REAL-TIME RECONCILIATIONS: THE CORNERSTONE OF FINANCIAL GROWTH AND SECURITY
This article was written by HedgeFlows In the often labyrinthine world of finance and accounting, real-time reconciliations may seem like another industry buzzword. Clumsily thrown around by those keen on the latest bells and whistles for their balance sheets. However, beneath the jargon lies an indispensable foundation for organisations aspiring to safe, agile, and robust financial operations. It’s more than technological fashion. It’s about securing a future for your business that is as dynamic as it is secure. THE BLUEPRINT FOR SAFER GROWTH Picture the mile marker in a marathon race—your reconciliations are exactly that in the financial journey of your business. They mark the progress with precision, and when every second counts, staying updated is not a luxury; it’s a necessity. Real-time reconciliations hold the key to a financially agile enterprise. This is due to an increasing global market and the advent of digital transactions. For accountants and finance managers, the need for precision is non-negotiable. Traditional methods, like manual data entry or delayed bank feeds, no longer keep pace with the relentless surge of transactions across the world. Delayed reconciliations are not just a bottleneck for daily operations. They can lead to costly errors and oversights that reverberate across the fiscal calendar. Timely reconciliation means better risk management, more informed decision-making, and, crucially, can unlock hidden capital within your operations. THE RISKS OF A RECONCILIATION DELAY The risk posed by outdated reconciliation processes is multifaceted and unforgiving. Financial discrepancies, whether in your sales pipeline or supply chain, can have a lasting impact on your standing in the market. A one-time error can lead to prolonged fallout in terms of client trust and investor confidence, which are currencies more valuable than any monetary capitals. Furthermore, the delay in recognising these discrepancies can lead to erroneous financial statements and misdirected funds, often with expensive trickle-down effects. It’s akin to trying to navigate a dense forest with an outdated map—not impossible, but certainly unwise, and downright costly in terms of efficiency and resources. SEIZING THE MOMENT: REAL-TIME APIS AND AUTOMATION The guard changes forever in the world of finance, and technology has heralded a new dawn for reconciliation processes. APIs (Application Programming Interfaces) that enable two-way communication between your financial systems and banking/merchant transaction feeds are empowering businesses to reconcile in real time. Automation is streamlining the once arduous task of matching volumes of transactions with unprecedented speed and accuracy. Imagine your banking data and your accounting ledger dancing in sync, providing a performance that is not only prompt but pristine. REAL-TIME RECONCILIATION CASE STUDIES Case studies are powerful exemplars of the transformative power of real-time reconciliations. Take a look at a travel company client of HedgeFlows, which saw a 60% reduction in errors and an 80% saving in resource hours by switching from manual to live reconciliations. On the other hand, a logistics company, after automating their reconciliation processes, noticed a marked increase in their working capital efficiency and a surge in their liquidity ratios, all due to the transparency and cash visibility in multiple currencies that real-time reconciliation affords. The stories are compelling—real-time reconciliations are not just a convenience; they’re the lifeline to a financially resilient business model. EMBRACING THE CHANGE For those pioneering the shift towards real-time reconciliations, the results are not just gratifying but can be paradigm-shifting. It’s about harnessing every transaction, every cash flow, as an opportunity to bolster the financial integrity of your enterprise. Organisations must no longer treat recon activities as just another back-office chore but as a strategic player in their growth trajectory. The takeaway is clear. In today’s dynamic economic landscape, being diligent and being delayed are as different as success and obscurity. Modern accounting technologies and systems exist not only to automate but also to amplify the competitive edge that real-time financial insights provide. TAKE THE FIRST STEP Real-time reconciliations are not speculative foundations for the future of finance. They’re a current-day imperative for a safe and sustainable financial future. The question is not if you can afford real-time reconciliations. But whether you can afford not to have them as your business grows. THE ROAD AHEAD The journey towards real-time reconciliation might seem daunting. But it’s a path paved with reductions in financial risks. Efficiencies that translate to the bottom line, and a compass holstered for strategic decision-making. For accountants and finance managers who seek to drive value and elevate their businesses, the time for real-time reconciliations is now. 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.
