The Three Lines of Defense: Simple in Theory, Tougher in Practice
This article is a contribution from one of our content partners, Avollone What’s the deal with the 3 lines of defense? When speaking to funds and other regulated companies, I almost always discuss the Three-Line Defense (LoD) model. The idea of the lines of defense was first formulated in 2011 by the Basel Committee in their report “Principles for the Sound Management of Operational Risk” and related to operational risk management principles. Still, it had been in the making years before by more mature risk management practitioners. It’s a model that’s easy to understand from a theoretical viewpoint but hard to implement practically, as this is usually when all the dilemmas and organizational differences come to light. In short, the 3 lines and their responsibilities are: 1st Line of Defense: Business Units and Front-Line Employees. 2nd Line of Defense: Risk Management and Compliance Functions. 3rd Line of Defense: Internal Audit and Independent Assurance. The typical problem for a smaller organization is that it’s simply impossible to spread the lines of defense on multiple people. This implies that you will have people “double-hatting” across 1st and 2nd LoD tasks. This adds to the requirements for documenting conflict of interests and to the required integrity of that person. There is no silver bullet to this other than being fully transparent about the conflicts by documenting this in relevant framework documents. This way, the firm shows the regulator that it is making conscious choices. It’s better to have made a well-documented but wrong choice, as the regulator can see that the firm has thought about it and been transparent about it. For bigger organizations, the problem is related to the size of the beast and the time it takes to implement changes. Implementing the LoD model requires larger changes, including moving tasks (and often people), reporting obligations, changing processes, and technology. The sheer grit and grunt work required is often underestimated, but it always starts with some very long workshops to define the to-be solution. After this come the relevant actions and changes needed. Again, it’s better to have defined the to-be model and be transparent that it’s under implementation than to knowingly run around with a model that is not fit for purpose and has been poorly implemented. Also Read Join our Treasury Community 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. Notice: JavaScript is required for this content.
Franklin
FX Hedging Is a Journey with a Destination
This article is written by HedgeFlows Navigating the complexities of foreign exchange (FX) markets and currency risks can feel daunting, especially for growing and mid-market businesses that trade internationally. Uncertainties in global markets can significantly impact financial stability, profit margins, and cash flows if left unaddressed. However, this uncertainty does not need to dictate your outcomes. Treat hedging as a strategic journey with a clear destination, and it can become a powerful tool to protect and enhance your business’s financial health. The secret to making this journey more straightforward lies in setting clear objectives right at the start. By identifying your goals and understanding why you are hedging, you can tailor your strategies to align with your business’s unique needs. Here, we’ll explore the importance of setting objectives and provide real-world examples of hedging goals for growing and mid-market businesses. Why Set Hedging Objectives? Imagine setting off on a road trip without a map or GPS – chances are you’d get lost. Hedging without objectives is much the same. Defining your goals provides direction, helping you measure success and assess whether your hedging actions deliver the intended value. When you set objectives for hedging, you’re not just aiming to mitigate risks. You’re safeguarding the financial stability of your business while ensuring maximum efficiency in deploying resources. The process becomes more transparent, and your team can operate with more confidence and clarity. What Are the Key Objectives for Hedging? For growing and mid-market businesses, hedging objectives often centre around mitigating risks tied to foreign exchange volatility. Here are three practical and impactful objectives for businesses in this category: 1. Minimising FX Volatility in Financial Statements Currency fluctuations can wreak havoc on financial statements, leading to unpredictable FX gains and losses. For example, if your business exports products overseas or has suppliers in foreign markets, or large cash balances in foreign currencies from recent fundraising or a loan, movements in exchange rates might add volatility to your revenue or costs. Left unchecked, this could create swings in profits and distort your financial reporting. Hedging Objective: Use hedging strategies to minimise these FX-related inconsistencies, stabilising your financial statements and ensuring clarity for stakeholders and investors. 