03 Jan 12
BAFT-IFSA, the association for organisations engaged in international
transaction banking, will hold its global annual meeting outside the US
for the first time since its inception, putting into practice one
further element of its strategy in the establishment of this global
commercial banking association. The 2012 Global Annual Meeting
Conference will be held at the Millennium Gloucester Hotel in London on
23-24 January.
Under the theme of 'Transaction Banking in a
Changing Global Landscape', the conference is designed to provide
insight into the business implications of the wide-ranging regulatory
and market changes being experienced by the global transaction banking
industry today. Sessions will feature chief economists, bankers, banking
clients and regulators, giving attendees exposure and access to a
cross-section of the international banking industry. This is a gathering
of industry practitioners organised by the industry and focused on
their needs.
In an interview with gtnews, Jeremy Wilson,
chairman, BAFT-IFSA board of directors and co-chair Europe Council, and
vice chairman at Barclays Corporate, says: "The timing of this
conference could hardly be better. Europe is in a state of flux, which
makes this the best possible time to gather together transaction bankers
from around the world to understand the issues and the way that the
evolving structure of Europe will affect them and their clients going
forward.
"The banking industry is facing major change in an
environment where the regulators around the world are seeking to secure
the safety of the banking system. Those changes include the Basel
Committee's work on trade, liquidity and leverage. There is an acute
need within the industry to understand the consequences of these
measures and to work with regulators in ensuring that the wider
interests and health of trade finance around the world are protected,"
he explains.
Wilson adds: "Another area under scrutiny is in the
world of payments. There is increasing interest in the security and
safety of the payments infrastructure, not least to ensure that it
doesn't collapse due to lack of investment at a time when there is such
significant demand for investment elsewhere across the industry as a
whole."
Over 225 industry leaders and executives will be in
attendance for the two-day event, which will feature a wide variety of
keynote speakers, panel discussions, and evening networking reception.
Confirmed speakers include Sir Philip Hampton, chairman, the Royal Bank
of Scotland Group, and Chris Salmon, executive director of banking
services, the Bank of England (BoE).
For complete programme details click here.
First published on www.gtnews.com
About Me
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- Joy Macknight
- Freelancer of the Year at Aviva Investors Sustainability Media Awards 2025. I am a former editor of The Banker, a Financial Times publication. I joined the publication in August 2015 as transaction banking and technology editor, was promoted to deputy editor in September 2016 and then to managing editor in April 2019. The crowning glory was my appointment as editor in March 2021, the first female editor in the publication's history. Previously I was features editor at Profit&Loss, editorial director of Treasury Today and editor of gtnews.com. I also worked on Banking Technology, Computer Weekly and IBM Computer Today. I have a BSc from the University of Victoria, Canada.
Tuesday, 3 January 2012
Becoming the Strategic Partner
09 Nov 2011
Risk management remains top of mind for corporate treasurers, and the question of how to be more strategically involved in business decision-making is the crux of the problem.
Risk management remains top of mind for corporate treasurers, and the question of how to be more strategically involved in business decision-making is the crux of the problem.
Risk management was one of the top issues discussed and debated at
the AFP conference this year - and it continues to be something that is
top of mind for corporates treasurers. In an Executive Institute
session, alongside Jiro Okochi, chief executive officer (CEO) and
co-founder of Reval, Mario Cornacchio, Jr, treasurer of Bose, went
through steps in the evolution towards strategic risk management.
Cornacchio explained how the environment of “inconceivable” volatility and rate of change has given the treasury an opportunity to lead. Bose treasury took a pragmatic approach to risk management, and overcame the problems of needing new skills in the treasury as well as resource constraints. But, he said, the big question to answer was: are we as treasurers ready to lead?
Bose doesn’t have an enterprise-wide risk management system but is working towards partnering with other areas to assess and quantify risk, in order to consciously choose what risk it is willing to take. Cornacchio believes that it is not about being risk averse, but managing risk. He made the point that treasurers need to talk at a strategic level without letting technical jargon get in the way - but that no one should underestimate the challenge in speaking in a different way to the board.
Bose uses Six-sigma and ‘lean’ enterprise methodologies to become more efficient and to use technology better. Some examples of how they improved risk management are:
Zicchino explored the idea of ‘personal branding’ and outlined six principles of marketing which can applied to self-promotion:
The solution’s aim was to remove paper from treasury and accounts receivable (A/R). The treasury and A/R teams joined forces to meet the following objectives:
Although it took a few weekends to complete the awards entries, the extra work was worth it, according to Stokes. She was invited to fly up on the corporate jet to Sibos in Toronto to pick up the gtnews award - and sat beside the chief financial officer (CFO). As a result, the CFO turned the project into the sustainability office as the finance department’s contribution to the corporate sustainability goals and the project was then publicised on the company’s intranet. Stokes has submitted the project to her university alumni class notes to gain visibility with her peer group.