Franklin
AI Tools and Platforms for Financial Analysis
In the realm of finance and data analysis, especially for a treasurer, several AI tools can either complement or potentially replace Excel. Here’s an overview of some platforms and AI tools that can be used for various financial and data analytic tasks, along with a discussion on whether they should replace or complement Excel: Recommended Reading: 1. Tableau 2. Power BI 3. Alteryx 4. Anaplan 5. R and Python (with libraries like tidyverse, ggplot2, xts, Pandas, NumPy, and SciPy) 6. Google Sheets with Google Data Studio Should These Tools Replace or Complement Excel? Replace Excel Complement Excel How about AI tools that could fully replace excel ? There are several AI tools and bots that can be integrated with Excel to enhance its capabilities, leveraging AI to automate tasks, generate complex formulas, and analyze data more efficiently. Here are some notable options: 1. Excel Formula Bot This tool helps users convert text instructions into Excel and Google Sheets formulas. It’s designed to streamline workflows by automating the formula creation process, making it user-friendly and intuitive 2. SheetGod This AI tool generates complex Excel formulas, macros, and regular expressions from plain English. It also offers features like sending marketing emails, generating bulk PDFs, and creating Google Workspace Add-Ons and Microsoft Excel Add-Ins. 3. GPTExcel This tool uses AI to generate spreadsheet formulas for Microsoft Excel and Google Sheets based on user inputs. It also provides explanations for the generated formulas to help users understand and apply them effectively 4. PromptLoop This tool allows users to integrate AI like GPT-3 directly into their spreadsheets to categorize, summarize, and transform text data. It simplifies the process of building AI-powered models in Excel without requiring extensive programming knowledge. 5. Excelly-AI An AI tool that transforms plain text into Excel formulas. It uses GPT-3.5-turbo technology to compute complex formulas and provides explanations for each one. It supports integration with both Excel and Google Sheets. 6. FormulaGenerator This tool generates and explains Excel formulas, VBA automations, Regex, and SQL queries from simple text instructions. It also includes an AI-powered Q&A bot for real-time assistance within spreadsheets. 7. Numerous.ai Known as “ChatGPT for Spreadsheets,” this tool can perform a variety of tasks, such as generating formulas, writing SEO content, and categorizing products using sentiment analysis. It works with both Microsoft Excel and Google Sheets. These tools can significantly enhance the functionality of Excel, making complex data tasks easier and more efficient. They are designed to be used as add-ons, integrating seamlessly with Excel to provide advanced capabilities without replacing the core functionalities of the software. Whether you’re a treasurer or a data analyst, these AI tools can help automate repetitive tasks, reduce errors, and save time, allowing you to focus on more strategic aspects of your work. Conclusion For a treasurer, it’s often beneficial to use these AI tools as add-ons to Excel rather than complete replacements. This approach leverages the strengths of Excel while enhancing its capabilities with specialized tools for more complex or large-scale data analysis and visualization tasks. We thought it would be valuable to get perspectives from Treasury professionals Sebastian and James, who are also Treasury Mastermind Board members. Sebastian Müller-Bosse, Manager Administration & Operations at Finance & Treasury Services GmbH, Comments Do AI tools have the potential to fully replace Excel? Yes, of course, it only depends on the specific use case that treasurers are using Excel for! Let’s be honest, Excel is a basic calculation tool that does mathematic operations and creates tables. By looking at the extensive list of other options, you will realize it’s not even the best in class for doing it. There are much more advanced data visualization options with PowerBI or Tableau and R or Phyton can handle much more data and calculate faster. In my opinion, the actual question is not if AI CAN replace Excel but rather IF treasurers will adapt to using AI tools in their organization. Here, I think the majority of treasurers will clearly stick to Excel and maybe will use AI tools as a complement since Excel is THE predominant and handy-to-use tool out there for all finance professionals. Only a fraction of finance professionals are already using R / Phyton, and PowerBI today, and these are not even AI tools. Why is the number of users not much higher, if these are clearly better? Because of convenience, the unwillingness to “change a winning” team, and maybe because learning new tools is hard (let’s not forget that it’s already hard to switch from Excel to Google Sheets and get to know the different layouts, etc!). AI today is making the job of learning new tools much easier because you don’t need to know how to code anymore. You simply get a running code delivered to your doorstep. The only problem that remains is that you still need the infrastructure and knowledge in case something is not adding up. You are ready to start learning about all the new fancy AI tools out there and are eager to integrate them into your daily work. Great! But if your organization forbids you to install/use them, you’re back where you started. In most cases, it’s not a “PlayStation” vs. “XBox” question since AI tools and Excel work in totally different spheres. With Excel, no one asks questions about data protection or the reliability of the deep learning models. With AI tools, you need to know much more about their suitability and how their use affects your organization’s data. Lastly, you still need to have Excel knowledge or knowledge about how to handle errors because AI probably can’t fix your bug even if you’re prompting,It’s still not working like expected; try again.” AI can be a huge complementary friend in creating the most complex Excel formulas but you still need to understand the outputs of AI tools and where to twitch and twerk them for you to get the correct results. The INDEX() formula that AI suggested is not worki.g? Well, if you…