2. Safeguarding the Value of Expected Cash Flows Many growing businesses rely on contracts, invoices, or project payments in a foreign currency. However, unexpected currency movements can reduce the value of future cash flows, undermining your ability to meet financial obligations or reinvest in growth. For instance, consider a mid-market business that expects to receive significant payments in USD, but their home currency is GBP. A declining USD against the GBP could result in substantial losses. Even before invoices are raised and while the sales order is outstanding, this business has its cashflows exposed to currency swings. Hedging Objective: Safeguard the value of incoming or outgoing cash flows through forward contracts, options, or similar tools to protect your expected funds against adverse currency movements. 3. Protecting Profit Margins For businesses with international revenues, rapid currency fluctuations can directly affect profit margins by increasing the cost of imports or reducing revenue in local terms. For example, a growing e-commerce platform may source goods from Asia in USD but sell in Europe in EUR. Volatility in those currencies could shrink already thin profit margins. Hedging Objective: Maintain healthy profit margins by locking in favourable exchange rates or introducing hedging techniques like options to shield against detrimental changes. Making the Hedging Journey Easier Now that we’ve covered the objectives, the next step is executing your hedging strategy. Here are some tips to make the process smoother for your business: Before jumping into hedging transactions, educate your team about hedging fundamentals. Understanding terms like forward contracts, options, and swaps can be invaluable. Use our FX & Treasury Academy for free content prepared by our experts. Using robust financial management tools and platforms can help streamline your hedging strategy. Many systems provide real-time FX tracking and automated alerts for currency risks but only few provide a comprehensive platform like HedgeFlows’ FX Risk Management. Managing FX risks requires specialised insight. Partnering with experts, such as consultants or financial institutions that understand mid-market and growing businesses, can offer tailored solutions for your unique needs. Book a free consultation with our experts. The success of your hedging doesn’t end at implementation. Regularly review your strategy to ensure it aligns with your objectives and adjust if changes in market conditions or your business arise. Destination Achieved Hedging doesn’t have to feel like a leap of faith or an ongoing challenge. By treating it as a strategic journey – with clearly defined objectives as your destination – you can unlock its transformative potential for your growing or mid-market business. The goals of minimising financial statement volatility, safeguarding cash flows, and protecting profit margins are not just risk-mitigation strategies but critical steps in building a resilient and scalable company. When approached methodically, hedging can empower your business to thrive amidst uncertainty. Also Read Join our Treasury Community 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. Notice: JavaScript is required for this content.
The U.S. Finally Catches Up to the Rest of the World on Payments
In a move that’s been a long time coming, the United States Treasury is finally getting rid of paper checks. On March 25, 2025, President Trump signed an executive order mandating that all federal payments and collections go digital by the end of September. While the rest of the world has been making payments electronically for years—if not decades—this shift marks a long-overdue modernization for the U.S. government’s financial processes. A Welcome (If Late) Change for Treasury Professionals For corporate treasurers, this is great news. The U.S. has long been an outlier, relying on outdated systems that complicate international cash management. Switching to electronic payments means less time spent dealing with slow, cumbersome paper processes. It streamlines cash flow, speeds up reconciliation, and makes it easier to forecast and manage liquidity—especially for global organizations that need consistency across all their operations. A Few Hurdles to Clear That said, the road ahead isn’t without challenges. For starters, the federal government will need to make sure their data is in order. Incomplete or outdated records could throw a wrench into the transition. Then there’s the issue of accessibility: not everyone has easy access to electronic payment methods. Exceptions are in place for certain individuals and situations, but there’s still work to do to ensure no one gets left behind. Looking Forward Once the dust settles, this shift could have a big impact on how corporate treasurers operate. By finally aligning with modern payment practices, the U.S. government will set a standard that benefits everyone—faster processing, better visibility, and a more efficient payment ecosystem overall. At Treasury Masterminds, we’ve always been about finding practical solutions to treasury challenges, and this is one change that can’t happen soon enough.
