track working capital, and not just working capital, but also the value of working capital,” says Chase. “An important part of this is predictive analytics, which is more than transformational. It supercharges treasury’s efforts.” Chase sees several key indicators of treasury’s success, including having adequate cash available for all operations, and preserving capital while maximizing the return on the investment portfolio. But there are other measures. “We must track trends and market dynamics that can impact the business, such as anything that might impact fuel prices, which you need to measure daily because this directly impacts cash flow,” she says. As CFO, Chase appreciates the global perspective and predictive capabilities provided by the treasury management system. “Predictive analysis and forecasting allow better scenario planning,” she says. “That’s critical because you can plan your cash-flow scenario based on changes in the price of oil, or on revenue going up or down in a particular region because of holidays, or fluctuations due to political situations that would impact revenues.” Chase sees the possibility of leveraging treasury even further by linking to ERP systems, adding business intelligence tools, and linking the treasury system to the corporate reporting system. Expand Your View of Treasury…
Comparing solutions: payment hubs vs. banking portals
This article is written by Nomentia Every company needs to make payments, either through banking portals or payment technologies. In this article, we’ll compare what it’s like to manage payments through bank portals versus in a payment hub. We’ll also elaborate on the pain points of using traditional corporate e-banking tools and the key benefits and features of using payment hubs. Lastly, we provide some guidance on selecting a solution that suits your company’s needs. What is a payment hub? A payment hub is centralized software that consolidates company-wide payments by gathering data from multiple payment initiating systems, such as ERP, banks, treasury, accounting, or financial systems. It streamlines payment procedures, enabling transactions across various banks and channels from one platform. This centralization enhances efficiency, reduces manual errors, improves visibility and control over financial operations, and ultimately optimizes cash management while reducing costs associated with manual work. How do online banking portals work for payments? Companies pay their bills through banking portals by setting up transfers from within the bank account, similar to wiring money in retail banking. In corporate banking, it usually starts with an invoice, salary payment or other form of credit that someone in the finance or accounting team verifies. Then, a person responsible for payables logs in to the company’s online banking portals and sets up a transaction that corresponds with this data. Typically, companies need to log in to several banks to minimize the risk of having only cash in one account at one bank. Yet, this also means that cash is divided over various bank accounts. Hence, payables need to be made from various banks, each requiring a separate login. This process can become very time-consuming with numerous banks, and it is also more challenging to see how much cash is available for payments since cash is spread over various accounts without central visibility. What is the difference between a payment hub and an online banking tool? A payment hub is offered by a specialized payments provider that has build a technology that can be used by companies for company-wide payments across all banks from a single place. In contrast, online banking portals are offered by banks and are essentially just a way to manage bank accounts, payments, and all other associated administration that comes with corporate accounts. The most common pain points without a payment hub There are several pain points associated with setups that do not include a payment hub, especially when companies start growing in size with an increasing number of payments from various bank accounts. These are some of the most common ones that our customers have faced before implementing a hub: 1. Difficulties having centralized cash insights When cash balances are scattered over various bank accounts, it is incredibly difficult to say what the company’s current cash positions are, although this can be of great strategic importance. On top of that, it is difficult to track in and outflows when this data is distributed. 2. Processing payments is time-consuming Another challenge that finance, treasury, or accounting teams face with online banking portals is that all payments must be made manually and individually in each portal, which is incredibly time-consuming with tens, hundreds, or thousands of daily payments. 3. Dependent on banking credentials As your team expands, managing users will become increasingly complex, as banking portals often require various tokens to log in. Unfortunately, these tokens are usually still physical devices, so you’re highly dependent on always bringing them with you. Suppose you need to access 10 bank accounts you may need 10 different tokens, and when traveling around, or even just between home and the office, that can be quite inconvenient. 4. High risk of fraud and errors Manual payments via banking portals are prone to errors since every transaction requires manual data entries. Erroneous payments have dire consequences for company finances. Fraudulent payments are also much harder to identify since you need to review all payments manually to see if there are any potential anomalies. 