Running on Empty: The wake-up call for financial visibility
This article is written by Cobase In Jackson Browne’s classic rock anthem “Running on Empty,” the narrative revolves around a relentless journey marked by continuous travel and the looming risk of running out of resources. For businesses, this song mirrors a familiar scenario in financial management—the critical point at which they realize the pressing need for robust cash management and comprehensive financial visibility. Recognizing the signs of financial strain Just as the song depicts a journey pushed to the limits, many businesses operate under similar conditions—stretching resources thin and often operating without a clear view of the financial road ahead. The wake-up call typically arrives when unexpected challenges strike: a downturn in the market, a sudden drop in cash flow, or unforeseen expenses that weren’t planned for. It’s at these moments that the lack of a proactive financial strategy becomes most apparent and perilous. A PricewaterhouseCoopers (PwC) survey revealed that 82% of companies fail due to poor cash flow management or poor understanding of cash flow. These issues become apparent during unexpected market downturns, sudden cash flow drops, or unforeseen expenses, emphasizing the need for a proactive financial strategy. The importance of financial visibility Financial visibility isn’t just about keeping an eye on today’s cash flow; it’s about predicting future financial states and being prepared for them. High visibility allows companies to make informed decisions, anticipate problems before they become crises, and manage resources more effectively. Without it, companies are essentially driving blind, unable to foresee bumps in the road ahead or prepare strategic responses. Financial visibility is crucial not just for monitoring current cash flows but also for predicting future financial states. A study by Deloitte highlighted that companies with high financial visibility could make decisions 3 times faster than competitors with low visibility. This capability allows businesses to anticipate problems before they turn into crises and manage resources more efficiently. Strategies for enhancing financial visibility Conclusion: don’t wait to run out “Running on Empty” serves as a poignant reminder of the dangers of complacency in financial management. Just as the song’s protagonist pushes forward with an almost reckless abandon, businesses too can find themselves moving dangerously close to their financial limits without adequate visibility and control. The key takeaway is clear: do not wait for the warning lights to flash red before taking action. Establishing robust financial visibility and proactive management practices is crucial in ensuring that businesses not only survive but thrive in today’s dynamic economic landscape. The journey toward financial transparency might seem daunting at first, but the peace of mind it brings could very well save your business from running on empty. 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.
Visa Expands Digital Wallet Capabilities with Seven Key Payment Innovations
Visa has recently expanded its digital wallet landscape, focusing on seven key payment methods to enhance security, convenience, and integration within its ecosystem. Here’s a detailed explanation of these methods: Recommended Reading: 1. Tokenization This method replaces sensitive payment information, such as credit card numbers, with a unique digital identifier or token. This token can be used to process payments without exposing the actual card details, significantly reducing the risk of fraud. Visa’s implementation of tokenization is designed to protect user data during online and mobile transactions, making it a cornerstone of their digital wallet security strategy. 2. Virtual Cards Visa has integrated virtual card technology into its digital wallet offerings, especially for business-to-business (B2B) transactions. Virtual cards are digital versions of physical cards that can be used for secure and controlled payments. They are particularly useful for corporate expenses, allowing businesses to manage and track spending more efficiently. The expansion of Visa Commercial Pay, which includes these virtual card solutions, highlights Visa’s commitment to modernizing B2B payments. 3. Biometric Authentication Visa is leveraging biometric technology, such as fingerprint and facial recognition, to enhance security and user convenience. This form of authentication ensures that only the authorized user can access and use their digital wallet, providing a higher level of security compared to traditional passwords or PINs. 4. Mobile Wallet Integration Visa has expanded its digital wallet capabilities to integrate with popular third-party mobile wallets like Apple Pay and Google Pay. This integration allows users to store their Visa cards in these wallets and make payments using their smartphones. This seamless integration increases convenience and broadens the use of Visa’s digital payment solutions. 