Cash Flow Hedging in Eruptive Currency Markets
This article is written by GPS Capital Markets This summer my family visited Yellowstone National Park. At Mammoth Hot Springs Historic District, near the north entrance of Yellowstone, I learned about the park’s history. This was the first national park ever established, with a vast coverage area (3,472 square miles or 8,992 kilometers), limited financial resources, and very harsh winter conditions. Despite these challenges, the administrative and conservation policies developed greatly influenced the success of the National Parks program nationwide, which continues to this day. Because I work as the Global Director of Marketing at GPS, I couldn’t help but draw parallels between the determination and preparation that went into creating Yellowstone and the business feats I see GPS help clients achieve daily. Just as Yellowstone’s early planners had to assess their goals and resources, companies looking to streamline treasury processes or establish hedging programs begin by determining their objectives and considering the specific financial risks they aim to mitigate. Bracing For and Responding to Volatility Each day, businesses brace for geopolitical events that can trigger market volatility, while visiting the park, we saw how the Park Service responds to out-of-the-blue events. During our trip, the Biscuit Basin, located about two miles from the famous Old Faithful Geiser, experienced a rare hydrothermal explosion. It was an unpredictable, relatively rare event and the park rangers responded by closing the area to mitigate the danger to visitors. Scientists employ monitoring equipment to track the geothermal activity of the area but cannot forecast with certainty the exact timing or location of the next event. Similar to how geysers’ schedules can be forecasted within certain windows of time but are still susceptible to unpredictable explosions, currency trends can be somewhat predictable within range. However, pressures on currency markets over the past few years have brought unexpected currency movements. Such is the case with the recent elections in Mexico. Following the election, the peso lost 12.5% of its value in one week. Another example is the recent market meltdown, when a combination of factors including weak US job reports and rising Japanese interest rates, combined to cause a global market shakeup. Adaptations for Different Types of Risk Yellowstone’s uniqueness lies in its diverse wildlife, numerous geothermal features, and the high concentration of active geysers within its volcanic hot spot. Since its establishment in 1872, the National Park Service has been committed to safeguarding this fragile ecosystem, initially from poachers and more recently from the pressures of increased visitor use. Their risk mitigation strategies have adapted to the evolving threats they encounter. Similarly, companies are exposed to many types of exchange rate risk: most commonly transaction, translation, and economic. Transaction risk is the potential financial loss due to exchange rate fluctuations between the initiation and settlement of a transaction. Translation risk occurs when a company’s financial statements consolidate foreign subsidiaries’ values into the parent company’s currency, potentially affecting financial reports. Economic risk involves the impact of changing currency rates on a company’s market value, creating inequities between them and foreign competitors and influencing future cash flows and market strategy. The most common financial strategy to offset the risks associated with dealing in more than one currency is hedging. Where to begin? Cash flow hedging protects a company’s future expenses and revenues from currency exposure. For example, if your company has a set payroll amount in a foreign currency they forecast to pay for the next 12 months, a cash flow hedging program can lock the amount of that future cash flow to ensure their payroll costs remain stable throughout the year. Every company is unique and has needs that are specific to them. In creating plans to mitigate risks you need to not only look at your unique situation but remain flexible enough to act when outlying events happen in the market. Just as no one in Yellowstone anticipated the eruption of Biscuit Basin, the Park Service had prepared by creating walking paths outside of the main area of destruction and had contingency plans in place to shut down and evacuate people immediately if necessary. Likewise, many of our clients took advantage of the weak MXN to lock in more risk for the coming year. It’s essential you have insurance in place, and contingency plans in case the worst happens. Also Read Join our Treasury Community 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. Notice: JavaScript is required for this content.