Zicchino made the point that even if Kellogg had not won an award, Stokes and her team could have promoted the project by writing a bylined article or case study for a trade publication.
gtnews has just announced the 2012 Awards for Global Corporate Treasury - are you planning your entry?
First published on www.gtnews.com
Cornacchio explained how the environment of “inconceivable” volatility and rate of change has given the treasury an opportunity to lead. Bose treasury took a pragmatic approach to risk management, and overcame the problems of needing new skills in the treasury as well as resource constraints. But, he said, the big question to answer was: are we as treasurers ready to lead?
Bose doesn’t have an enterprise-wide risk management system but is working towards partnering with other areas to assess and quantify risk, in order to consciously choose what risk it is willing to take. Cornacchio believes that it is not about being risk averse, but managing risk. He made the point that treasurers need to talk at a strategic level without letting technical jargon get in the way - but that no one should underestimate the challenge in speaking in a different way to the board.
Bose uses Six-sigma and ‘lean’ enterprise methodologies to become more efficient and to use technology better. Some examples of how they improved risk management are:
- Innovative foreign exchange (FX) options hedging programme.
- More advanced customer default risk assessment.
- Hands on support in supplier risk assessment.
- China supply concentration and renminbi (RMB) hedge.
- Opportunistic Mexican peso hedge.
- Data breach response plan.
Treasury: How to Increase Your Profile
Cornacchio’s question raises the issue of how to get a seat at the table when it comes to more strategic questions. Eileen Zicchino, chief marketing officer (CMO), JP Morgan Treasury Services, and Deirdre Stokes, certified treasury professional (CTP), manager, corporate treasury, Kellogg Company, ran a session entitled ‘What Have You Done For Me Lately? Marketing Your Professional Assets’, which got to the crux of how to raise your profile within the organisation.Zicchino explored the idea of ‘personal branding’ and outlined six principles of marketing which can applied to self-promotion:
- Know your audience.
- Tailor the message to your audience, whether that is your team, manager, board or external parties.
- There are only two stories worth telling: efficiency gains and creating value.
- Now you have the story, aggregate the facts, i.e. milestones in the project.
- Leverage the right tools, i.e. company newsletter, intranet, bylined articles for external publications, conference presentations, case studies and awards submissions.
- Get help from experts, i.e. marketing department, internal communications, banks and vendors.
The solution’s aim was to remove paper from treasury and accounts receivable (A/R). The treasury and A/R teams joined forces to meet the following objectives:
- Eliminate many common manual processes.
- Improve the timeliness of the bank account reconciliation process.
- Reduce the use of paper, which in turn impacts energy use and waste generation.
Although it took a few weekends to complete the awards entries, the extra work was worth it, according to Stokes. She was invited to fly up on the corporate jet to Sibos in Toronto to pick up the gtnews award - and sat beside the chief financial officer (CFO). As a result, the CFO turned the project into the sustainability office as the finance department’s contribution to the corporate sustainability goals and the project was then publicised on the company’s intranet. Stokes has submitted the project to her university alumni class notes to gain visibility with her peer group.
Zicchino made the point that even if Kellogg had not won an award, Stokes and her team could have promoted the project by writing a bylined article or case study for a trade publication.
gtnews has just announced the 2012 Awards for Global Corporate Treasury - are you planning your entry?
First published on www.gtnews.com
eBAM Top of Emerging Trends, Finds AFP Benchmarking Survey
08 Nov 2011
The AFP 2011 Treasury Benchmarking Survey identifies emerging trends and Microsoft's director of finance leads a session on shaping the supply chain.
The AFP 2011 Treasury Benchmarking Survey identifies emerging trends and Microsoft's director of finance leads a session on shaping the supply chain.
Nearly seven out of 10 survey respondents from the middle market
companies (less than US$1bn in revenue) have indicated that electronic
bank account management (eBAM) is a valuable emerging trend, according
to the 2011 Association for Financial Professionals (AFP) Treasury
Benchmarking Survey. More than half of the large corporate respondents
also felt the same.
The survey, sponsored by PNC, also identified cross-bank zero balance accounts (ZBA) as another important development.
More than 700 organisations participated in the survey, which evaluates operational issues for treasury departments that directly impact an organisation’s success. In its three-year lifespan, this is the first time the survey has emphasised bank relationship management. The main findings were:
Shaping the Supply Chain for Xbox’s Success
In the afternoon session Michael Trzupek, senior director of finance operations, Microsoft, went through step-by-step how he transformed the Microsoft finance department’s role from that of an accounting function, where its main function was finance reporting at the base level, to one that provides financial analysis and insight and helps to drive the business strategy.
Microsoft has a broad product portfolio. It has six operation centres in five countries, 10 Tier 1 manufacturers, 15 supply chain partners and 640 suppliers. It supplies more than 50,000 retail outlets and has 300 retail partners. It developed an integrated supply chain management programme.