5. No security checks or other process controls Whenever you make payments from a banking portal, you miss some critical steps that payment hubs can offer automatically. Or, if done manually, it becomes very time-consuming. These steps include security checks in payment processes to tackle fraud, prevent errors, enhance matching, or screen against sanctions—something that programmed computers can do easily and much more efficiently. 6. Challenges in keeping up with a high number of payments As mentioned before, the more payments you need to execute through different banking portals, the more time you spend on doing so. Sometimes, this means that it’s challenging to keep up with the number of payments. Rather than tackling the issue by hiring more people, it is very common to get automated payment technology that can easily help you streamline processes. 7. Almost no integration possibilities Banks themselves offer very limited integration possibilities with financial, accounting or ERP systems, therefore processes cannot be automated properly. Yet, these same systems contain crucial information for finance, accounting, and treasury teams’ payment operations. Ideally, they are fully integrated with banks to provide a central source of truth. While this is partially possible through building bank connections with banks, this requires a lot of work from your team and several IT specialists. A dedicated technology that handles everything is therefore a lot easier to manage. The benefits of using a payment hub Companies can benefit in multiple ways from using a payment hub, some of the most mentioned benefits include: One of the primary reasons for acquiring a payment hub is its ability to centralize all payment files, irrespective of the banks or source systems that are involved. It connects to all your bank accounts via the most appropriate connectivity protocols, enabling you to execute payments centrally and access all relevant cash flow data from the same system. This gives you better control over your finances and helps you streamline your payment processes. Automating and centralizing payment processes can help you save…
Enhanced Corporate Treasury Staffing & Technology Solutions
This article was written by TIS Payments in 2023 Despite current economic headwinds, new research by TIS finds that treasury teams are planning to increase their overall headcount and invest in new technology during 2023. While this is generally good news for the industry, practitioners must still be very strategic with how they pursue these staffing and technology initiatives. This is especially the case given added emphasis by business leaders on finding ways to cut costs and reduce operational expenses through years’ end. Economic Uncertainty in 2023 Remains High As we wind our way through the first quarter of 2023, most corporate treasury and finance practitioners would probably agree that the global business environment is in a precarious position. Although overall U.S. and European inflation have fallen from their highs in 2022, business leaders continue to worry about the rising costs of goods, as well as the prospect of a global recession and various geopolitical risks. In fact, a recent research report by The Conference Board found that slow growth and recession are the greatest external concerns for C-suite executives in the year ahead. To make matters worse, a tumultuous market often results in unpredictable staffing scenarios, especially when trying to hire and retain top talent. As we’ve seen recently, staff disruptions — including a recent slew of layoffs that have impacted the tech industry — have roiled corporate recruiting processes. And looking towards the next year, PwC’s Annual Global CEO Survey found that over half of respondents were still planning to reduce their operating costs in 2023, with 39% either already reducing headcount or planning to reduce it in the next 12 months. However, despite the current uncertainty continuing to face organizations in the U.S. and across the globe, it appears that treasury practitioners are, in large part, fairing well amidst the turmoil. This is true both with regards to their staffing and recruiting prospects, as well as with their technology adoption priorities and planned spend. Despite Broader Headwinds, Treasury’s Headcount is Set to Grow in 2023 Of course, most treasury teams are undoubtedly concerned about the challenges prevalent in today’s business environment. As evidence, preliminary results of NeuGroup’s 2023 Finance & Treasury Agenda Survey identified a prolonged economic slowdown as treasurers’ biggest concern heading into 2023, with 59% predicting that negative GDP growth will last through the end of the year. But as new research by TIS has revealed, these challenges are not holding back treasury’s plans to invest in additional staff or acquire new technology. In fact, TIS’ 2023 Treasury Priorities & Operations Survey, which polled the views of over 250 US finance and treasury practitioners over a 2-month span, found that only 3% expect to reduce their headcount in 2023. Instead, 48% plan to add more staff, and 49% will hold their staffing levels steady. While these treasury staffing plans might seem to contradict logic given the current market, they are also evidence of the growing importance of treasury’s role internally. Although treasury teams have traditionally been kept lean, a renewed focus by business leaders is opening the door for more headcount. In large part, data indicates that the rising strategic influence of treasury is helping boost their importance. In our study, 57% of treasury groups saw the strategic value of their department increasing in the months ahead compared