rhumphries@gpsfx.com
When Treasury Chooses You: Insights from a Recent LinkedIn Poll
Careers can take unexpected turns, and for many Treasury professionals, the path into their field seems to have been anything but straightforward. A recent LinkedIn poll posed the question, “How did you get into Treasury?” and the results offer a glimpse into the varied ways professionals land in this critical area of corporate finance. Here’s what we learned: Below, we’ll explore these findings, discuss some possible reasons behind them, and acknowledge where the data itself (rather than speculation) tells the story. 1. Most People Didn’t Plan on Treasury With 56% of respondents saying they arrived in Treasury “by accident,” it’s clear that a conventional, deliberate route into Treasury is not the norm—at least among this sample. This data point suggests that many professionals discover Treasury while working in another financial role, or perhaps stumble across an opportunity they hadn’t initially sought. 2. A Smaller Percentage Made a Conscious Choice Only 28% of respondents indicated that Treasury was a clear career choice from the start. This group—just over a quarter of participants—either studied Treasury specifically (perhaps through targeted courses or specialized programs) or were aware of the role early in their careers and actively pursued it. 3. Referrals and Networking Play a Role Another 13% reported landing in Treasury via referrals from friends or colleagues. While not the largest segment, it still underscores the importance of networking and industry connections in shaping careers. 4. The “Other” Category With 3% of respondents choosing “other,” there’s a tiny but real slice of people whose paths may not fit any of the main categories. Their reasons could range from internal transfers within a company’s finance department to academic research that led to a corporate treasury internship, among countless other possibilities. Why These Results Matter Final Thoughts The poll results reveal an interesting reality: for many people, Treasury isn’t something they set out to do—yet they end up thriving in it. That speaks both to the hidden nature of the field and the transferable skill sets that make a Treasury career possible. While we can infer some reasons from broader industry norms (limited academic exposure, niche skill requirements, reliance on referrals), the poll itself doesn’t offer every detail behind these routes. Ultimately, these insights should prompt more intentional conversations about raising awareness and providing structured avenues for entering Treasury. If you’re a hiring manager, you might consider ramping up outreach or creating clearer career pathways. If you’re just starting out in finance and find yourself drawn to cash management, risk assessment, or corporate liquidity strategies, Treasury might be worth a closer look—whether by design or, as the data suggests, “by accident.” Have your own Treasury story? Feel free to share in the comments section or send them to us as a blog. Understanding how others have navigated into Treasury can help demystify the field and encourage more transparency around the various routes that lead to this vital function in business. 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.
Top features to look for in in-house bank software
This article is written by Nomentia Executive summary: For global businesses looking to harmonize their cash management and gain control and visibility over their payment operations, an in-house bank is an obvious choice. In this article, we answer the following questions: What are the core functionalities of in-house bank software, and how does in-house bank software centralize the control of cash management? We also cover the benefits and the most important features of an in-house bank solution and how it can help manage intercompany transactions and loans. Read on to learn more about the top features to look for in in-house bank software. In-house bank: Centralized cash management, cost efficiency, visibility, and control? As things stand, many globally operating companies are burdened by cash management and treasury operations, where each of their subsidiaries or business units manages its own banking relationships and cash management independently. The reasons for this are common, as are the results: Questions like what our consolidated cash position is, what our true foreign exchange exposures are, and even what our overall liquidity risk is are difficult, if not outright impossible, to answer. As treasurer or a cash manager, you know the risks involved. In the long run, the situation is unsustainable. Something must be done and done right. As luck would have it, I chanced a word with Nomentia’s top expert about the top features of an in-house bank: Jouni Kirjola Jouni Kirjola is the Head of Solutions and Presales at Nomentia, bringing nearly 20 years of expertise to the role. Specializing in payments, cash forecasting, in-house banking, and reconciliation, Jouni has extensive experience and deep knowledge of financial solutions, making him a key leader in delivering tailored solutions that meet clients’ needs. What is an in-house bank? An in-house bank is a centralized financial entity within a corporation that acts as an internal banking unit. It is typically established by large multinational corporations to manage and optimize the company’s financial resources more efficiently. Key features of an in-house bank In-house bank software: Can you do without one? In action, an in-house bank could operate as follows: A multinational corporation with subsidiaries in various countries might use an in-house bank to centralize all financial transactions. For instance, if a European subsidiary needs funding, the in-house bank may lend money from the cash reserves of an Asian subsidiary, avoiding the need for external loans. This set up can bring several benefits, like: But there are also challenges like: It’s up to each organization to discern