Trzupek explained that the ability to sell its product to customers digitally - i.e. Xbox Live service - was changing the dynamics of the supply chain and would continue to be a challenge in the future to deliver a rich consumer experience. In 2005, Microsoft moved all manufacturing to China but maintained a hands-on factory management programme. It consolidated its supply chain.
The company believe in building and sustaining a world-class manufacturing and supply chain operation, which requires a focus on cash management, said Trzupek. He explained that the Microsoft finance team focused on:
First published on www.gtnews.com
The survey, sponsored by PNC, also identified cross-bank zero balance accounts (ZBA) as another important development.
More than 700 organisations participated in the survey, which evaluates operational issues for treasury departments that directly impact an organisation’s success. In its three-year lifespan, this is the first time the survey has emphasised bank relationship management. The main findings were:
- Large corporates have an average of 16 bank relationships, compared to between four to eight relationships for middle corporates (US$1-5bn) and mid-market companies.
- The average length of banking relationships is approximately 10 years.
- Eighty-five percent of large corporates has a credit facility; this is true for 82% of mid-corporates and 73% of mid-market companies.
- The average number of banks participating in the facility is 13 for large corporates, three and two for mid-corps and middle market companies, respectively.
- Companies put great value on the stability of their bank group - six out of seven say that maintaining a stable bank group is important.
- Over 70% of corporate treasurers consider a bank’s health to be a significant factor in initiating or maintaining a business relationship, and 19% changed banks last year due to concerns about a bank’s health.
Shaping the Supply Chain for Xbox’s Success
In the afternoon session Michael Trzupek, senior director of finance operations, Microsoft, went through step-by-step how he transformed the Microsoft finance department’s role from that of an accounting function, where its main function was finance reporting at the base level, to one that provides financial analysis and insight and helps to drive the business strategy.
Microsoft has a broad product portfolio. It has six operation centres in five countries, 10 Tier 1 manufacturers, 15 supply chain partners and 640 suppliers. It supplies more than 50,000 retail outlets and has 300 retail partners. It developed an integrated supply chain management programme.
Trzupek explained that the ability to sell its product to customers digitally - i.e. Xbox Live service - was changing the dynamics of the supply chain and would continue to be a challenge in the future to deliver a rich consumer experience. In 2005, Microsoft moved all manufacturing to China but maintained a hands-on factory management programme. It consolidated its supply chain.
The company believe in building and sustaining a world-class manufacturing and supply chain operation, which requires a focus on cash management, said Trzupek. He explained that the Microsoft finance team focused on:
- Taking the cost out - looking at total cost of ownership (TCO).
- Proactive cost curve management.
- Optimal product lifecycle management.
- Manage both risks and opportunities.
- Terms, conditions and balance sheet.
- Negotiating a seat at the table and increase the finance department’s influence.
- Provide valued insight by prioritising easy-to-win victories.
- Acting as an key contributor for the business – develop a strong partnership to deliver financial results.
- Outsourcing is not abdication.
- Alignment in not consensus.
- Scaling is more than building and selling more units.
- Risk versus reward is exactly that – focus on risk, not reward.
- Architecture is more than just process and tools but also strategy, people, networks, processes, tools and systems must all align.
First published on www.gtnews.com
Get Up, Get Into It, and Get Involved
07 Nov 2011
Bill Clinton, the 42nd president of the US, took centre stage at the 2011 AFP annual conference in Boston.
The annual conference of the Association for Financial Professionals
(AFP) officially opened last night in Boston with the best attendance in
its 25-year history: more than 6000 delegates and a record number of
corporate practitioners - 2308 - have registered for the conference.
Attendees almost stampeded into the hall to hear the opening plenary keynote speaker, ex-US president Bill Clinton. Clinton’s speech focused on the challenges and opportunities presented by the turbulent times faced by the global economy. He spoke of the inequality in the world and the responsibility of corporates, not only to their shareholders, but also to their increasingly global communities and the long-term stability of the system.
When asked by Michael Connolly, chairman of the AFP and vice president - treasurer, Tiffany & Co, how he defined leadership, Clinton listed four criteria:
The strategy addressed short-term financing requirements during construction through a commercial paper programme and bullet bonds, rather than with traditional bank financing and amortising bonds, resulting in savings in excess of US$50m for the project.
OPG was chosen from among two other finalists: Hewlett-Packard and Microsoft. OPG, HP and Microsoft were selected as the three Pinnacle Finalists because their solutions made treasury and finance operations run more efficiently and effectively at their organisation.
This morning I am going to the session ‘2011 AFP Benchmarking Survey Results’, which takes a closer look at bank relationship management. The presenters will discuss key metrics from the survey, the importance of credit in relationships, criteria used in selecting banking providers and will identify the characteristics top performing companies use in managing their bank relationships.
