Vox Pop: Treasurers’ Say What Can be Learnt During Conference Season

Patricia Hui, Senior Corporate Treasury Manager, Mentor Graphics

Question (Q): Ahead of this autumn’s conferences with the AFP Conference in Miami running 14-17 October and many other shows around the world imminent, what are you hoping to get out of the traditional conference season?

Answer (A): I always look forward to attending the annual Association for Financial Professionals (AFP) Conference in particular because I’m US-based and it offers an excellent opportunity for corporate practitioners to network and discuss best practice with their peers and service providers. Spending a few days in a group learning environment, I usually find myself getting inspired from listening to the knowledgeable experts. With the upcoming conference season, I am hoping to bounce off a few new ideas, as well as to validate some current business processes with my peers. In addition, I would like to investigate all of the latest service and product developments in the financial market with the objective of perhaps implementing a few of them.

Q: What topics are you most interested in exploring during the upcoming conference season?

A: There are so many interesting and relevant topics that are worth exploring during the upcoming conference season. However, I am particularly interested in electronic bank account management (eBAM) implementations and learning more about this. I have had casual conversations previously with my banking business partners to explore the eBAM initiative, since my company has hundreds of bank accounts worldwide and authorised account signers spread across multiple continents. It’s absolutely a pain to work through tons of paperwork usually required by the banks whenever there is a need to open a new account or to update account signing authorities. It would be more efficient to manage those global bank accounts and authorised signatories electronically as opposed to manually via an Excel worksheet.

Q: What impending regulations are you most interested in learning more about and why?

A: There are two impending regulations that are generating a lot of discussion among corporate treasurers. One of them is Basel III which will have an impact on corporates that rely on bank funding. Basel III not only raises the costs of doing business with banks but may also contribute towards banks focusing more and more on a narrowing customer base. Another impending regulation that is being talked about frequently in recent months is the Securities and Exchange Commission’s (SEC) proposed money market fund (MMF) reforms. I agree with my peers that the proposed MMF reforms such as floating net asset values (NAVs) and holdback provisions would significantly reduce investors’ interest in utilising MMFs as an investment tool.

Q: Does the current gloomy economic situation worry you and what are you doing about it? For example, are you diversifying into emerging markets seeking growth, looking at commercial paper issues new credit lines with banks, focusing tightly on liquidity and short-term only investments, etc?

A: I am not overly concerned with the current economic situation. I do see signs of improvement in my industry even though the US market recovery has been taking baby steps. Given the current global market condition, I believe it is even more important for corporates to stay focused and properly execute its business strategies than ever before, but for my corporate things aren’t looking too bad.

Q: If there is one thing that you could change in your treasury what would it be?

A: As mentioned in answer to Question 2, I would love to work with my banking partners to implement eBAM as soon as possible in order to manage our global bank accounts and signatories more effectively. Due to the number of bank accounts maintained in various geographies and authorised signatories that spread across multiple continents I would love to co-ordinate with my banking partners to implement an eBAM solution. It is labour-intensive and cumbersome for treasury to keep track of global bank accounts and signatories using Excel. Automating this manual workflow with the objective of achieving better visibility and more up-to-date information for internal reporting, as well as auditing purposes, is definitely a process improvement my department is seeking.


Craig Ehrnst, Treasurer, NCCI Holdings

Q: Ahead of this autumn’s conferences with the AFP Conference in Miami running 14-17 October and many other shows around the world imminent, what are you hoping to get out of the traditional conference season?

A: This is an election year, and we face many uncertainties pending the outcome of the US presidential election. As a result, our new leader will need to address the  ‘fiscal cliff’ issue and our corporate tax structure going forward, which is also likely to change. I am interested in learning more from my peers about what planning they are doing to prepare for these changes. There could be significant tax implications which will impact our cost of capital.  Businesses can plan and thrive with clarity of tax obligations, and presently there is a great deal of uncertainty.

Q: What topics are you most interested in exploring during the upcoming conference season?

A: For our company, we have seen an increase in credit card activity, as well as companies presenting a presenting a credit card for their payment of large six figure invoices.  We would like to explore best practices to implement ‘Level 2/3’ credit card information and explore convenience fees in light of the Visa proposed settlement and the on-going furore and fines about interchange fees.  

Q: What impending regulations are you most interested in learning more about and why?

A: The outcome of Federal Deposit Insurance Corporation (FDIC) insurance disappearing at the end of this year on corporate chequeing accounts is a significant issue for us. I am also very interested to explore the abandonment of the SEC’s planned structural reforms concerning MMFs and what further action might still be taken around fund parameters. 

Q: Does the current gloomy economic situation worry you and what are you doing about it? For example, are you diversifying into emerging markets seeking growth, looking at commercial paper issues new credit lines with banks, focusing tightly on liquidity and short-term only investments, etc?

A: That is not for us, as such investments and geographies do not fit our model. As to the general economic situation, all I can say is that ‘we are sticking to our knitting and staying in our cave’.

Q: If there is one thing that you could change in your treasury what would it be?

A: I’d like to provide more education to others about treasury activities. A day in treasury moves pretty quickly compared to other jobs I have had in my career, and I would like people to better understand the function, what is involved and what it can do. Decisions are made and money is invested all the time. 

