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How to get treasury more effective

International corporates need to handle internal loans, currencies and payments in several countries – safe and easy. How do you meet this challenge? The answer is integrated and transparent treasury systems, using machine learning and automation.

Johannes Westergården, founding partner Addedo, was host at the breakfast seminar with Lars Beckman and Michaela Katsanikou from Core Process.

We are in the midst of the fourth industrial revolution. It is a rapid and profound change of the way we live, work and even define ourselves as human beings. In this perspective it is necessary for international corporates to be aware of how this revolution affects their treasury functions and systems.

With this as a starting point, Lars Beckman, CEO of Core Process, described the opportunities in and benefits from using digital treasury system platforms on a breakfast seminar hosted by Core’s new partner, finance consulting firm Addedo.

Read the report from the breakfast seminar where Lars Beckman and Michaela Katsanikou, senior consultant at Core Process, describes the essence and benefits from an effective and integrated treasury system.

 

Core Process and its partners are a part of what has become known as the fintech industry. This provides technologies that replace current financial services, especially banking services. Third-party providers offer smarter, easier and less time-consuming services by using system technology that enables different financial systems and functions to be integrated. The integration and transparency in these systems also increase the level of security.

“In this rapidly changing world it is essential to monitor and understand to whom you are paying. If you are paying to the wrong receiver, you can be hit by sanctions and be blacklisted. This in turn could implicate sanctions in your trade with other countries. With our systems you will get better control on all transactions,” said Lars Beckman.

Companies in the Nordic countries have in some degree been left behind in this progress.

“The Swedish market has in many years been protected by the banks. We are trying to convince Nordic company groups to catch up in order to meet the actual demands and possibilities on this new market.”

Six pillars of the treasury process

The key to an effective treasury function is to have a long-term perspective and a structured method. It is easy to be tempted and jump on-board new systems without having done a fundamental analysis of the business and its financial prerequisites. Lars Beckman pointed out six pillars of the treasury process:

  • Analysis.
  • Strategy.
  • Policy.
  • Risk management.
  • Transactions.
  • Reporting.

“This requires good tools and system support and an organisation with a clear allocation of responsibilities and authorizations. And you must dare to question current processes and put prestigious issues aside.”

For this purpose the initial analysis is crucial, to get everyone involved to understand what can be changed and why.

“It is not always obvious that everyone understands what corporate finance and treasury are talking about. You must take it to a level where everyone understand what will happen and the benefits from the change.”

Four main areas of the treasury system

Lars Beckman briefly introduced examples of four areas where Bellin tm5 supports the treasury function with services enabled by machine learning and automation:

  • Rate providers: Market data from external providers as Bloomberg and Reuters.
  • ERP integration.
  • Banking: Manage all payments in the system and disengage your bank.
  • Trading portals: Automated data exchange, cash management.
A breakfast at Addedo can be a good investment.

How ÅR Packaging managed the big change

A couple of years ago, Swedish packaging group ÅR Packaging was acquired by a private equity. As a consequence, there were high and completely new demands on the treasury function. The loan structure was complex with many different subsidiaries and countries involved.

“We put all data on loans in our system. The first and obvious effect was that the client could track all contracts instead of searching in binders. In the next step we simplified both transactions and administration, resulting in improved profitability. The client could focus on its business instead of loosing themselves in Excel-files.”

Cash forecasting and complete control

Michaela Katsanikou, senior consultant at Core Process, presented the ÅR Packaging case with emphasis on the development of the groups’ cash forecasting.

“It was a lot of Excel-sheets before, which is time consuming when new companies and currencies are incorporated in the business. On that, the new owners have high demands on reporting. Today the group meet this with monthly reports for each company and currency. They can compare their cash forecast with actual outcome as well, something they were not able to do before we implemented Bellin tm5.”

ÅR Packaging has achieved a better cash management and control, resulting in reduced financial costs.

“The new system is easier, safer and faster. They have a completely different and improved control in relation to the subsidiaries. Much of the operational risks before were related to subsidiaries not having time to do forecasts, due to manual work. And if you have full control on the liquidity, you can reduce your financial reserves,” Michaela Katsanikou pointed out.

Note: This seminar was hosted by Addedo on June 18th 2019 in Malmö, Sweden.

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