with just 4% decreasing. And, 81% anticipated spending more time on strategic activities in 2023 compared to 2022. However, this growing strategic influence and renewed focus is also being accompanied by added expectations and responsibilities. In our survey, 77% of treasury teams expected their responsibilities list to grow or grow significantly in the coming year. But while adding headcount may be a sign of an added emphasis on treasury by business leaders, data also indicates that a large component of the department’s strategic value is being derived through the application of enhanced technology. This includes the use of modern ERPs and TMSs, AI and machine learning (ML) tools, real-time payment solutions, and other types of improved data exchange protocols such as APIs. Let’s take a closer look at this planned tech investment. Investments in Treasury Technology Expected to Stay Elevated in 2023 Going off a combination of prominent industry studies and thousands of recent conversations with practitioners and consultants, it’s clear that technology adoption continues to be a major focus for treasury. Regardless of company size or industry, it seems that practitioners are collectively focused on either upgrading legacy TMS and ERP systems that have become obsolete, or moving beyond their manual excel and e-banking portal setup to achieve a more unified and streamlined structure. Although cloud and SaaS platforms continue to be a major focus of these investments, other more “disruptive” capabilities involving AI, ML, and APIs are also being prioritized. Based on TIS’ 2023 study, adopting solutions to improve cash forecasting and cash management functions are of critical importance, as are payments, bank connectivity, and working capital tools. In total, over 2/3rds of treasury teams indicated that forecasting and positioning were their top priority in Q1, and over half (55%) planned to invest in new cash management solutions within the year. In addition: However, not all types of technology attracted high levels of interest from treasury teams. Notably, only one in five of all respondents – and just 13% of enterprise companies – expected treasury to use cryptocurrency by the end of the year. Given subdued market enthusiasm for crypto since 2022, coupled with several high-profile crypto bankruptcies and scandals like FTX, this hesitation is not entirely unwarranted. So then, given the clear inclination by treasury to continue investing significantly in new staff and technology during the next year, what is the best way for practitioners to ensure their investments reap the desired levels of productivity, efficiency, automation, and control? Three Strategic Considerations for Treasury as They Hire More Staff & Invest in New Technology Given the 2023 economic climate, organizations are becoming much more conscientious of their spend, and there is a heightened expectation from business leaders that treasury’s technology investments reap the desired benefits. In order to manage these high expectations, the following tips can help…
Insights from the Nomentia Treasury Summit 2024: Navigating the dynamics of modern treasury management
This article is written by Nomentia Treasury management – For the future In an engaging opening address, Nomentia’s own Lauri Bergström and Tapani Oksala painted a vivid tableau of the ever-evolving landscape of treasury management and Nomentia’s customer-centric and dynamic approach to its developments. Three key trends emerged as focal points: financial strategy, risk management, and technological advances. Emphasizing the critical role of teamwork and leadership across organizations, the duo set up a robust foundation for the summit’s discussions. Unlocking liquidity management: The story of Caverion and the dynamics after an M&A The event kicked off in full with a deep dive into the complexities of liquidity management, as exemplified by Caverion’s finance operations amidst a strategic merger. In this session, Viljami Vainikka, Head of Group Treasury at Caverion, provided a comprehensive overview of Caverion’s liquidity landscape during a merger with Assemblin, highlighting their approach to optimizing cash visibility and addressing challenges in cash flow forecasting. He outlined Caverion’s liquidity management setup, which includes cash management across multiple currencies, numerous bank accounts, and entities, with a focus on optimizing liquidity and improving forecast accuracy. In conversation with Tapani Oksala, Vainikka shed light on the challenges of optimizing cash visibility and underscored the importance of robust and accurate cash forecasting, leveraging technology and strategic partnerships, and the potential for integrating AI to enhance liquidity planning processes to increase efficiency and accuracy. Key takeaways from “Unlocking liquidity management” How BioNTech dealt with turbulent times In the second presentation of the Nomentia Treasury Summit, Dirk Schreiber, Head of Treasury at BioNTech, shared with the audience insights into BioNTech’s journey amidst the centennially turbulent times leading toward the COVID-19 pandemic and its aftermath. Founded in 2008, BioNTech experienced initial challenges until the onset of the COVID-19 pandemic in early 2020. Recognizing the potential of their mRNA technology for developing a COVID-19 vaccine, BioNTech swiftly pivoted its focus, leading to the rapid development and distribution of a vaccine in collaboration with Pfizer. Schreiber highlighted the unprecedented growth and financial influx that followed the successful vaccine development, presenting BioNTech’s treasury management journey in response to these