5. Contactless Payments Visa supports contactless payment methods, which allow users to make transactions by simply tapping their card or mobile device near a payment terminal. This method is quick, secure, and particularly useful in environments where speed is essential, such as public transportation or retail stores. The adoption of contactless payments has surged, driven by consumer demand for faster and safer payment options during the pandemic. 6. Cross-border Payments Visa is enhancing its capabilities to facilitate cross-border transactions, making it easier for users to make international payments. This includes optimizing exchange rates and reducing fees, thus providing a more seamless and cost-effective solution for global transactions. Visa’s efforts in this area aim to support the growing need for international e-commerce and global business operations. 7. Embedded Finance Visa is integrating financial services into non-financial platforms through embedded finance. This means that payment capabilities are built directly into various digital platforms, such as ride-sharing apps or e-commerce websites, allowing users to make payments within the app without needing to switch to a separate payment service. This integration streamlines the user experience and increases the efficiency of transactions. Based on these payment innovations introduced by Visa, we thought it would be valuable to get perspectives from Treasury professionals Royston and Lorena, who are also Treasury Mastermind Board members. Q: What is the impact of these new advancements on treasury? Which methods do you see as most relevant and impactful for treasurers? Should treasurers take action now on any of these? How about fraud? Royston Da Costa, Assistant Treasurer at Ferguson, Comments Apart from the first point, Tokenization (and that appears mainly for Consumers), there is nothing new in what Visa is proposing! There are a number of digital wallets already offering these services and some even offer virtual bank accounts…! In terms of the questions you asked: Fraud – any initiative offering greater security will be most welcome by most Treasurers, and this should be the aim for ALL Financial institutions i.e. not a nice to have for Corporate but a necessity! Most attractive to Treasury: (i) Virtual cards are a huge hit, especially for our business in the US; (ii) Embedded Finance could prove quite promising especially for our customers wishing to pay us using our online platform. Lorena Pérez Sandroni, Head of Treasury at PayU GPO, Comments Indeed, I agree with Royston comments, we saw VISA publications and I like to see as many times as possible for them to cover the services we do have partnerships with them. However, we can’t treat this publication as something innovative or making the impression is VISA the pioneer, the products are developed and being offered already. Regarding Fraud initiative comment , the upcoming change in regulations is supposed to take all Fintech companies to make sure the data is secure (PSD3), however as Royston pointed out it is a must. 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.
PSD2 and Open Banking: All you need to Know
This article is written by Trustpair Flexible payment options, such as credit cards and buy now, pay later have been proven to help businesses improve their conversion rates by as much as 27%. With open banking APIs and PSD2 regulations, businesses can offer more payment options to their customers (and vendors), helping to scale their growth. But that’s not all open banking is good for. In this piece, you’ll learn about the advantages (and risks) associated with open banking’s biggest regulation – PSD2. PSD2 and open banking: definition and context PSD2 stands for the second iteration of the Payment Services Directive. It’s a European regulatory guideline tasked with connecting the data from banks to third party providers (fintechs). The aim of the regulation is to decrease the barrier of entry for new companies to access the financial services market, and ultimately increase the quality and range of finance services for customers. PSD2 came into force in 2018, after its first version was introduced back in 2007. The initial regulation was introduced to promote a single market for payments in the EU. But this second version was necessary because of the rise in open banking – consumers’ expectations have evolved as banking accounts and services moved online. As such, PSD2’s core concepts, including AIS and PIS were created to meet these expectations and maintain the integrity of the payments market. And although it’s mandated in the European market, there’s still a lot that US businesses can provide within the confines of PSD2. AIS: Account information service Account Information Services (AIS) enable registered service providers to consolidate and report a user’s data from multiple sources into one dashboard. A budgeting app like Emma or PocketSmith, which both connect multiple bank accounts to automatically analyze transactions, is a good example of this. In order to be authorized to access and consolidate this information, third party providers must be registered with their National Competent Authority (which also manages PSD2 compliance). By being approved on this list, AIS’ need to have completed their due diligence and demonstrate that they can adhere to the security standards of the payments regulation. PIS: Payment initiation service Payment Initiation Services (PIS) work a bit differently. It enables users to pay for products or services from inside a business app, instead of having to set it up through their bank. This brings the benefits of digital convenience, since the likes of direct debits or bank-to-bank payments are incredibly manual and time-consuming. In-app payments could vary from gaming purchases to online subscription payments for business products. But what remains the same, every time, is that users benefit from seamless and secure real-time transactions at a low cost. And, they get full control over their purchases thanks to automatic push payment (APP) notifications. These notifications pop up on the phones of payees as before their money leaves their account, as an extra authorization step. Having said that, authorized push payment fraud is emerging as a threat. With cellphone users getting constantly pinged by notifications, it’s easy for users to get confused and authorize withdrawals. This type of mobile payment fraud happened to customers of TalkTalk (a telecoms business), when fraudsters called up the customers and told them to accept the APP for a refund. Instead of funds being deposited into their account, it were withdrawn. Open banking and APIs: how does it work? Although Payment Services Directive 2 does not mandate any particular methods or tools (since it’s a directive), APIs are the clear option for implementing open banking services. API stands for application programming interface. They are like keys – when developers have a platform that they want to link with a bank, they will use the bank’s API to unlock data sources from the bank. Of course, each API works with the highest level of security, ensuring that open banking can be scaled at a low cost. Here are some examples of the services that work through open banking APIs: Open Banking: what are the key advantages? When it comes to the advantages of open banking, we’ll focus on three of the most impactful: PSD2 standards for security The introduction of multi-factor authentication came in with PSD2. This elevates payment security standards with greater internal controls, as it required at least two of the following three verification measures to take place before a transaction could leave the payee’s account: Also known as 2FA, this implementation is an incredibly popular one for businesses – both used to authenticate their customers and administrators. In fact, 64% of companies use MFA to verify customer identities, and 90% to validate their staff users as of Jan 2023. More competition leads to better customer experiences Long gone are the days where we all choose a bank as a teenager, and stick with it. In fact, more consumers in the US are reporting their interest in switching banks today, than compared to any point within the last decade. Open banking is one of the driving forces behind this change, since it’s enabled so much innovation. Now, financial institutions can partner with third parties to offer: With open banking accessible across the board, it’s up to the banks and financial institutions to build better customer experiences. Think improved UX design, gamification, and more account features, like savings calculators or investment predictions. Fueling the competition, this ultimately results in good news for the customer; more convenience, better app navigation and access to innovative products and services. Improved financial wellbeing The data that open banking provides can help individual customers and businesses alike. For example, data-driven businesses are 23 times more likely to acquire their customers, and six times more likely to retain them, than institutions that do not use data in their strategies. By implementing APIs to report on customer interactions, transactions and behavior, users can better understand how customers make purchasing decisions. This leads to higher conversion rates, since businesses can make the right offers at the right time. For example, banks could send the following offer: “we can see that you’ve been earning above the tax threshold. Would you like to automatically transfer a % of all…
FX Hedging is not Gambling
This article was written by HedgeFlows Many finance professionals in small corporations find dealing with foreign currencies quite challenging. Surprisingly, only 4% of UK SME exporters hedge their currency risks, while some businesses still consider FX forwards to be a form of gambling. This raises a question: why do most major corporations adopt FX hedging strategies while smaller companies often see it as an unnecessary expense? This article delves into the most common mistake made by finance teams when it comes to hedging and presents a more structured and robust approach to understanding this complex practice. The most Popular (and often wrong) Reason for Buying FX Forwards Numerous finance professionals view the primary aim of “hedging” using FX forwards as securing a more favourable FX rate for future transactions. While this notion holds some truth, it fosters a decision-making framework that is too flexible, leading to unpredictable incentives and behaviour. Traditional FX forwards are by far the most popular hedging instruments and enable businesses to fix today’s exchange rates for a specified amount of currency to be exchanged in the future. By entering into FX forward contracts, parties agree on a predetermined exchange rate for future transactions, shielding themselves from fluctuations in exchange rates. This fixed rate mitigates uncertainty and