Joerg Bermueller, Head of Cash and Risk Management, Merck KGaA

Q: Ahead of this autumn’s conferences with the AFP Conference in Miami running 14-17 October and many other shows around the world imminent, what are you hoping to get out of the traditional conference season?

A: It is the intensive exchange of ideas and discussions with all financial participants concerning the latest market trends which make these events so valuable. Talking to the top treasury peers of the industry and sharing their views for the upcoming challenges is a key way to evaluate future strategies and find out about best practice. There is no better way to do it.

Q: What topics are you most interested in exploring during the upcoming conference season?

A: At present it is the issue of counterparty risk that is most concerning me and which I most want to investigate during the upcoming conference season, in conjunction with the problem of where best to invest the cash at a reasonable interest rate, which should not be negative. These are key issues for treasurers at the moment.

Q: What impending regulations are you most interested in learning more about and why?

A: In particular it is the single euro payments area (SEPA), which is due to come into force in 2014 for eurozone members, and I’m especially interested in the direct debit regulations, the impact on mandates, etc. Longer term, the Basel III capital adequacy rules are of interest to me, especially the restrictive impact they could have on bank funding and trade finance, so I want to look into that more during the conference season as well. Additionally, the on-going deregulation process in emerging markets – whether that is renminbi (RMB) liberalisation in China or whatever – is always of interest.

Q: Does the current gloomy economic situation worry you and what are you doing about it? For example, are you diversifying into emerging markets seeking growth, looking at commercial paper issues new credit lines with banks, focusing tightly on liquidity and short-term only investments, etc?

A: For the time being, it is very relieving that our business is doing well. Due to this fact we do not have to worry overly about the worsening general economic situation, although we are of course constantly monitoring it. For the moment, however, we can stick to our current treasury strategy, concerning markets, products, timings and financial partners without having to make any major alterations.

Q: If there is one thing that you could change in your treasury what would it be?

A: If it comes to my ‘favourite wishes’, I am always dreaming of a fully integrated and IT connected treasury system which covers the whole process from evaluating exposures until posting. In between the system should be capable of handling deals, market evaluations, exercising cash transfers, doing intercompany clearing, cash flow forecasting, scenario analyses, eBAM, TWIST assessments, etc. For the time being I am happy if the existing interfaces are all running smoothly but in my dream scenario I’d like absolutely everything to be integrated in the future.

EuroFinance 2012

Keara Killian, Director, Treasury and Risk Management, Getty Images

Q: Ahead of this autumn’s conferences with EuroFinance, the AFP Conference in Miami and many other shows around the world imminent, what are you hoping to get out of the traditional conference season?

A: I’m looking forward to seeing how other corporates are thinking about capital structure and debt financing, and learning more about the investor relations function during the upcoming conference season. Bharti Airtel, for instance, promises to put the spotlight on investor relations at the forthcoming EuroFinance conference in Monaco at the end of September.

Q: What topics are you most interested in exploring during the upcoming conference season?

A: In addition to the areas I’ve already mentioned, I’m going to be focused on funding. Getty Images grew in large part through acquisitions, and the resulting integrations of acquired entities in emerging markets into our global banking structures presents a myriad of challenges. I will be plugging into modules on treasury centralisation, minimising local cash and migration to shared services, with a view to learning how to better manage our emerging market liquidity.
Note: Getty Images has itself just been acquired for US$3.3bn by the private equity firm Carlyle Group from Hellman & Friedman. The Getty family, which founded the agency in 1995 with Jonathan Klein, will increase their stake in the firm to just under 50%, as part of the deal.  

Q: What impending regulations are you most interested in learning more about and why?

A: I am more interested in discovering how regulation is not going to affect us. The recent onslaught of regulation, including SEPA, Dodd- Frank and the Basel III capital adequacy rules, have all certainly got treasurers talking. Hearing from the early adopters as they describe the trials of their experiences so far will be interesting for me.
 
Q: Does the current gloomy economic situation worry you and what are you doing about it? For example, are you diversifying into emerging markets seeking growth, looking at commercial paper issues new credit lines with banks, focusing tightly on liquidity and short-term only investments, etc?
 
A: At Getty Images, we are not exempt from the concerns that are associated with an uncertain economic climate. Growth is, after all, dependent on consumer trends. We have been fortunate to be a leader in our industry and we continue to focus on international expansions including recent acquisitions in the Middle East and Asia, while simultaneously expanding our diversified product offering such as video and music. From a treasury perspective, we are focused on major risk factors, key among them at the moment is the euro crisis and we continue to refine our contingency plan.
 
Q: If there is one thing that you could change in your treasury what would it be?
 
A: We ultimately aim to position treasury as a value-adding function, by optimising our key capabilities and providing the business tools to optimise transaction flows, enabling customers to pay for our products and for us to pay our content providers easily. Access to technology is crucial to our delivery and like all organisations there is intense competition for limited resources. Of course we’d like more [tech budget] but we nonetheless strive to provide benefits to the business through optimising the resources we have and leveraging our relationships with the best providers.
 

• The vox pop series of corporate treasurer answers above is sourced from the autumn edition of gtnewsGlobal Treasury Briefing (GTB), which can be downloaded via the top right-hand side link on the homepage. The latest edition of GTB includes an interview with Indesit’s treasurer and a feature highlighting lessons from the last downturn as the global economic situation worsens. It also contains award-winning treasury case studies and the most recent European Treasurers Council (ETC) report.  

 

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