First published on www.gtnews.com
Attendees almost stampeded into the hall to hear the opening plenary keynote speaker, ex-US president Bill Clinton. Clinton’s speech focused on the challenges and opportunities presented by the turbulent times faced by the global economy. He spoke of the inequality in the world and the responsibility of corporates, not only to their shareholders, but also to their increasingly global communities and the long-term stability of the system.
When asked by Michael Connolly, chairman of the AFP and vice president - treasurer, Tiffany & Co, how he defined leadership, Clinton listed four criteria:
- To be able to have an accurate assessment of where the organisation you are leading is at.
- To have a vision for the future.
- To have a strategy to realise the vision.
- To have the ability to execute the strategy.
AFP Pinnacle Grand Prize 2011
Recognising leadership and excellence in treasury, Ontario Power Generation (OPG) outshone other competitors to win the AFP Pinnacle Grand Prize, sponsored by Wells Fargo. OPG’s treasury team executed a financing programme with unique technical features that resulted in considerable savings.The strategy addressed short-term financing requirements during construction through a commercial paper programme and bullet bonds, rather than with traditional bank financing and amortising bonds, resulting in savings in excess of US$50m for the project.
OPG was chosen from among two other finalists: Hewlett-Packard and Microsoft. OPG, HP and Microsoft were selected as the three Pinnacle Finalists because their solutions made treasury and finance operations run more efficiently and effectively at their organisation.
Benchmarking
During his welcoming speech, Connolly made the point that during these uncertain times, it is important to get up, get into it, and get involved - borrowing from the James Brown song. He stressed the important role the AFP plays in lobbying regulators and influencing the industry as a whole, particularly through surveying its membership on significant developments in the market.This morning I am going to the session ‘2011 AFP Benchmarking Survey Results’, which takes a closer look at bank relationship management. The presenters will discuss key metrics from the survey, the importance of credit in relationships, criteria used in selecting banking providers and will identify the characteristics top performing companies use in managing their bank relationships.
First published on www.gtnews.com
Wednesday, 26 October 2011
SIA Expo 2011 Tackles SEPA and Beyond
18 Oct 2011
More than 600 payments industry players participated in SIA's sixth annual international payments summit in Milan. Rebranded as SIA Expo, the conference covered topics such as SEPA 3.0, the future of electronic payments (e-payments) and electronic services (e-services) as the next frontier for innovation.
The sixth annual international payments conference hosted by SIA - previously known as ‘Do You SEPA’ - attracted more than 600 participants from the European payments industry. Giacomo Vaciago, economist, Università Cattolica del Sacro Cuore, gave the opening keynote speech addressing the continuing global economic crisis.
According to Vaciago, Europe needed to address three problems:
On the positive side, Muylle reports that a deal between the three institutions involved - EP, EC and the European Payments Council (EPC) - will hopefully happen by the end of this year. He said that the EC is to launch a public consultation in order to finalise the end dates.
Paolo Angelucci, chairman, Assinform, the Italian association of information and communication technology companies and an affiliate of the Confindustria (Confederation of Italian Industry), argued that the “war on cash is a war of civilisation”, and that it was important to outline a transition path to dematerialisation through changing people’s mindset. Assinform is part of the ‘Digital Italy’ project.
However, Mario Dal Co, general manager, Agency for the Promotion of Technologies for Innovation - Presidency of the Council of Ministers, highlighted that many public administrations in Italy still ask citizens to pay in cash - such as Equitalia, the national tax and collections collector. Paolo Martinello, chairman, AltroConsumo and BEUC, the European consumer’s organisation, also pointed out the high proportion of irregular work in Italy does not help with a mass migration to digital payments. He said: “A modern payments system will happen when the Italian economy becomes more transparent, and tax avoidance is tackled. We need to be courageous and pull down the threshold of €500.” He used the example of taxi drivers in Brazil: more than half live in favelas, yet all cabs will accept credit cards as payments.
Piet Mallekoote, CEO, Currence, which launched the e-payments scheme iDEAL in the Netherlands in 2006, explained how all three stakeholders in the process - web merchants, consumers and banks - benefit from online banking e-payments (OBeP).
John Broxis, STEP2 services director, EBA Clearing, spoke about EBA’s new initiative called MyBank, which it officially launched on 19 September this year. It put out a call for banks and e-merchants across Europe to participate in the pilot scheme, to go live in June 2012. Broxis believes that this new initiative will benefit merchants through reduced cost due to automation, improved customer services and the ability to reach new customers. It will benefit the consumer through payments security, the absence of a need to disclose bank or card details and its SEPA-wide coverage.
SIA is throwing its weight behind the MyBank initiative. According to Mario De Lorenzo, central institutions director, SIA, it is the infrastructure that is the key value for MyBank. He believes that SIA can bring to the table its experience in secure payments, specialisation in real-time authorisation systems and deep knowledge of fraud and detection programmes.
