Treasury Foresights has explored some of the dominant issues on the treasurers’ agenda in the year ahead. Here we ask a selection of industry experts to run through what they believe will be the big talking points of 2017 and what will be their primary areas of focus.
Damian Glendinning, Treasurer, Lenovo
“I actually don’t believe in special focus areas. If you have the right basic structure and approach, your system should be able to deal with most things which life throws at it. But I am concerned that currency hedging will become more difficult and expensive, as some of the new regulations start to have an impact. This can take the form of non-deliverable forwards (NDFs) becoming even more expensive and harder to price, or it can be a lack of liquidity in the deliverable market. I hope we will see progress on pain points such as know your customer (KYC), and some exciting new progress in fintech. I do not expect boredom to be an issue…”
Guillermo Gualino, Vice President and Treasurer, Agilent
“Similar to last year, Agilent Treasury will continue aligning its priorities to those of the business to support growth, geography expansion and profitability in 2017. However, our main focus will be on re-positioning the group’s risk management activities for elevated economic and political uncertainty. Specifically, we will improve hedging performance by increasing natural hedges, expand visibility of cash and exposures by achieving further centralisation, and improve our agility to deal with volatility spikes through further team cross-functionality.
Our ultimate objective will be to increase flexibility across functions because it has become increasingly challenging to forecast and quantify risk as the current uncertainties are driven by the breakage of long-established economic and financial relationships. We have been preparing by streamlining treasury operations, upgrading banking technology, reducing exposures, restructuring FX programmes, and training more team members as generalists in multiple treasury disciplines.”
Simon Jones, Managing Director, Head of Treasury Solutions, Treasury Services EMEA, J.P. Morgan
“Regulatory, economic and technological drivers are changing the shape of banking. As we move into 2017, traditional foundations will continue to shift. To thrive in this new environment, treasurers should particularly focus on:
- Understanding the regulatory drivers that are necessitating change.
- Shaping an investment policy that is adaptable and fit for purpose.
- Working more closely with internal functions and banking partners to understand the evolving payments landscape and to drive business growth.
- Ensuring flexibility and scalability within their bank account and liquidity structures.”
François Masquelier, Senior Vice President, Head of Treasury and Enterprise Risk Management, RTL Group
“My department has finalised its annual treasury roadmap for next year. The main focuses will be on Treasury Business Intelligence and how to best automate reporting and aggregate (big) treasury data coming from multiple IT (and non IT) sources into usable dashboards and KPI’s to measure our performances. Another objective would be to finalise the review of Transfer Pricing (TP) to comply with BEPS’ new provisions and to assess IFRS 9 impacts and more specifically the Expected Credit Loss (ECL) aspect of this.
Eventually, we will also keep rolling-out our Bank Single Gateway project, including a few major eBAM messages, wallet sizing and new e-payment methods. We still have as major objective to enhance internal controls by further automating tasks and reports, by revisiting processes (eg EMIR, payments and portfolio reconciliations) and fulfilling IT general control reviews on main IT systems. The current economic context and volatile markets, combined with pressure on costs and limited (human) resources make our task even more complicated. On the soft skills side, we have worked on the team agility to be able to cope with the fast coming challenges in the treasury function.”
Tim de Knegt, Manager Strategic Finance & Treasury, Havenbedrijf Rotterdam
“The treasury function in general should become more aligned with business operations and objectives; given the current climate around financing, interest rates, other economic indicators and monetary policies, this is even more apparent than it was just a few years ago.
Our view of risk has fundamentally shifted. From being focused on transaction and counterparty credit risk, we must now also consider how long an industry will last, in particular, sectors based on traditional energy sources. This is something that has not been on the radar until now. In general, the lifespan of markets has become less predictable and, given the current speed of technological development, are expected to be rather shorter going forward. This has an effect on risk appetite. Until recently we were able to predict quite well for at least the next two or three decades. But now, with changing government policies, volatile markets and the commitments of last year’s UN Climate Change Conference and the recent G20 summit in Hangzhou, the outlook is continuously changing.