if the benefits of an in-house bank outweigh the challenges. Let’s compare: Feature / Capability In-house bank software Disparate cash management and banking systems Global operations support A centralized platform simplifies global operations with a unified structure for managing payments, intercompany transactions, and cash positions. Fragmented processes across regions lead to inconsistent practices, manual interventions, and higher complexity. Cash visibility Comprehensive, real-time view of cash positions across all entities with drill-down capability to specific subsidiaries, accounts, or currencies. Limited, often delayed cash visibility; data needs to be manually consolidated from various sources. Liquidity management Consolidates financial data across ERP, banks, and TMS for full liquidity insights and optimized cash pooling and cash concentration. Decentralized cash management: It is challenging to allocate and pool funds across subsidiaries, often increasing borrowing costs. Payment processing Centralized and automated payment hub; reduces errors, delays, and manual processing with templates and workflows for consistency. Multiple manual payment systems; increased risk of errors, inconsistencies, and delays in payment processing. Intercompany financing & settlement Automated intercompany loan management and netting reduce the need for external borrowing and simplify internal settlements. Complex, time-consuming intercompany settlements require extensive reconciliation, often incurring extra costs. Cash flow forecasting Automated, accurate forecasts incorporating historical trends, seasonality, and real-time data, allowing precise planning and analysis. Limited forecasting capabilities; manual data consolidation reduces accuracy and delays in forecasting. Currency management Multi-currency support with automated FX handling for global cash positions, reducing currency risk. Inefficient currency management often requires external hedging, adding cost and exposure to FX risks. Fraud prevention & compliance Role-based security, fraud detection, approval workflows, and sanctions screening ensure secure transactions and regulatory compliance. Inconsistent security protocols: higher risk of fraud and compliance issues due to lack of standardized control measures. Scalability Easily scales to support additional subsidiaries, transactions, and currencies as the organization grows. Difficult to scale; disparate systems need reconfiguration or replacements to handle increased transaction volume or new entities. Reporting & analytics Centralized, customizable dashboards with real-time reporting for monitoring, insights, and strategic alignment across the organization. Limited reporting: data consolidation is time-intensive, making it challenging to generate actionable insights. Operational efficiency Streamlined operations with automated workflows, reducing dependency on manual work, cutting operational costs, and improving speed. Higher operational costs due to redundancy, manual interventions, and inefficiencies across regions. Cost of implementation The initial investment may be higher, but it reduces long-term costs through increased efficiency, fewer errors, and centralized operations. Lower upfront costs but ongoing high costs due to inefficiencies, lack of centralization, and potential need for external services. Core features of in-house bank software: What to look for? Best Nomentia tools to set up an in-house bank Cash visibility, cash flow data consolidation and harmonization According to Jouni, companies should be asking: “What is our current cash position globally and by subsidiary? Or by currency? Are we accurately reconciling and clearing accounts on a daily basis?” Centralized cash visibility allows companies to manage liquidity, monitor bank relationships, and analyze cash movements on a global scale. By consolidating data into one view, the treasury can quickly assess cash positions and make informed decisions about liquidity allocation, funding needs, and investment opportunities. Payment hub for payment process standardization “What is the most efficient way to track and control our cash outflows? How do we ensure consistent and compliant payment processes across subsidiaries?” A centralized payment hub standardizes payment processes across subsidiaries, reducing manual intervention and enabling more effective cash and working capital management. Collection hub for collection-on-behalf-of (COBO) processes “How can we decrease banking fees and dependency on multiple bank accounts?” “Can we centralize payment processes to reduce…
How to Tackle Troublesome Tariffs with 5 Savvy Working Capital Solutions
This article is a contribution from our content partner, Kyriba Widespread uncertainties surround the economic impacts of the second Trump administration, especially in regards to the potential for significant tariffs on the U.S.’s top three trading partners–Mexico, Canada, and China–as well as Europe. In response to Trump’s threat of 25% tariffs on goods, both Canada and Mexico have suggested imposing retaliatory tariffs on U.S. imports. One Canadian leader even floated the provocative idea of halting electricity exports to the U.S., while Mexican President Claudia Sheinbaum vows to coordinate, collaborate, but “never become subordinated” as Mexico prepares to negotiate tariffs affecting the 80% of its exports destined for the U.S. market. Canadian Prime Minster Justin Trudeau’s resignation announcement earlier this year introduces an additional layer of complexity to Canada’s handling of Trump’s tariff threats. In the face of ongoing volatility, financial leaders need effective strategies to safeguard their organizations’ fiscal health, and optimizing working capital is a key approach to counteracting the adverse effects of tariffs. By strategically managing assets and liabilities, finance experts can minimize tariff impacts, reduce costs, and maintain liquidity performance. Equipped with the five savvy