provides stability for both parties involved in the contract, regardless of FX market movements. When asked why they use FX forwards, all too often, people say they do it to get a better exchange rate, reduce their costs, or boost their revenues. Unfortunately, setting the goal of achieving a superior FX rate through hedging requires individuals to forecast future exchange rate movements, a task fraught with difficulty. Even the most skilled FX traders in leading banks and hedge funds struggle to consistently predict currency fluctuations correctly, a feat made more challenging for small finance teams lacking the resources and information flow available to top traders. Attempting to outsmart the foreign exchange market by aiming for preferential rates when buying and selling currencies is akin to challenging a casino at its own game. The unpredictable nature of FX rates contributes to the perception of hedging as a gamble, as individuals attempt to foresee future market conditions without a crystal ball. The fear of making incorrect decisions driven by current market rates is a significant concern for inexperienced finance managers and treasurers, who worry about the potential impact on their careers. Experienced finance teams mitigate this unpredictability by aligning their hedging strategies with well-defined and communicated internal objectives and metrics and implementing processes to effectively manage uncontrollable factors like FX risk fluctuations. Clear Internal Objectives Although the primary objective of FX hedging may vary for each business, key common goals and strategies can provide stability to your hedging approach despite the fluctuating nature of exchange rates. The prevalent strategies include Balance Sheet Hedging and Cashflow Hedging. Balance Sheet Hedging A balance sheet hedging programme aims to safeguard profit margins against currency fluctuations, reflected as FX Gains & Losses in accounting records. Typically, balance sheet items like foreign currency bank account balances, AP/AR, and other assets and liabilities in foreign currencies can lead to FX Gains & Losses for any accounting period. Often, foreign invoices are accrued at one exchange rate and settled later at a different rate, resulting in such FX Gains & Losses. The significance of hedging is better understood when it is directly linked to underlying exposures. Assessing hedging performance accurately necessitates considering hedges together with underlying assets or liabilities in foreign currencies. For many businesses, FX risk may be unidirectional. For instance, a company might solely buy or only sell in a foreign currency. In such scenarios, mitigating the impact of currency fluctuations on profit margins is achieved by hedging any contract or invoice denominated in a foreign currency promptly upon commitment. Nonetheless, understanding when FX risks arise is crucial. FX risks often emerge as soon as a contract is signed or even earlier, but accounting only captures a part of these risks when invoices are recorded in the ledger. In the above case, the exchange rates moved unfavourably from the time the sale invoice was entered until it was paid, and thus, the person who would have made the hedging decision looks like an unsung hero, even when the performance of the FX contract is viewed on its own. However, market exchange rates could also move in a favourable direction, in which case, the decision to hedge may seem like a wrong one – it would be better to wait and exchange currencies later. If the decision to hedge or not to hedge is based on an individual’s views of where the exchange rates are going, the company risks ignoring the key fact. The company is exposed to currency risks in a specific direction, and it must hedge if it wishes to remove FX gains and losses from the income statement. This is why it is important to view the hedges combined with the underlying risks to demonstrate their value: simply by fixing a predictable value of foreign invoices and thus protecting profit margins from unexpected currency swings. In the above example, the result FX Gain & Loss is nil, exactly the desired outcome. Cashflow Hedging Imagine that the above-mentioned company decided to hedge such an invoice even earlier, when the sales contract was signed. This means the company would enter into a FX forward contract, locking in a guaranteed exchange rate of 1.2525 (1.2500 and a small cost that often needs to be paid to purchase a FX forward). As a result, the company would lock in the value of £79,840.32 ($100,000/1.2525). More importantly, when the client pays $100,000 a month later, the cash flow can be exchanged at the guaranteed rate, and the company can collect the full £79,840.32. However, in this case, the hedge existed even before the invoice appeared on the balance sheet. Until the invoice date, this hedge relates to a forecasted transaction. Such a hedge is called a cashflow hedge because it does not…
Mastering the human side of Treasury: Why soft skills really matter