First published on www.gtnews.com
According to Vaciago, Europe needed to address three problems:
- What to do with the debt, which is “the debt of a war that we didn’t have”? He suggested a consolidation of debt.
- How to have natural risk aversion, not panic-driven. He said that Europe needed to reduce risk and segregate bank functions.
- Whether or not to go forward with the euro? He believes that the euro project was a great stride forward, but that each country had a different role to play and there was no sense in pretending that every country is a “Germany”, i.e. an economic powerhouse.
SEPA 3.0: Beyond the End Date
In the next session on the single euro payments area (SEPA), Jean-Yves Muylle, head of unit DG internal market and services - retail issues, consumer policy and payment systems, European Commission (EC), spoke about the state of play in terms of the planned migration to SEPA Credit Transfers (SCTs) (the EC proposal is for February 2013) and SEPA Direct Debits (SDDs) (February 2014). However, there are a few hurdles still to overcome, such as:- Debate over regulation flexibility, i.e. how much should be left up to Member States.
- Slight disagreement over technical specifications.
- Room to manoeuvre with regards to modalities and details.
- The European Parliament (EP) has introduced amendments to smooth the transition, for example: allowing temporary conversion facilities from Basic Bank Account Number (BBAN) to International Bank Account Number (IBAN); lifting the limit of €50,000; abolishing settlement-based statistical reporting; and ensuring all direct debits are valid after SDD migration.
On the positive side, Muylle reports that a deal between the three institutions involved - EP, EC and the European Payments Council (EPC) - will hopefully happen by the end of this year. He said that the EC is to launch a public consultation in order to finalise the end dates.
War on Cash
In the session, ‘More than SEPA: The Future of E-payments’, Giovanni Sabatini, general manager, Italian Banking Association (ABI), argued that the Italian situation is behind the rest of Europe in usage of non-cash payments and said more things were needed to be done to create incentives for consumers to move away from cash beyond the ban on cash for transactions of more than €500. Massimo Arrighetti, chief executive officer (CEO), SIA, agreed that it was important to continue the “war on cash” because of the high cost of cash - estimated to be €10bn per year in Italy - and the market benefits.Paolo Angelucci, chairman, Assinform, the Italian association of information and communication technology companies and an affiliate of the Confindustria (Confederation of Italian Industry), argued that the “war on cash is a war of civilisation”, and that it was important to outline a transition path to dematerialisation through changing people’s mindset. Assinform is part of the ‘Digital Italy’ project.
However, Mario Dal Co, general manager, Agency for the Promotion of Technologies for Innovation - Presidency of the Council of Ministers, highlighted that many public administrations in Italy still ask citizens to pay in cash - such as Equitalia, the national tax and collections collector. Paolo Martinello, chairman, AltroConsumo and BEUC, the European consumer’s organisation, also pointed out the high proportion of irregular work in Italy does not help with a mass migration to digital payments. He said: “A modern payments system will happen when the Italian economy becomes more transparent, and tax avoidance is tackled. We need to be courageous and pull down the threshold of €500.” He used the example of taxi drivers in Brazil: more than half live in favelas, yet all cabs will accept credit cards as payments.
Payment Initiatives: iDEAL and MyBank
With e-commerce in Italy growing by 19% in the past year, conference participants were interested to hear about payment initiatives such as iDEAL and MyBank to help in the ‘last mile’ uptake by improving the customer experience.Piet Mallekoote, CEO, Currence, which launched the e-payments scheme iDEAL in the Netherlands in 2006, explained how all three stakeholders in the process - web merchants, consumers and banks - benefit from online banking e-payments (OBeP).
Web merchants
- Real-time payment guarantee.
- No chargebacks and reversals.
- Automated.
- Cost-effective.
Consumers
- No sign up.
- Simple, familiar, easy-to-use.
- Highly secure.
Banks
- Leveraging on investments in internet banking.
- Less disintermediation.
- Improving relationships with banks.
John Broxis, STEP2 services director, EBA Clearing, spoke about EBA’s new initiative called MyBank, which it officially launched on 19 September this year. It put out a call for banks and e-merchants across Europe to participate in the pilot scheme, to go live in June 2012. Broxis believes that this new initiative will benefit merchants through reduced cost due to automation, improved customer services and the ability to reach new customers. It will benefit the consumer through payments security, the absence of a need to disclose bank or card details and its SEPA-wide coverage.
SIA is throwing its weight behind the MyBank initiative. According to Mario De Lorenzo, central institutions director, SIA, it is the infrastructure that is the key value for MyBank. He believes that SIA can bring to the table its experience in secure payments, specialisation in real-time authorisation systems and deep knowledge of fraud and detection programmes.