dynamic circumstances. With a surge in funds, BioNTech urgently required a robust treasury management system to manage its expanding financial operations. Despite facing initial challenges with an untested treasury function, Schreiber and his team swiftly implemented a treasury management system, leveraging Nomentia’s expertise to build BioNTech’s treasury operations. The presentation explored the intricacies of BioNTech’s treasury transformation, emphasizing the rapid expansion of requirements for the treasury and the establishment of essential treasury guidelines and processes for future development. Schreiber emphasized the critical role of the right technology in this transformation, particularly the implementation of Nomentia’s treasury management system to provide real-time visibility into cash positions, automate trading activities, and streamline reporting processes. Key takeaways from “How BioNTech dealt with turbulent times” Panel discussion: Bank as your partner in the fight against financial crime The panel discussion featuring representatives from Nordea, SEB, and OP shed light on the evolving landscape of financial crime prevention and the role of banks as strategic partners. Against the backdrop of increasing cybersecurity threats, the panel emphasized the importance of collaboration between banks and corporate treasuries in combating financial crime. As technology evolves, it brings with it new and exciting opportunities to those companies that are able to manage their risk appetite accordingly. Unfortunately, the development of technology also provides opportunities to the criminal element. The threat landscape in the digitalized business environment is significantly more complex than before. Thanks to technology we’re living in an environment wrought with crime and fraudulent behavior. The ecosystem of crime in the digitalized financial environment is complex and ever more susceptible to human error and poor processes. The panel’s discussions centered on the adoption of innovative technologies and best practices for enhancing security and mitigating risk in treasury operations. This session focused on the crucial role of proactive measures and strategic partnerships in safeguarding financial assets in an increasingly digital world. According to the panel, treasury management and financial professionals would do well not to treat the fight against financial crime as a digital problem only, as the evolving threat landscape requires an adaptive and nimble approach not only to security technology but the organizational culture as well. Fortunately, this is not a fight that businesses have to face on their own. The banking and finance industry has taken proactive steps to improve its resilience and business continuity. On the legislative side, the EU’s DORA (Digital Operations Resilience Act) is a great example of how demands for businesses to secure their operations in the financial threat landscape is not only a digital undertaking but requires a wider scope that encompasses their operations fully. Key takeaways from “Bank as your partner in the fight against financial crime” Digitalizing bank account management with smart workflows at EATON In the 4th presentation of the day, Stefan Müller from Eaton discussed the digitalization of bank account management (BAM) during the Nomentia’s Treasury Summit. Previously, BAM was cumbersome and fragmented, involving manual tasks, email exchanges, and Excel spreadsheets. Eaton recognized the inefficiencies and partnered with Nomentia in 2019 to modernize their BAM processes. The transformation involved leveraging advanced digital technologies to automate tasks like account openings, closures, signatory changes, and transaction monitoring. This shift required comprehensive cleanup of account and signer data, process documentation, and target workflows. By mid-2021, the project was underway, and by March 2022, the new BAM system was live. Today, Eaton manages BAM operations on one centralized platform, gaining efficiency, control, and compliance. Automated reconciliations and streamlined workflows have reduced manual efforts significantly. The treasury function has seen tangible benefits, including the closure of 200 accounts and the removal of over 200 signers and 2,300 permissions. The digitalization of treasury operations has offered opportunities for greater control and efficiency. Real-time data access enables informed decision-making and proactive risk management. Automation of routine tasks frees up time for strategic analysis. However, increased reliance on digital platforms necessitates robust security…
Biopharmaceutical Giant Breaks out of the Cash Forecasting Mold
This article is written by TIS Payments Note: This article was originally published by Treasury & Risk Editor in Chief Meg Waters, based on her interview with the treasury team at Bristol Meyers Squibb. You can view her original article here: Biopharmaceutical Giant Breaks out of the Cash Forecasting Mold (treasuryandrisk.com). Interview Participants The corporate treasury team at global biopharmaceutical company Bristol Myers Squibb manages cash and cash equivalents in the billions of dollars (US$11.5 billion as of December 31, 2023) across more than 200 legal entities around the world. Efficient cash forecasting in this environment requires clear visibility into global accounts and as much automation as possible. Until recently, the forecasting process provided treasury with visibility into 99 percent of the company’s accounts—but it was manual and cumbersome. “We take two approaches to cash forecasting,” explains Amy Szuting Chen, director of international treasury. “Treasury