Discussing global development organisations typically conjures up a variety of images. Relief efforts after Typhoon Haiyan, Syrian refugee camps and malnourished children in Mali likely come to mind. Yet what about analytical models predicting cash funding requirements, collaboration with banks to meet cash flow needs in exotic locations, or a dashboard mapping real-time global cash positions?
Treasury’s most basic function is to ensure sufficient liquidity to meet an organisation’s ongoing financial obligations. To manage cash effectively, a competent treasury department must understand the context in which the organisation operates and develop cash management structures and services that will adapt with it. This is especially true for organisations that work in difficult contexts, such as World Vision, a global Christian charity focused on child well-being with nearly US$3bn in annual revenue.
Accordingly, World Vision has focused on three fundamental buildings blocks: cash forecasting, bank partnerships, and technology.
Managing a reliable cash forecast begins with educating local finance staff, who are primarily accountants and may not otherwise understand the impact of local cash management decisions on the global organisation. The impact may be enormous; World Vision operates thousands of projects in over 80 countries globally. Ensuring that cash flow forecasts most accurately represent operational expectations is critical to understanding the global organisation’s liquidity needs and potential risks.
Even with good practices and trained finance staff, the reality of working amid political and environmental instability may complicate efforts to forecast cash accurately. Operations and funding may be delayed due to civil unrest, natural disasters, and supply disruptions. Cash forecasts should incorporate such risk factors to ensure sufficient flexibility, enabling treasury to adjust for unexpected funding delays like civil wars in South Sudan or commodity price volatility in Zimbabwe.
With a robust forecast in hand, a treasury has to ensure that funds reach their intended destination on time. The old adage of working smarter rather than harder is particularly relevant when developing banking solutions. Traditionally, banks have developed a suite of products that are marketed directly to clients. This is not necessarily an approach that works well in a developing country with limited banking infrastructure in the remote locations where charities tend to operate.
Accordingly, World Vision must develop contextualised solutions to address treasury concerns. The process begins with a request for proposal (RFP), developed by treasury in collaboration with local project offices. The purpose of the RFP may not be to merely replace a current banking partner in a given country, but to re-evaluate the local operation’s need for physical cash in light of rapidly evolving technologies, anti-fraud concerns and the safety of personnel.
In addition, whereas the banking landscape was far simpler in a bygone era, greater complexity breeds opportunity. Cash accounts have been utilised in the past in lieu of sub-accounts, and in some parts of the world their use is unavoidable. However, where treasury may eliminate the need for local accounts it can consolidate funds, improve yield, and reduce overhead costs.
None of this can occur without competent banking partners, such as Standard Bank of South Africa, which knows evolving banking contexts better than most treasuries and can recommend changes to banking structures and services not just during the RFP process, but throughout the life of the banking relationship.
Obviously, the larger the relationship, the more a bank will view an organisation such as World Vision as a partner, rather than merely a client. World Vision continues to consolidate banking relationships to manage fewer, more critical accounts.
In each context, the best methods to perform bank transactions are explored through channels such as wires, low-value clearinghouses, and mobile money, while conducting bank balance reporting and reconciliations. Where possible, liquidity is managed utilising zero balance accounts (ZBAs), control disbursement, pooling and interest optimisation.
World Vision defines appropriate user interactions with bank accounts through treasury workstations, bank online systems, and enterprise resource planning (ERP) systems. The organisation’s bank solutions align its global operations and local bank relationships to ensure cash needs are met for communities in remote locations and to protect the security of employees who might otherwise transport cash. In addition, excess balances must be managed effectively, and enterprise-wide cost structures managed efficiently.
Real-time visibility of cash in diverse contexts is a challenge, especially where cost is a central concern. To meet this critical need, World Vision has developed a SWIFT-enabled, cloud-based treasury management system that does more than regurgitate information fed into it; it accurately processes transfers and identifies exposures – in essence, doing what a much larger global treasury operation would do yet at a fraction of the cost.
World Vision’s technology partner, Trellis Integration Partners, has been instrumental in leveraging standardised technology to meet a complex set of business requirements. The system, named CashWyze, was developed for bank reporting and payments, portfolio management, intercompany account management, and foreign exchange (FX) risk management. It provides granular real-time oversight of global financial risk based on cash flow exposures. In the future, it will provide bank administration management capabilities to aid in bank relationship rationalisation and management needs, as well as regulatory compliance including the foreign bank account report (FBAR).
So the next time you consider global development activities, such as providing clean water in Senegal, combating child labour practices in Bangladesh, or administering relief in Haiti, remember there is always a treasury operations team working behind the scenes. World Vision’s treasury doesn’t just manage cash; it manages money on a mission.
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