gtnews.com: Articles

Liquidity Risk Still Biggest Concern says gtnews Treasury Risk Survey 2013

Tue, 18 Jun 2013 04:00:00 -0400

According to the gtnews Treasury Risk Survey 2013, produced in collaboration with Zanders, liquidity risk is still the biggest concern with 78% of the 327 corporate treasury readers questioned from across Europe and North America citing it. In order of importance, other risks identified in the newly released report were regulatory risk (72%); foreign exchange (FX) risk (72%); interest rates (68%); and counterparty risk (66%). A move towards a more integrated ‘holistic’ risk management approach which focuses on operational and business risks was also evident, alongside traditional cash management concerns.

Analysing the World of Commodities

Mon, 17 Jun 2013 04:00:00 -0400

Multinationals are faced with buying raw materials in volatile commodity markets. By hedging firms can minimise the effects of unpredictable and wild price fluctuations. This is easier said than done though, due to the inherently difficult nature of commodity markets and the information that must be shared across various functional groups. However, helped by analytics and cloud-based treasury and risk management (TRM) technology that gives a holistic view of risk, companies can work collaboratively across the enterprise to gain the visibility needed to understand exposures, hedge and communicate better.

Hedging Gold Exposures During Volatile Times

Fri, 14 Jun 2013 04:00:00 -0400

Due to volatility gold market participants are increasingly looking for tools to mitigate risk. This article explains the volatility and proposes various offsetting structures. It includes examinations of hedging strategies, including forwards, vanilla options and knock out options, in addition to zero cost strategies such as zero cost collars and forward extras.

Commodity Risk Management in a Treasury Framework

Fri, 14 Jun 2013 04:00:00 -0400

Commodities price fluctuations have been seen as separate from regular market price exposures. With increasingly volatile commodity markets, however, and the availability and liquidity of hedging products, allied to developments in risk management systems, commodity risk management is moving up the treasury agenda. In a climate of tightening profit margins, where improving efficiency is key, an effective commodity risk management framework could present an attractive opportunity.

Digital Delivers for Payments and Receivables

Thu, 13 Jun 2013 04:00:00 -0400

Companies and their corporate treasurers are benefitting from a move to digital payments and receivables. However there are still many corporates that have yet to reap the benefits of digitisation, which can maximise cost savings and enhance working capital. This article argues that corporates should now make the move to transform their supply chains.

URBPO: A New Payment Mode for Trade

Thu, 13 Jun 2013 04:00:00 -0400

With the Uniform Rules for Bank Payment Obligations (URBPO) about to launch, this article looks at the initiative developed by the International Chamber of Commerce (ICC) and SWIFT and outlines the benefits of alternative means of settlement for international transactions.

Counterparty Risk Management for Corporate Treasury Functions

Tue, 11 Jun 2013 04:00:00 -0400

The past five years has seen the challenges of counterparty risk management grow, largely through consolidation in the banking industry which means that companies are reliant on a small number of very large banks. This article outlines the key counterparty risk management principles that should form the basis of a corporate treasurer's policy.

From Cash Visibility to Mobility: Microsoft Treasury’s Strategy on Counterparty Risk

Tue, 11 Jun 2013 04:00:00 -0400

Counterparty risk exposures have increased for corporates of all sizes, but for multinational corporations (MNCs) with multiple presences worldwide they are massive. This article outlines the policies adopted by Microsoft’s treasury team in analysing, assessing and addressing the group’s various counterparty risks.

The Strength of Implied Ratings in Assessing Counterparty Credit Risk

Mon, 10 Jun 2013 04:00:00 -0400

In the period since the 2008 global financial crisis, corporate treasurers have grappled with credit risk issues that were starkly illuminated by Lehman’s meltdown and the vivid reminder that credit agency ratings are not infallible. Many tried using credit default swaps (CDSs) but quickly found that trading induced volatility renders them unsuitable. Few treasury departments have the resources to conduct their own analysis of bank balance sheets. This article summarises corporate counterparty credit risk management and suggests that implied ratings offers a solution to this conundrum.