prepares a top-down, P&L [profit and loss]–driven multiyear forecast and a bottom-up forecast based on receipts and disbursements for the current year. For the bottom-up forecast, in each budget cycle—so, four times per year—treasury would collect data from our business partners, line by line. We would gather gross sales projections, as well as spending and payments, such as operating expenses and capex [capital expenditures] at the legal-entity level. “The information for a standard bottom-up cash forecast was submitted by different teams, and not in a standard format,” Chen continues. “Each business views their forecast differently, and there are variations in their methodologies. So the treasury team would have to consolidate all this data in Excel, which created a lot of manual work and took a month or more each quarter.” International business units added another layer of complexity because different geographic regions handled forecasting differently. “Internationally, we had three different forecasts that were not 100 percent in sync with each other,” Chen says. “Occasionally, one forecast might show a cash surplus, while another forecast for the same region might show a net outflow using a different set of assumptions.” The forecast timelines also varied. Whereas corporate treasury generated daily forecasts for the U.S. market, the international team worked with business units to predict monthly cash receipts and disbursements. “We are operating in a dynamic environment as a company right now, and we are required to make a lot of business decisions quickly,” says Abhishek Jhunjhunwala, director of capital markets. “On the capital markets side, we work on many scenarios around different capital allocation strategies, and cash is a critical component. When we had a manual process to pull together forecasting information, it certainly created a decision-making hurdle. We would all have to wait for the top-down and bottom-up forecasts to be generated and then reconciled, which slowed down our decision-making. “Bristol Myers Squibb has engaged in a lot of M&A [merger and acquisition] activity recently, and every transaction requires cash,” he adds. “A couple of years ago, we were considering whether we had the capital to complete a certain acquisition, what our cash flows would look like, and whether we needed more support from a liquidity perspective. We had the P&L forecast, but the final cash flow forecast was not immediately available.” Bristol Myers Squibb treasury needed to standardize and accelerate global cash forecasting, shifting toward automation wherever possible. With the help of a third-party consultant, the team identified their requirements for a cash forecasting solution, including cybersecurity and access control needs. The treasury team assessed four systems, selected one (TIS CashOptix), and negotiated a contract with the help of internal procurement teams. As they neared the end of this process, the IT budget allocated to cash forecast upgrades ended up being committed to a different finance initiative, so the forecasting project lost its funding. The treasury leadership team decided that the project was so necessary that they would fund it out of treasury’s internal budget, with the expectation that the additional interest income generated by investments would offset the costs. In deploying the system, the project team established four driving principles: First, they vowed not to customize the system to fit their current processes, but instead to use the system to standardize processes across all teams. Second, they wanted to minimize manual workflows. Third, they committed to think outside the box and challenge the existing mindset. And fourth, they agreed to continuously reprioritize the different aspects of the project. The project team worked with IT to build interfaces between TIS CashOptix and key source systems—including Bristol Myers Squibb’s enterprise resource planning (ERP) system, treasury management system, and planning system—with the goal of automating data feeds. They established logic for converting information from different systems so that all the data in the forecasting system would be standardized. The team stepped outside their comfort zone and redesigned their processes to fully leverage system capabilities and minimize manual efforts. The resulting cash forecasting system uses historical, market, and other data inputs to automatically generate forecasts of daily cash flows. The forecasts can span custom time periods, in days, weeks, months, or even years. And the system offers scenario modeling based on the forecast data, so treasury staff can create events and combine them into forecast scenarios to project potential business impacts of all kinds of external and internal events. Treasury teams agreed to use one forecasting cycle and work off the same version of the forecast. “Now the entire treasury team—U.S. cash managers, international cash managers, the European treasury center, everyone—all look at the same numbers,” Chen says. “That means we can make better decisions based on an updated and thorough cash forecast, rather than just cash position. Plus, our investment and financial risk management teams can use these forecasts to decide how much further out to invest our cash or issue commercial paper. The system provides a view of global liquidity, which helps facilitate these investment decisions, and we continue to discover new uses of the system. It’s a journey, rather than a destination.” “This solution supports quicker, easier decision-making,” Jhunjhunwala says. “This is partly about technology and partly about the processes we…