First published on www.gtnews.com
EuroFinance 2011 Blog - Best Practice in Bank/corporate Relationships
14 Oct 2011
On the second day of EuroFinance 2011, the plenary panel discussion revolved around the questions corporates should be asking their banks on best practice. The playing field was evenly matched, with three corporates and three banks.
The second session of day two at the EuroFinance conference in Rome delved into the corporate/bank relationship, looking at what can be done to improve performance and services. The panel was made up of three corporate and three banking representatives:
Johal said that he wanted a bank that could show an understanding of the company’s business, the treasury model and the organisation as a whole. He wanted a bank that could listen, with the same level of experience. He made the point that banks really needed to get the onboarding process right and deliver what they promise on time.
Kirkland agreed that banks had to listen and added that he wanted them to present solutions that solve the pain points he faces. Mehta said that listening and understanding could always be done better. “Banks must understand the domain that theses solutions are being used - in the way that Steven Jobs understood the consumer.”
Berndt came back on the two main points of predictability and relationships. She said: “In many ways this is like a marriage - yet we are still talking about ‘the banks’ and ‘the corporates’. Coming together will drive true reform. Banks have to realise that what is right for the client doesn’t mean that it is right for the P&L [profit and loss] of a specific product. Sometimes it is better to take a hit on a specific product’s revenue, because you know that you will pick the loss up somewhere else. It is like taking a hit for the greater good.”
After the initial discussion, the audience was asked a number of questions, the first being how do you rate your bank on a scale of one to nine, with nine being top notch? Thirty-one percent and 29% rated banks seven and six, respectively. Only 5% gave banks a nine rating.
The participants were then asked what is the banks’ biggest shortcoming? Twenty-eight percent cited documentation, while 16% each chose fee transparency and failure to understand the business. For Millar, a bank’s lack of understanding its own business was a source of much frustration. She felt that senior management’s intent often could not be executed on the ground. Johal also agreed, saying that ‘global’ doesn’t always work. “We have faced issues in that delivery doesn’t meet expectation.”
Schmand argued that in order to truly be a global network bank, and attain the “McDonald’s-affect” where the experience is uniform no matter what geography the bank operates in, a bank would need to be operating from one single platform.
When asked what corporates can do to improve the banking relationship, 55% of the audience said greater openness and transparency. Berndt again returned to the theme of relationship. “Openness is about finding out what your client needs. For example, if a corporate client is going through a big M&A deal then that probably isn’t a good time to talk to them about payments.”
- Carole Berndt, head of EMEA, global treasury solutions, Bank of America Merrill Lynch (BofA Merrill).
- Darsh Johal, head of global cash management, Shell Treasury Centre.
- Dr Mark Kirkland, vice president treasury, Bombardier Transportation.
- Rajesh Mehta, regional head of treasury and trade solutions Europe, Middle East and Africa (EMEA), Citi.
- Debbie Millar, group executive - treasury, funding and investor relations, MTN Group.
- Daniel Schmand, managing director, head of trade finance and cash management corporates EMEA, Deutsche Bank.
Johal said that he wanted a bank that could show an understanding of the company’s business, the treasury model and the organisation as a whole. He wanted a bank that could listen, with the same level of experience. He made the point that banks really needed to get the onboarding process right and deliver what they promise on time.
Kirkland agreed that banks had to listen and added that he wanted them to present solutions that solve the pain points he faces. Mehta said that listening and understanding could always be done better. “Banks must understand the domain that theses solutions are being used - in the way that Steven Jobs understood the consumer.”
Berndt came back on the two main points of predictability and relationships. She said: “In many ways this is like a marriage - yet we are still talking about ‘the banks’ and ‘the corporates’. Coming together will drive true reform. Banks have to realise that what is right for the client doesn’t mean that it is right for the P&L [profit and loss] of a specific product. Sometimes it is better to take a hit on a specific product’s revenue, because you know that you will pick the loss up somewhere else. It is like taking a hit for the greater good.”
After the initial discussion, the audience was asked a number of questions, the first being how do you rate your bank on a scale of one to nine, with nine being top notch? Thirty-one percent and 29% rated banks seven and six, respectively. Only 5% gave banks a nine rating.
The participants were then asked what is the banks’ biggest shortcoming? Twenty-eight percent cited documentation, while 16% each chose fee transparency and failure to understand the business. For Millar, a bank’s lack of understanding its own business was a source of much frustration. She felt that senior management’s intent often could not be executed on the ground. Johal also agreed, saying that ‘global’ doesn’t always work. “We have faced issues in that delivery doesn’t meet expectation.”
Schmand argued that in order to truly be a global network bank, and attain the “McDonald’s-affect” where the experience is uniform no matter what geography the bank operates in, a bank would need to be operating from one single platform.