Setting up an Effective Counterparty Risk Management Framework

Mon, 10 Jun 2013 04:00:00 -0400

Compared with only a few years ago, today’s corporate treasurers are exposed to a much greater variety of counterparty risks within both their supply chains and financial institutions. This article provides guidance on how these counterparty risks can be effectively monitored and managed.

Cloudy Outlook: The Future of Treasury

Fri, 07 Jun 2013 04:00:00 -0400

The cloud delivers computing as a service, rather than a product, so that software or hardware infrastructure can be accessed on demand. It is increasingly the technology of the future for treasuries, explains gtnews’ Heather McKenzie. What kind of cloud-based services such as monitoring dashboards to improve cash visibility and other online tools can corporations now use, and how does a SWIFT Service Bureau (SSB) full service capability, such as the one deployed by National Grid’s treasury and Dow Corning stack up against SWIFT’s own Alliance Lite 2 cloud offering?

T2S: Breaking Down Silos, Connecting EU Markets and Energising Settlement

Fri, 07 Jun 2013 04:00:00 -0400

The year 2015 and beyond will be marked by a significantly different environment for securities settlement in the European Union (EU). The European post-trade landscape is undergoing a plethora of major programmes related to infrastructure and regulatory initiatives, including the TARGET2 Securities (T2S) scheme. This article highlights key aspects pertaining to the state of EU securities settlement pre and post-T2S, the design elements and the current state of T2S programme.

Why Counterparty Risk Still Matters

Fri, 07 Jun 2013 04:00:00 -0400

A dearth of good quality collateral has forced many corporates to explore counterparty diversification as well as potential new instruments. Both policies increase counterparty risk and this article suggests some basic steps to improve its effective management.

The Emergence of Real-time Payments

Thu, 06 Jun 2013 04:00:00 -0400

The rapid growth and development over recent years of real-time payments is examined in this article, which reviews specific national schemes, the advantages for corporate treasury and the next likely development of real-time cross-border schemes.

New SME Exchange Could Release Funds and Stoke Investor Appetite for Retail Bonds

Tue, 04 Jun 2013 04:00:00 -0400

Mid-sized Dutch companies presently have very limited access to alternatives to bank financing. Will the planned new small-to-medium sized enterprise (SME) exchange in the Netherlands this summer change this situation and improve matters for treasurers seeking funds? This article gives an overview of the alternative funding landscape in Europe, examining the existing markets in Germany, Italy and the UK, from a Dutch perspective.

SSBs: A Changing Marketplace

Tue, 04 Jun 2013 04:00:00 -0400

The recent introduction of new qualifying criteria for SWIFT service bureaux (SSBs) could radically alter the SSB marketplace, driving consolidation among the providers and impacting the SWIFT connectivity options available to treasurers. This article looks at the changing SSB marketplace, the new Shared Infrastructure Programme (SIP) criteria, and what it all means for treasurers seeking partners for the on-boarding and connectivity procedure. The status of the SWIFT for Corporates programme is also assessed.

Q&A: SWIFT Explains New SIP Qualifying Criteria for Service Bureaux

Mon, 03 Jun 2013 04:00:00 -0400

SWIFT has introduced new, stricter requirements for its service bureaux. Under the umbrella of the SWIFT Shared Infrastructure Programme (SIP), eligibility criteria, roles, responsibilities and legal, financial and operational requirements have all been redefined. SWIFT Service Bureaux (SSBs) must now comply with these new rules in order to deliver reliable SWIFT connectivity to their corporate treasury customers. gtnews interviewed Filip Versluys, head of partner management at SWIFT, to illustrate the changes and their potential impact.

Turkey: The Gateway to Eastern Trade

Thu, 30 May 2013 04:00:00 -0400

As Turkey’s economy develops and the country continues to carve out new trade routes with the Middle East, central Asia and beyond, a host of trade opportunities for western European corporates are emerging. This article looks at the growing Turkish trade corridors, need for treasury expertise, and prospects for the market.

The Sand Continues to Shift in High-Yield Loans

Thu, 30 May 2013 04:00:00 -0400

This article looks at the attractiveness or otherwise to investors of high-yield bank loans versus corporate bonds, and the shifting sands of the corporate debt market. The waning and waxing of the emphasis given to interest rate risk, the need for high-yields versus the ability to call upon liquidity quickly and the desire for safety in cash management operations are all considered in this investment-focused article.