When building a career path in Treasury, certain technical skills are very important. However, soft skills are what can elevate your career beyond what technical skills cannot. Soft skills like communication, problem-solving, adaptability, leadership, and collaboration are very crucial to attaining leadership roles. Recommended Reading Let’s highlight the importance of these soft skills in a practical way: 1. Communication In a situation where you are presenting a complex financial report to company executives. Your ability to explain the numbers in a clear, understandable way is what keeps everyone on the same page. It also ensures confident decision-making. Without strong communication skills, important details could get lost in translation, leading to misunderstandings, and missed opportunities. 2. Problem-solving Assuming you are faced with a sudden cash flow crisis due to a market downturn. Your skill for analyzing the situation, identifying key issues, and brainstorming innovative solutions is what really saves the day. Whether it’s renegotiating terms with vendors or restructuring debt, your problem-solving skills help you through challenging financial situations. And helps your company achieve its corporate financial objectives. I remember a time. After completing my cashflow forecast, I discovered that due to changes in the economic situation and the implementation of a Central Bank policy, our company’s cash flow was going to decline by 20%. And we were securing repayments to international vendors for capital expenditures. I simply proactively engaged the suppliers to restructure payment terms for a longer period, giving them a mitigation strategy for any repayment risk they anticipated. 3. Adaptability Think about how rapidly technology evolves in finance. One day, you’re mastering a new Treasury Management System (TMS); the next, you are exploring the next, more efficient application for payments. Your ability to embrace change and quickly learn new skills ensures that you stay ahead of the curve and effectively leverage emerging technologies to streamline processes and enhance efficiency. 4. Collaboration In a situation where you are working on a major capital project that requires input from multiple departments—finance, operations, and marketing. Your ability to collaborate effectively, build relationships, and align everyone’s efforts towards a common goal is what drives the project’s success. By facilitating a culture of collaboration, you encourage synergies, take advantage of diverse expertise, and deliver impactful results that benefit the whole organization. Conclusion on Mastering the human side of Treasury While technical expertise is important in Treasury, it’s the soft skills that truly elevate professionals to leadership levels. Whether it’s communicating financial insights, solving complex problems, adapting to change, or collaborating across teams, mastering the human side of Treasury is what sets exceptional professionals apart from the rest. 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.
Jessica
Modernizing Treasury Management: Treasury Delta’s Fintech Innovation Recognized by EY UK
Exciting news just in: Treasury Delta, a strategic partner of Pecunia Treasury and Finance (Pecunia), has been chosen by EY UK for their Fintech Growth Programme. This recognition shines a light on Treasury Delta’s innovation, which will streamline corporate treasury transactions, particularly within treasury management. Pecunia’s decision to team up with Treasury Delta stems from a shared vision of simplifying day-to-day Treasury operations, especially the complex and costly request for proposals (RFPs). Together, they aim to leverage digital technology in order to remove friction points and they have recently undertaken their first successful transaction together. Katja Palovaara, EY Programme Manager, has praised Treasury Delta’s digital platform, stating, “Treasury Delta’s innovative digital platform stands out, promising a transformative impact on the future of financial transactions with its exceptional efficiency and cost-effectiveness. Their customer-centric approach and commitment to automation herald a new era for Treasury projects.” The Importance of Tech in RFPs: Saving Time, Money and Improving Decision Making Traditional RFP processes in treasury management are very time-consuming and resource-intensive. However, with technology such as Treasury Delta’s digital platform, these challenges are being addressed effectively. By incorporating tech-driven solutions, organizations can significantly reduce the time and effort required to conduct RFPs. Automation streamlines data collection and analysis, allowing Treasury professionals to focus on strategic decision-making rather than administrative tasks. This efficiency not only saves time but also reduces the operational costs associated with manual RFP processes. Furthermore, advanced analytics capabilities provide deeper insights into vendor capabilities, pricing structures, and market trends, empowering Treasury teams to make more strategic and informed choices. The use of technology in RFPs also facilitates better communication amongst stakeholders. Cloud-based platforms, like Treasury Delta’s, enable real-time access to data and insights, fostering collaboration between Treasury professionals, vendors, and other relevant parties. This seamless exchange of information enhances transparency and accountability throughout the RFP process. In summary, as organizations continue to prioritize efficiency and innovation in their treasury operations, tech-driven solutions like Treasury Delta’s platform will play an increasingly pivotal role in driving success. This recognition by EY UK validates Treasury Delta’s niche position as an up-and-coming player in fintech innovation, poised to drive significant advancements in treasury management practices. If your firm is interested in exploring this innovation, inquiries can be directed to Pecunia at info@pecuniabv.nl or by registering your interest at https://treasurydelta.com. 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.
