This year’s Dutch Association of Corporate Treasurers (DACT) conference was held at the beautiful Kasteel Oud Wassenaar outside Leiden in The Netherlands on 4 June and attracted over 100 delegates. The theme of the conference was ‘The Future of Treasury’ and keynote speakers included David Swann, treasurer at British American Tobacco (BAT), and Sjoerd de Vries, finance director at Nidera. Both speakers agreed that the recent liquidity crisis has given the treasury departments more internal focus. Treasurers are getting more airtime in front of their boards, however it was admitted some of this time has been spent bringing bad news.
Swann discussed the increase in treasury centralisation that has occurred over the past 15 years or so, and argued that there might well be a move back to de-centralisation in some form in order to ensure that local knowledge is kept within treasury. Some centralised treasuries complain that there is a mismatch between group and local knowledge. This would require some decision making to be moved back to the end markets, which might not be a bad thing.
Both speakers agreed that corporates are spreading bank lending across more banks now, as a direct consequence of the crisis. There was definite agreement that the credit crisis has affected banks’ ability to fund companies and that funding has deteriorated. Internal funding has therefore become more important and companies are looking at ways in which they can manage cash more efficiently.
Swann made an interesting observation about transactions services and, in particular, the management of service centres such as payment factory, which have reached a maturity level where it could be argued they no longer have to be the sole prevail of treasury. Shared service centre (SCC) policies and procedures in many companies are tried and tested and can be managed outside the treasury structure.
The issue of risk was also a main discussion point, stressing the need for better education among treasury professionals on this subject. It was argued that many large companies are possibly still not fully measuring risk properly and, as a result, it is impossible to manage it effectively.
The afternoon programme consisted of workshop sessions including cash forecasting, bank connectivity and SWIFT, as well as negotiation skills – all of which were well attended and provoked some interesting questions, including “Why bother forecasting in the first place?”
When it comes to the relationship between Europe and Britain – uniformity isn’t a word that currently springs to mind. And that’s not just a reference to Brexit. Whilst the Europe and Britain do find themselves in the midst of a political break-up – their monetary policies are also showing signs of divergence.
Europe’s introduction of the General Data Protection Regulation (GDPR) next May will have implications for businesses around the world and US corporates should start getting ready if they haven’t already done so.
As anticipated, US organisations exited prime money market funds en masse following last year’s SEC reforms. AFP’s latest Liquidity Survey indicates what it will take to encourage them back.
The statement issued by the bank also suggests that fiat currencies are superior, due to their price stability.