Addressing the SEPA Migration Challenge

Thu, 30 May 2013 04:00:00 -0400

The closer the 1 February 2014 deadline for migration to the single euro payments area (SEPA) looms, the more complex the transition seems to become. This article discusses some of the corporate treasury concerns now coming to light, and outlines how they may yet be overcome with the right guidance and practical support.

Cloudy Thinking on Sensitive Corporate Data

Thu, 30 May 2013 04:00:00 -0400

Cloud storage offers a range of efficiencies for corporates and cost savings for their treasury departments. However, despite professing concerns over the security issues of placing sensitive data in the cloud many finance managers appear to have done little to mitigate this risk.

Retail Bonds: A Suitable Match for Mid-sized Corporates

Tue, 28 May 2013 04:00:00 -0400

For the many companies and treasury departments in Europe seeking alternative funding sources to the banks, retail bonds can offer an attractive option although one that is not without its challenges. This article investigates the pros and cons for small and medium-sized enterprises (SMEs) of the retail bond market and how initiatives in the UK and Germany in this area have fared since their launch three years ago.

The State Of The US Corporate Bond Market

Tue, 28 May 2013 04:00:00 -0400

Although the US corporate bond market was last directly subject to regulatory change more than a decade ago, a range of measures introduced in the wake of the 2008 financial crisis has had a major indirect impact. This article examines the changes and the slow, but steady take-up of electronic trading platforms.

Corporate Bonds and Getting the Best Out of Them

Fri, 24 May 2013 04:00:00 -0400

Holding cash is all very well, but treasuries that do this run the risk of corporate capital being eroded by inflation. Despite the risk of rising inflation many governments are still keeping interest rates at historically low levels as well to try to encourage economic activity, but this acts as another disincentive to hold cash. It is the same for retail investors. Corporate bonds are an increasingly attractive alternative. This article explains their attraction to retail investors and how to tap this funding stream.

Borderless Payments Seen as the Prize at EBAday 2013

Fri, 24 May 2013 04:00:00 -0400

A borderless world for payments was the chosen theme for the Euro Banking Association’s 2013 EBAday, held this week in Berlin, Germany. More than one of the presenters at the payments conference suggested that banks, not generally regarded as innovators, need to consider new alliances to achieve this goal and better serve corporate treasury and other clients.

Real-time View: Searching for Value in a Low-rate Environment

Fri, 24 May 2013 04:00:00 -0400

As treasurers increasingly utilise alternative investment options in a prolonged low-rate interest rate environment, good cash flow and financial visibility are becoming ever more important in the drive to optimise cash.

Cash Forecasting: Buy-in and Engagement are Crucial for Success

Thu, 23 May 2013 04:00:00 -0400

Efficient cash forecasting is essential in today’s challenging business environment. Achieving it is no easy feat as individuals across the organisation must actively contribute if the treasury department is to successfully manage the process. This article outlines how treasurers can achieve ‘buy-in’ from their colleagues and avoid the common pitfall of a lack of engagement with the cash forecasting procedure.

Corporate Treasury in 'The Lucky Country': Q&A with Reuben Rattos, Aristocrat Leisure

Tue, 21 May 2013 04:00:00 -0400

Since its inception the phrase ‘The Lucky Country’ has gained popular use as a term for Australia. It has certainly been apt over the past two decades of continuous growth, when the country largely escaped the global financial crisis. gtnews asked Reuben Rattos, group treasurer and investor relations manager for Australian gaming company Aristocrat Leisure, about the environment for corporate treasury in the country, challenges such as its strong currency and Australia’s developing ties with China.

Treasury Transformation: Australia and New Zealand Ahead of the Curve

Tue, 21 May 2013 04:00:00 -0400

Treasury is in different stages of transformation around the world. In Australia and New Zealand, the role of the treasurer is evolving particularly fast due to the high level of technology in the countries, stringent risk and regulatory rules, and their historical reliance on the volatile commodities sector. All of these factors have led to treasury moving from an operational function to a strategic centre of excellence where real-time reporting, cash visibility and risk are paramount. There are many lessons to be learned from the region.