Patrick Kunz
An Interview with Sebastian Muller-Bosse, Board Member of Treasury Masterminds
Q: Let us know you, Sebastian. Tell us a little bit about yourself and your journey in treasury I joined Finance & Treasury Services as a Corporate Treasury Manager after finishing my Master’s in “Finance & Accounting” at Leuphana University Lüneburg. While I was studying, I did several internships in corporate treasury departments, which helped me gain a lot of experience in treasury operations and currency management. For example, I was involved in implementing a new global treasury management system and revising a hedging strategy. Before this, I spent a year in treasury consulting with one of the Big Four accounting firms, where I helped clients set up their treasury functions and improve their organizational, procedural, and methodological approaches. I also have a background in banking, having completed a banking apprenticeship. Also Read: An Interview with Benjamin Defays, Board Member of Treasury Masterminds 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? 1. Corporate Banking: Hard Skills Since specifically Treasury Management concepts, methods, or instruments are not widely taught in academics as an individual subject like Controlling or Accounting, a sound understanding of corporate banking and cash & risk management, as well as financing products, is important. Treasury really begins with the bank relationship, ergo bank account management, investing and lending cash, etc. Most payment products or banking services are not hard to understand but it’s an advantage to be familiar with the “slang” and environment before starting a job in treasury. “Learning on the job” (see below) or visiting specialized seminars is a common way to develop the necessary skills throughout your career, making sure that you gain the relevant knowledge for your daily operations. 2. Analytical Soft Skills The fundamental tasks of a Treasury Manager are to create transparency, reduce financial risk, and ensure liquidity and solvency at all times. Where do I need cash, in what currency, and at what time? To answer these questions, you need to create sophisticated, comprehensive reports, that show data about your cash flow. There are many tools out there that help you visualize your cash flow in beautiful-looking tables and graphs. The real pain really starts at the beginning, though. No one likes to (a) collect, (b) save, and (c) clean the data, except you’re a real data wizard. The role of the Treasurer shouldn’t be about this data wrangling but the data analysis itself. You need to feel comfortable digging deep into the numbers and trying to figure out what story they tell. 3. The Rest: Learning on the job Since every Treasury is different, the requirements of businesses’ cash and risk management and financing can vary a lot. No Treasurer deals with all banking products and services, so you will soon find out what is relevant to your organization and what is not. One of your Treasury fellows might work in a trading company and deal with letters of credit every day, whereas you never understood how to manage them. A second fellow prepares for a bond emission, whereas you are only dealing with simple bank loans. A third fellow is executing the cash status and forecast by the push of a button in their Treasury Management System, while you are still struggling with your manual Excel sheets. This is all completely normal and fine! Always try to improve your workflows and systems, automate processes where you can, and stay up-to-date with skills, trends, challenges, and regulations in Treasury. Q: In your opinion, what are the most significant challenges facingTreasuryy departments in today’s business environment, and how do you approach addressing these challenges? 1. Resources Labor market shortages plus the lack of sophisticated higher education, especially Treasury management, create a tight situation for corporations trying to fill their vacancies. Often, they demand experienced treasurers who are simply aging more and more and the young ones are not following fast enough. A temporary solution can be interim managers but in the long run, only universities can help increase the supply of recruits. 2. Budget Treasury departments are fairly low-staffed compared to other finance departments like controlling or accounting. Many corporations prefer to stack up their technology, trying to make machines do the work more efficiently, rather than hiring for more FTE. Often, approval for these kinds of projects faces a bottleneck at the C-level and budget is the prevailing argument. A well-prepared business case with quantitative and qualitative value is key to winning their hearts on a project like this since the overall goal isn’t normally about gaining a profit from treasury activities. 3. Change Management In the fast-paced environment of today, new digital skills are needed more than ever. Especially data literacy and agile working methods are promising to cope with new trends in technology and to overcome the old “we always did it this way” mentality. The younger generation knows that there are capabilities and solutions for “getting the job done”. They can be frustrated if the organization is not adapting to the new realities and continues business as usual. Integrating young people into the team brings new ideas to the table since they grow up with different views and approaches. 4. Embrace LinkedIn Treasury management is a dark niche in the big pond of finance. Connecting to your peers helps you navigate these waters, not only on your own. Many treasurers got to their position where they are more or less my chance since the career path isn’t shown to them after university. Therefore, the feeling of working in a fairly unknown financial terrain should be more of the norm than the exception. A great place to start is connecting on social media platforms, especially on LinkedIn. Today everyone is happy to have a big online network of like-minded people and it’s not weird anymore if you haven’t met the person in real life yet. 5. 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