working capital solutions outlined below, financial teams are well-positioned to navigate the complexities of tariff-induced challenges with confidence. Tariff Turbulence Will Cause Supply Chain Strain Trump’s proposed tariffs could have far-reaching effects, likely increasing the cost of goods. Businesses are expected to pass these higher costs to consumers, impacting inflation, supply chain dynamics, and market demand. Below are some top consumer goods that could become more expensive in the U.S. and globally if these tariffs are implemented. Automobiles A 25% tariff on all goods crossing the border under the United States-Mexico-Canada Agreement (USMCA) would have significant repercussions for the auto industry, which is deeply integrated across the three countries. Vehicles produced under the USMCA typically cross borders an average of eight times during production, compounding the impact of tariffs at each stage and leading to increased production costs, disrupted supply chains, and higher consumer prices. In 2023 alone, the U.S. imported $44.76 billion worth of vehicles from Mexico, making it the top import. Additionally, Europe is not immune from Trump tariff troubles, as the U.S. imported $42.5 billion worth of European passenger cars in 2023. Consequently, new tariffs could lead to production cuts and mass layoffs in several countries.Adding to the complexity, numerous automakers such as General Motors, Ford, and Stellantis have relocated production to Mexico to bypass previous tariffs on Chinese goods, turning it into a significant hub for car manufacturing. Notably, electric vehicles assembled in Mexico using Chinese and Canadian components could cost more. This reliance on non-U.S. parts, which are cheaper than U.S.-made alternatives, means that the proposed tariffs could dramatically alter the cost dynamics for American automakers. Gas The proposed 25% tariff on Canadian crude oil imports could have severe economic consequences for both the U.S. and Canada. U.S. imports of Canadian crude oil reached a record 4.3 million barrels per day in July 2024, a vital supply for American refineries specifically configured to process this type of crude for gas and heating oil. The proposed tariff could increase U.S. gas prices up to $1 per gallon. For Canada, crude oil exports constitute nearly its entire trade surplus with the U.S., and rerouting this oil is not feasible due to the immovable nature of recently expanded pipelines. Both countries face limited flexibility, as Canada has few alternative export options and U.S. refineries have restricted sourcing alternatives. Produce Due to climate change affecting U.S. growing conditions, the country increasingly depends on Mexico for produce. The United States is Mexico’s largest agricultural trading partner, importing $44.87 billion in agricultural products in 2023. For example, 91% of avocados consumed in the U.S. are sourced from Mexico. But the consequences of agricultural tariffs have much broader implications than the price of avocado toast: when the U.S. imposes tariffs on other countries, retaliatory measures typically target American agricultural products, which would drive up costs for domestic products as well as imports. Alcohol A 25% tariff on all goods crossing the border under the United States-Mexico-Canada Agreement (USMCA) would have significant repercussions for the auto industry, which is deeply integrated across the three countries. Vehicles produced under the USMCA typically cross borders an average of eight times during production, compounding the impact of tariffs at each stage and leading to increased production costs, disrupted supply chains, and higher consumer prices. In 2023 alone, the U.S. imported $44.76 billion worth of vehicles from Mexico, making it the top import. Additionally, Europe is not immune from Trump’s tariff troubles, as the U.S. imported $42.5 billion worth of European passenger cars in 2023. Consequently, new tariffs could lead to production cuts and mass layoffs in several countries.Adding to the complexity, numerous automakers such as General Motors, Ford, and Stellantis have relocated production to Mexico to bypass previous tariffs on Chinese goods, turning it into a significant hub for car manufacturing. Notably, electric vehicles assembled in Mexico using Chinese and Canadian components could cost more. This reliance on non-U.S. parts, which are cheaper than U.S.-made alternatives, means that the proposed tariffs could dramatically alter the cost dynamics for American automakers. 5 Savvy Working Capital Solutions In response to potential tariff impacts, implementing working capital solutions and reducing associated costs are crucial strategies. Tariffs can affect the cost of capital, but working capital solutions like supply chain finance, dynamic discounting, and receivables finance can help mitigate these effects. These approaches enable financial leaders to enhance cash flow, strengthen supplier relationships, and maintain sustainable growth amid economic uncertainties. 1. Supply Chain Finance (SCF) offers suppliers early payments at favorable rates based on their buyer’s credit rating. By using a third-party funder and providing payment options, supply chain finance facilitates a stable vendor base at a lower cost of capital compared to traditional methods. Supply chain finance is particularly beneficial for industries such as manufacturing, automobiles, and retail, which often have extensive and complex supply chains across multiple markets. By insulating buyers from market volatility, supply chain finance reduces financial risks and provides the flexibility needed to adapt to changing tariff landscapes. Supply chain finance supports supply chain stability by providing suppliers with access to funding and minimizing the potential of disruptions caused by tariff-induced financial strain. How Supply Chain Finance Accelerates Growth for…
Treasury Contrarian View: Treasury Dashboards — Are We Tracking the Wrong Metrics?