Australia Must Learn how to do Business with China

Mon, 20 May 2013 04:00:00 -0400

A recent trip to China by an Australian government delegation explored bilateral trade and enhancing professional services links between the two nations, covering treasury, finance and accounting. Among its members was KPMG’s Asia practice partner, Doug Ferguson, who speaks Mandarin and here shares his views about the future economic prospects of the country and how best to do business with the Chinese.

Treasury Forecasting: Challenges and Solutions for Best Practice

Fri, 17 May 2013 04:00:00 -0400

Accurate cash flow forecasting has moved up the corporate treasury agenda in recent years. This article outlines a high-level path to facilitate the implementation of a sustainable best practice forecasting capability within an organisation.

EMIR: An Unpleasant and Imminent Surprise

Thu, 16 May 2013 04:00:00 -0400

European governments have a plan that enables banks to go bankrupt without having a devastating effect on the financial system via recovery and resolution plans. The problem is that no-one knows exactly what to expect from this plan, included in the European Market Infrastructure Regulation (EMIR), which also covers the move to centralised clearing for over-the-counter (OTC) trades and other market reforms. The introduction has been briefly delayed until the framework is in place, but mandarins insist that from 23 September 2013 all companies, including banks and corporates, will be confronted with this new legislation.

Coping with a Prolonged Low-interest Rate Environment

Tue, 14 May 2013 04:00:00 -0400

Weighing up the return on investment versus the return of investment poses a conundrum for corporate treasurers. This article examines the dilemma of whether to accept credit, liquidity or interest rate risk to earn higher yield in a low-interest rate environment, or to preserve capital.

Earnings Credit Rate: A New Look at a Classic

Tue, 14 May 2013 04:00:00 -0400

Corporates’ cost pressures, heightened risks and the need for liquidity are making Earnings Credit Rate (ECR) programmes more attractive than ever. This article looks at the development of ECR and how its usage within the US is steadily expanding to treasury departments around the world.

Managing Cash in Challenging Times with Low Interest Rates

Mon, 13 May 2013 04:00:00 -0400

The short term investment landscape has changed dramatically with the low interest rates that have been prevalent in recent years impacting the availability of good money market funds (MMFs), fixed income deposits and other financial instruments commonly used by treasurers. The cash management landscape has also been affected by regulatory change, a decreasing bank appetite for cash balances, and on-going uncertainty caused by the eurozone crisis and other economic headwinds. Treasurers need to seek alternatives.

The Challenge of a Low-interest Environment to Insurers

Fri, 10 May 2013 04:00:00 -0400

The life insurance industry is particularly interest rate sensitive, so the current extended period of low rates creates huge problems for companies in this sector and their treasury departments. This article outlines the issues that have arisen, suggests how they might be tackled and looks at those questions that have still to be addressed.

How to Make Supply Chain Finance a Success

Thu, 09 May 2013 04:00:00 -0400

Supply chain finance (SCF) offers benefits for both buying companies and suppliers. However, this article suggests that to ensure its success it is essential for companies establishing a SCF programme to follow some simple rules.

Case Study: Optimising Credit and Collections Management at Edward Don

Tue, 07 May 2013 04:00:00 -0400

The key objectives of account receivables (A/R) management are minimising credit risk and optimising payment performance. US corporation Edward Don and Company deployed a statistical modelling tool that has helped their credit and collections teams to optimise the relevant processes and results, improve efficiency and cut the key performance indicator of Days Sales Outstanding (DSO) by more than five days. The project, detailed in this case study, additionally helped them to accelerate their order processing workflow, improve customer satisfaction and sales performance, and to cut costs.

Supplier Finance in the Sourcing Strategy

Mon, 06 May 2013 04:00:00 -0400

Supplier Finance is now considered an integral part of sourcing strategy for all forward-looking companies. However, establishing a fully-integrated and successful payables and supplier finance programme requires the corporate treasurer to resolve several issues in order to reap the full benefits. This article explains how this may be achieved and the often diverging priorities of treasury and procurement can be reconciled.

Supporting Supplier Finance

Fri, 03 May 2013 04:00:00 -0400

Supplier finance is once again being looked at as a source of liquidity and working capital, and as a way of strengthening the relationships in your supply chain in a risky environment. This article will examine the latest governmental moves to support it and treasury best practice.