The Port of Rotterdam is still expanding and as the type of parties interested in the port area is necessarily changing, so too is the type of financial support clients are looking for, both from our side as well as from financial institutions. Treasury will play an important role here as we have a good overview and appreciation of port activities from an economic perspective enabling us to help financial institutions understand the risks involved. We can also use our knowledge of financial products to help enhance the commercial proposition.
The focus on energy transition, innovation – and the digitisation of industries – means we are adopting new business models too. As a port, our current business is fully dependent on volume-driven supply chains, but we are moving towards a more value-driven business model. Today, we have a pilot project, running to the end of this year, based on transparent, holistic trade finance. If the entire trade cycle is financed as a single project, not as individual components, and all parties in the chain have access to each other’s data, it could make huge savings for our clients. If we get the right results from the pilot, we hope to open it up to overseas trade in the coming year.”
Kate Smedley, Group Treasurer, 2 Sisters Food Group
“The main focus for 2017 is where the debt capital markets are post Brexit and continued focus on cash flow forecasting as a key tool for the Board and developing staff within the team.”
Jean-François Denis, Deputy Head of Cash Management, BNP Paribas
“The ever-more intertwined relationship between finance and technology will be the top focus area for the corporate treasurer in 2017. Having made a disruptive entry in the retail space, fintechs are all set to enter the complex, transactional banking market, albeit in collaborations with banks. Transaction banks themselves are cooperating with each other in initiatives like SWIFT Global Payments Initiative (GPI), which in 2017 is likely to focus on business-to-business payments. Increasing cyber-criminality will likewise require special attention from corporate treasurers. Along with enhanced compliance and staff training regimes, big data and Artificial Intelligence should be seriously considered as deterrence mechanisms against cybercrime.”
Charley Edwards, Assistant Treasurer, Informa
“Next year our main focus will be to implement a new TMS. We are currently undergoing a global implementation of a single instance of SAP across the group and when this has gone live we want to implement a new TMS that can support us as we become a more efficient and sophisticated treasury function. A second focus will be to repatriate ‘trapped’ cash from regions such as China and other emerging markets. Our operations in China generate cash flow and we’re keen to access this and bring it back to the centre.”
Matt Cornwall, Deputy Treasurer, Capita
“At Capita we have an entrepreneurial philosophy that is focused on developing ideas that will enable us to perform our duties quicker and with more accuracy. As such our focus has been and will continue to be based around driving continuous improvement throughout the treasury department.
This is especially important at Capita as part of the culture within the company is very M&A focussed and growing in size overseas bringing in new complexities and risk. Streamlining processes, standardisation and straight through processing is therefore something that we will continue to place a high emphasis on to ensure that these risks are mitigated and to free up resources within the team to focus on more value-added work.
External help is needed to do this, of course, and we will be continuing to push our banking partners to provide us with the technology and services that we require to meet our objectives..”
Karen Van den Driessche, Treasury Director EMEA, Avnet
“The Avnet treasury organisation will continue to partner with our business divisions to support them in their growth targets, efficiency improvement and M&A integration while maintaining our focus on unparalleled execution.
Treasury’s focus will be on stabilising the recently implemented Treasury Management System and Asia Pacific (APAC) in-house bank structure, reaping the benefits from it through centralised execution, increased cash visibility and the publishing and tracking of key metrics to support better business decisions and execution.
Additionally, we will be working on improved risk management, specifically our APAC foreign exchange, further standardisation and centralisation while executing cross regional and functional training to ensure we are a truly, effective global team to support the increased challenges that lay ahead of us brought on by increased globalisation of our business.”
Royston Da Costa, Group Assistant Treasurer, Treasury Systems and Development, Wolseley
“Wolseley treasury is committed to supporting its diverse businesses globally, and as part of this service, we are currently rolling out a cloud based treasury management solution (TMS), Bellin. We expect this to not only provide our group with the tools to enhance their treasury processes like regulatory reporting and cash visibility, but also enable us to have greater oversight of the whole group’s treasury activity in one system eg bank accounts, facilities and guarantees.
The focus, as we move into 2017, will be on developing the use of our system to improve cash forecasting, automating payment connectivity, and continuing to increase the support we can offer our group. There are a few areas aside from the TMS, that we will also be focussing on like working capital optimisation, merchant card acquiring, and liquidity management.”