Dashboards have become a staple in corporate treasury—colorful visuals, real-time updates, and dozens of KPIs all packed into a single screen. But here’s the question: Are treasury dashboards helping us make better decisions, or are they just digital wallpaper? Are we tracking the right things, or are we so focused on reporting that we’re missing the big picture? The Case for Dashboard Overload Dashboards are often backward-looking, summarizing what’s already happened instead of predicting or prescribing what should happen next. The Case for Strategic Dashboards They can help track progress against internal benchmarks or market standards, driving performance and accountability. Rethinking Treasury Dashboards Rather than packing dashboards with every possible metric, treasurers should ask: Let’s Discuss We’ll be sharing examples and expert opinions from board members and treasury tech partners—join the conversation and let us know what metrics matter most to you. COMMENTS Sebastian Muller-Bosse, Treasury Masterminds board member, comments: Everyone knows what a furniture maker or a potter creates, but what about a treasurer? What does a treasurer work with, and what is their masterpiece at the end of the day? For me, it’s the report that transforms financial data into actionable information, ultimately leading to wisdom for financial decision-making. Too often, when creating reports, the question is “What do we want to report?” or “Which information should we show?” However, it’s more effective to start with “Why?” If I understand the purpose of the report, I can build it more efficiently instead of just displaying the requested information. Often, these details are presented in plain tables because they’re just numbers. The second crucial question that brings clarity is “How do I present the data so that the information reaches the recipient quickly and efficiently?” This requires exploring various visualization options. Is a bar chart or a pie chart better? Could it be a waterfall diagram or even a treemap? Have you ever heard of Sankey diagrams? Can colors and sizes be used effectively? Which tool should I use to present it—Excel, PDF, PowerPoint, Tableau, or Power BI? Does my recipient have specific preferences? Answering these questions will help you build a good dashboard that presents information in a targeted manner and might even tell a data story. Because if the treasurer’s work at the end of the day is a report, we should all know our tools to craft a masterpiece that is admired. Alexander Ilkun, Treasury Masterminds board member, comments: In my worldview, dashboards are an instrument that is integral to an effective and efficient Treasury team – on both operational as well as strategic level. Why does a visualization tool beat analyzing raw data in Excel? People are quite bad at consuming information in tables – carefully crafted visuals help tremendously in understanding what the data tells us. Instead of your team member taking an Excel spreadsheet on a regular basis and putting it into a pivot table or chart to glimpse insights it saves a quite a bit of time and effort when the information can be accessed effortlessly in a visualization. Then there is also an argument of missing the datapoints. It will be hard to find a person who was looking at the pivot trying to make sense of the data only to realize that some of the datapoints got filtered out or were not displayed. Further, once the data is visualized, it spurs thinking about how to get inputs automatically – in my experience, a vast portion of input retrieval can be automated and data can be transformed consistently and systematically before it is visualized in exact same way as it has always been. The final argument I will make is in the realm of business continuity – it is much easier to train someone new how to read a properly developed dashboard (with built-in tooltips and manual, if needed) than to transition an Excel model, where you have to worry about the skill level of the individual taking over the data model as well as its integrity going forward (since, lets admit) even experts can accidentally break a model). Dashboards can also serve as an excellent communication tool. By displaying information to Treasury team members and other stakeholders, it is possible to allow them to self-serve in order to find answers to many questions without relying on someone reading the email, manually checking the data, and then responding. These are just a few questions that come to mind that could be effectively answered 24/7 by dashboards that are tailored for that specific purpose. As you can sense from the direction, I’m a big proponent of having various reports tailored for a specific need, which means there are various functional reports, from which select information may be combined into a smaller number of strategic dashboards or even a single one (although avoid overcrowding your visualization). It will raise an inevitable question – how much time is spent gathering data for these? Is it really worth it? The answer is that in the current technological era, a lot (if not all) data retrieval can be automated by API, RPA, or another kind of interface. When you take out the time investment to gather inputs, you are only left with the benefit that report gives you. Therefore, you can afford to run those reports as often as you need, getting close to near real-time information, without incurring additional cost (the costs of many tools are often fixed). What is even more – once you have the inputs and the reports automated, you can start thinking about combining the data from various reports to initiate trigger-based action or automate business workflows, which raises your game to the whole next level. 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:…