Case Study: The Management of Hubbell Inc’s Global FX Exposure

Thu, 02 May 2013 04:00:00 -0400

US manufacturing firm Hubbell Inc experienced a rapid expansion of its global foreign exchange (FX) exposure, and found that current processes were not effectively measuring and managing this growing risk. Exposure visibility was low, and the corporation was exposed to unexpected and significant potential FX losses against its earnings. It assembled an expert project team, including several senior finance executives, to identify and implement a solution to ameliorate this issue. This case study illustrates its new FX risk solution.

Future of London and Treasury Impact of Regs Debated at SWIFT Forum, as Dyson's Treasurer talks SEPA

Wed, 01 May 2013 04:00:00 -0400

The parlous state of the UK’s relationship with the EU, following the decision to go for an ‘in/out’ referendum and its implications for the future of London as a financial centre were debated at the SWIFT Business Forum on 30 April, with the ex-deputy head of the Bank of England, John Gieve, calling for “diplomacy”. The afternoon’s ‘Transaction Banking and Corporates’ stream focused on the corporate impacts of the new Basel III intraday liquidity requirements and the treasurer at Dyson, Anne Coughlan, warned that “keeping abreast of regulatory changes” like Basel III and SEPA was down to treasurers, while she outlined her corporation’s plans to overhaul its cash management system by 2014.

AIFMD: A Wide-reaching Scope

Tue, 30 Apr 2013 04:00:00 -0400

The Alternative Investment Fund Managers Directive (AIFMD), a European Union law to put hedge funds and private equity funds under the supervision of an EU regulatory body comes into force on 22 July 2013. If fund managers haven’t started working towards compliance already, they risk missing the deadline even though they have a one year transitional period to fully comply. This article provides a potted guide to compliance and examines if it will impact on treasurers.

A Hard Market: Treasury Challenges in the Consumer and Retail Sector

Tue, 30 Apr 2013 04:00:00 -0400

A string of high-profile casualties in the retail sector since the 2008 financial crisis testifies to the challenges faced by many European companies in the industry and the struggles of their treasury departments. International expansion offers the potential for stronger growth, but success in the home market is not always easily replicated in other parts of the world.

The Perils of Excel

Mon, 29 Apr 2013 04:00:00 -0400

A recent Excel 'coding error' by eminent economists that means the basis for austerity is now being questioned, holds a warning for treasurers. Prudent treasurers should avoid the risk of suffering equivalent errors by investing in more robust and rigorous technology solutions.

People or Technology? The Real Barriers to Integration

Fri, 26 Apr 2013 04:00:00 -0400

There are a host of pitfalls inherent in the on-boarding process that impede or even prevent successful channel banking or corporate-to-banking integration. Too often the reason for failure is attributed to technology. This article examines the main causes for projects exceeding time limits, exceeding budgets or being abandoned entirely, and asks how these can be addressed.

Counterparty Risk Management and Emerging Requirements

Fri, 26 Apr 2013 04:00:00 -0400

Nearly five years on from the global financial crisis, the repercussions continue to be felt and the need for reliable counterparty risk management has moved steadily up the corporate agenda. This article examines the basic framework and main components that should form part of a treasury’s counterparty risk management strategy.

Supply Chain Automation: A Quiet Revolution in Finance

Tue, 23 Apr 2013 04:00:00 -0400

Many UK firms, particularly those at the end of the supply chain, face a lending drought and extended payment terms. Fortunately advances in technology, coupled with initiatives such as invoice financing and dynamic discounting, are providing various options that can help mitigate the resulting squeeze.

Asset-based Finance: Helping Prevent a UK Triple-dip Recession

Tue, 23 Apr 2013 04:00:00 -0400

UK economic growth has been elusive in recent years, but a steady growth in demand for asset-based finance is helping more UK firms and their treasury departments weather challenging business conditions. This article examines the increase in demand for products from the asset-based finance industry.

Factoring’s Strong Growth in Asia

Tue, 23 Apr 2013 04:00:00 -0400

The use of factoring in Asia is rising due to multiple drivers, such as a lack of alternative finance and a desire on the part of treasurers to explore other avenues of finance. This article will examine the growth of factoring in Asia.