When asked what corporates can do to improve the banking relationship, 55% of the audience said greater openness and transparency. Berndt again returned to the theme of relationship. “Openness is about finding out what your client needs. For example, if a corporate client is going through a big M&A deal then that probably isn’t a good time to talk to them about payments.”
Treasury Verdict
The third session focused on giving the delegates an opportunity to make their views known on some of the most interesting and important treasury issues of the day. Here are a few of the results:Will the US dollar be replaced as the reserve currency in the next 10 years?
- Stay with US dollar - 48%.
- Euro - 11%.
- New basket of currencies - 26%.
- Renminbi (RMB) - 12%.
- Swiss franc - 3%.
What is the biggest concern with regards to China in the next 10 years?
- No concerns - 15%.
- Chinese economy will collapse - 13%.
- Heading for long-term decline - 11%.
- Domination of world economy - 36%.
- Implosion due to social turmoil - 25%.
Where do you see growth?
- US -10%.
- Latin America - 45%.
- Middle East - 22%.
- Sub-Saharan Africa - 21%.
- Southeast Asia - 47%.
- Western Europe - 16%.
- Central and eastern Europe - 36%.
How much will the share of revenue from emerging markets grow in the next 10 years?
- No change - 3%.
- Decline - 1%.
- Grow by 50% - 27%.
- Grow by 100% - 16%
- More than double - 19%.
- More than triple - 12%.
- No idea - 10%.
- Not relevant - 12%.
Has company investment policy been affected by the US downgrade?
- Yes - 11%.
- No - 89%.
Where would you put your spare cash in a stable market?
- No spare cash - 7%.
- Pay down debt - 26%.
- Diversified investments - 26%.
- Expansion/M&A - 23%.
- Build cash buffers - 5%.
- Distribute to shareholders - 13%.
What are you doing to protect your supply chain?
- Offer better payment terms - 16%.
- Direct financial support to suppliers - 14%.
- Work with bank to provide finance - 43%.
- None of the above - 23%.
- Squeezing the supply chain - 30%.
EuroFinance 2011 Blog - Will Collection Factories Become a Necessity?
13 Oct 2011
After payment factories come collection factories. How close are treasuries to making this a reality?
Workshop stream three in the first afternoon of EuroFinance 2011 looked at what was termed 'liquidity plus' - which included two case studies on balancing the cash and building the right buffers, presented by Sven Vorstius, head of interest rate risk management, Bayer, as well as how to improve on cash flow forecasts, presented by Diane Wilson, assistant treasurer, TI Automotive.
Despite the interest both sessions attracted, it was the third session of the day, entitled 'Payment and Collection Factories for the Future', which caught my attention - mainly due to the fact that many corporate treasurers have expressed intense frustration when attempting to set up a payments factory, let alone a collection's equivalent.
Willem Dokkum, global head of sales payments and cash management (PCM), ING, asked a number of questions in a straw poll of the 120-strong audience. The first asked whether the collection factory would become a necessity for corporates in the near future, for example by 2015. The majority (60%) said "yes", while 14% said "no". Interestingly not a single participant had already set up a collection factory to date.
Speaking from the panel, Laurent Guillouët, head of back office and cash management at ArcelorMittal, said: "A payment factory is relatively easy because the information comes from inside the group, or an internal system; whereas the information for a collection factory comes from an external system. That is the real problem. Is it a necessity? Everyone is interested in a more centralised and efficient system."
The second question looked at what is the most important element for the successful introduction of a collection factory. Almost half (48%) of the audience cited an integrated enterprise resource planning (ERP) system, while 24% said an integrated policy, 17% picked top-down/directive approach, and just 10% thought it was shared key performance indicators (KPIs).
Marco Schuchmann, head of treasury operations and payment factory, AkzoNobel, disagreed, saying that integrated ERP in not that important. He believes that the most important element is the top-down approach. "It is important that senior management indicates what direction we are going in. There needs to be a shared goal and mandate from senior management." AkzoNobel is implementing a payment factory despite having over 160 ERP systems.
Erik van den Enden, general director treasury, AB Inbev, agreed that no one has a single ERP system, yet everyone is creating these factories, but did admit that it makes it much easier to only be dealing with one system. He argued that it was shared KPIs that were the most important. "It can't be done in an ivory treasury tower, but must get everyone - IT, local people, etc - involved," he said. "It is important that senior management has buy-in, too."
When asked what was the most important benefit expected of introducing a collection factory, half of the audience identified visibility and control on cash/to improve funding. Almost a quarter (23%) chose a very efficient order-to-cash (O2C) process. Only 13% picked reduction of risk and focus on credit management. Reduction in headcount/free up capacity was the least popular, with only 4% of the audience citing that as the most important benefit.
Schuchmann jokingly said: "Well in today's world, where countries cannot service their debt and Blackberries don't work, it is all about risk."