How Embedded Finance is Changing Bank Reconciliation
This article is written by Embat Embedded finance is revolutionising the way businesses and banks interact with each other, as well as with consumers and users. Advances in new technologies and the support of APIs have completely changed the current financial paradigm, altering many of the business processes we encounter daily. But how exactly is such a fundamental process like bank reconciliation changing? What advantages does this new reality bring? Discover more below. What is embedded finance? The term embedded finance refers to the integration of financial services into platforms or applications that traditionally do not belong to the financial sector. In other words, it is the merging of banking and financial services within non-banking applications, allowing these applications to offer services such as payments, loans and insurance more directly to their users. The idea behind embedded finance is not entirely new. For years, companies have sought ways to simplify the user experience by reducing friction in their payment processes. However, with technological evolution and the emergence of fintech, this integration has become deeper and more diverse. Now, we are not just talking about payments but a complete range of financial services that can be integrated into e-commerce platforms, mobility applications, social networks, and more. Technology has been the catalyst in the rise of embedded finance. Open Banking in general and APIs in particular have allowed non-financial platforms to connect securely with financial service providers. This has democratised access to financial services, enabling companies of all sizes and sectors to offer their customers embedded financial solutions. Advantages of embedded finance for a business The advantages of adopting embedded finance are multiple and can significantly impact a company’s growth and profitability. Below, we explore all these benefits in detail: Advantages for banks Embedded finance is not just an attractive option for businesses. Banks can also benefit from its full potential: APIs & UX Embedded finance could not have reached its peak without the power provided by APIs. Application Programming Interfaces (APIs) are essential within embedded finance, allowing different software to communicate with each other. In the financial context, APIs enable platforms to integrate banking services securely and efficiently. In this regard, UX is also important. A smooth and simple user experience can be the difference between the success and failure of financial service integration. It is essential that transactions are intuitive and that the user feels confident when using these services. Exemplary cases of embedded finance in the world Embedded finance has enabled numerous companies, both within and outside the financial sector, to innovate and offer solutions that were previously unthinkable. These exemplary cases demonstrate the power and potential of integrating financial services into non-traditional platforms: How to implement embedded finance Implementing embedded finance in a company or platform may seem like a complex task, but with proper planning and the right tools, the process can be smooth and effective. Below are the key steps and considerations for successful implementation: Tools for implementing embedded finance A successful implementation of embedded finance requires specialised tools and platforms that facilitate the integration of financial services into non-financial applications and platforms. Some of the most notable tools in this area are: Banking API platforms: Integrated payment solutions Loan-as-a-Service (LaaS) Platforms: At Embat, we have a flexible and customisable automatic reconciliation system. With this solution, you can automate bank reconciliation using criteria tailored to your business’s specific needs. With an agile and intuitive interface and verification and approval processes that ensure traceability and compliance with requirements at all times. Conclusion In conclusion, embedded finance is transforming bank reconciliation and the way businesses and banks interact. With benefits for both businesses and banks, this trend is here to stay and continue revolutionising the financial world. Also Read Join our Treasury Community 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. Notice: JavaScript is required for this content.