A third of the audience identified local practices or lack of uniformity as the main bottleneck to implementing the collections factory. Almost a quarter (24%) said that it was a lack of commitment by senior management as the major pitfall, while 21% cited too many applications (e.g. accounting, billing, etc).
In order to make a collection factory a success, 30% and 31% chose one technical platform (interconnected IT systems) and one shared service centre (SSC). Worryingly, 15% said "nothing special".
Wouter Ligteringen, manager treasury operations, KPN, said that one important choice was missing - project management. He said that it was critical to gather together people with different areas of expertise and from different environments. KPN's success was based on a phased approach, rolling out outgoing payments, direct debits, high value payments, and then subsidiaries. The project manager needs to set deadlines and monitor consultants, according to Ligteringen.
Although Guillouët voted for one technical platform, he also agreed that the project team is an important factor.
The final question focused on what the next challenge or ambition is after the collection factory is created. Over a third (36%) thought it would be 'other', i.e. promotion to chief financial officer (CFO). The next most popular answers were expanding the collection factory geographically (26%), connecting the payment with the collection factory (16%), and expanding the collection factory geographically.
Van den Enden made the point that implementing a collection factory was part of a larger cash management optimisation plan. Although it was a very important milestone for AB Inbev, the next step was to build on the infrastructure that the company now has, he said.
Despite the interest both sessions attracted, it was the third session of the day, entitled 'Payment and Collection Factories for the Future', which caught my attention - mainly due to the fact that many corporate treasurers have expressed intense frustration when attempting to set up a payments factory, let alone a collection's equivalent.
Willem Dokkum, global head of sales payments and cash management (PCM), ING, asked a number of questions in a straw poll of the 120-strong audience. The first asked whether the collection factory would become a necessity for corporates in the near future, for example by 2015. The majority (60%) said "yes", while 14% said "no". Interestingly not a single participant had already set up a collection factory to date.
Speaking from the panel, Laurent Guillouët, head of back office and cash management at ArcelorMittal, said: "A payment factory is relatively easy because the information comes from inside the group, or an internal system; whereas the information for a collection factory comes from an external system. That is the real problem. Is it a necessity? Everyone is interested in a more centralised and efficient system."
The second question looked at what is the most important element for the successful introduction of a collection factory. Almost half (48%) of the audience cited an integrated enterprise resource planning (ERP) system, while 24% said an integrated policy, 17% picked top-down/directive approach, and just 10% thought it was shared key performance indicators (KPIs).
Marco Schuchmann, head of treasury operations and payment factory, AkzoNobel, disagreed, saying that integrated ERP in not that important. He believes that the most important element is the top-down approach. "It is important that senior management indicates what direction we are going in. There needs to be a shared goal and mandate from senior management." AkzoNobel is implementing a payment factory despite having over 160 ERP systems.
Erik van den Enden, general director treasury, AB Inbev, agreed that no one has a single ERP system, yet everyone is creating these factories, but did admit that it makes it much easier to only be dealing with one system. He argued that it was shared KPIs that were the most important. "It can't be done in an ivory treasury tower, but must get everyone - IT, local people, etc - involved," he said. "It is important that senior management has buy-in, too."
When asked what was the most important benefit expected of introducing a collection factory, half of the audience identified visibility and control on cash/to improve funding. Almost a quarter (23%) chose a very efficient order-to-cash (O2C) process. Only 13% picked reduction of risk and focus on credit management. Reduction in headcount/free up capacity was the least popular, with only 4% of the audience citing that as the most important benefit.
Schuchmann jokingly said: "Well in today's world, where countries cannot service their debt and Blackberries don't work, it is all about risk."
A third of the audience identified local practices or lack of uniformity as the main bottleneck to implementing the collections factory. Almost a quarter (24%) said that it was a lack of commitment by senior management as the major pitfall, while 21% cited too many applications (e.g. accounting, billing, etc).
In order to make a collection factory a success, 30% and 31% chose one technical platform (interconnected IT systems) and one shared service centre (SSC). Worryingly, 15% said "nothing special".
Wouter Ligteringen, manager treasury operations, KPN, said that one important choice was missing - project management. He said that it was critical to gather together people with different areas of expertise and from different environments. KPN's success was based on a phased approach, rolling out outgoing payments, direct debits, high value payments, and then subsidiaries. The project manager needs to set deadlines and monitor consultants, according to Ligteringen.
Although Guillouët voted for one technical platform, he also agreed that the project team is an important factor.
The final question focused on what the next challenge or ambition is after the collection factory is created. Over a third (36%) thought it would be 'other', i.e. promotion to chief financial officer (CFO). The next most popular answers were expanding the collection factory geographically (26%), connecting the payment with the collection factory (16%), and expanding the collection factory geographically.
Van den Enden made the point that implementing a collection factory was part of a larger cash management optimisation plan. Although it was a very important milestone for AB Inbev, the next step was to build on the infrastructure that the company now has, he said.
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