Some 120 treasurers from the four corners of Europe came together on March 9 and 10, 2017 in the woodlands of La Hulpe outside Brussels for the first EACT Summit. Jean-Marc Servat, Chair of EACT, took a cue from René Magritte in his opening address, declaring that “this is not a conference,” but a forum of discussion and exchanges intended to reflect on future trends in the world of treasury management. The events on the two half-days' alternated between plenary sessions and workshops. In the World cafés, participants remained standing to foster dialogue and generate concrete proposals that all could embrace.

The first plenary session focused on “The future of treasury”. The speakers (two treasurers, a CFO and a banker) agreed with the notions that: 1) treasurers have become not only partners within their companies, but those companies’ main bankers, forging long-term relationships; 2) treasurers devote more time and energy to compliance issues; 3) technology allows for better organisation, but the threat of fraud and cyber-criminality is becoming more tangible; 4) treasurers must face a new risk, i.e. geopolitical uncertainty.

In the coming five years, treasurers will have to enhance their skills of adaptation, prepare for new disruptions, reduce structural costs (doing even more with less), concentrating on a smaller number of banks. In turn, banks will have to go further in customising their products to fit individual clients' needs. The two treasurers who took the floor expressed concern that technology could replace them in many of their tasks. They all insisted on the growing importance of human relations.

One session was dedicated to post-merger integration with representatives of three companies: GE Power & Water, Lafarge Holcim and Nokia. The lessons learned from this session were quite different. At Nokia, which is used to mergers / disposals (Microsoft, Siemens, Alcatel Lucent), managers were appointed very quickly and the new organisation was up and running in merely four months, with one particularity: treasury is managed using a specific in-house tool by a seven-person team in the IT Department. Lafarge Holcim started from scratch to structure the organisation and to make it operational. The process took a year and led to the departure of many talented staff members. For GE, human relations posed no problem, as Alstom's treasury management team was transferred to Alstom Transport. GE based its management methods on the acquired entity and admitted to learning a lot from the way Alstom managed its balance sheet.

This EACT Summit concluded with a round table featuring four rising stars in the world of treasury management who work in mid-caps and boast 10 years of experience in the profession. They were chosen by the Dutch, French, German and Luxembourg associations. All four were on the same wavelength: the profession has become largely automated, with compliance and regulatory affairs omnipresent. It is a little-known niche trade, so treasurers must make themselves known in their companies.

A special report on the event was produced in collaboration with TMI - read it here. You can also watch a video review, 'EACT Summit 2017: Customer Voices', on the EACT homepage.

Richard Cordero
EACT Chief Operating Officer

Does your bank send you a monthly invoice how much they charge you on banking costs? Some do but some don’t. Even if you receive an overview of these costs – do you look at them? Often organizations don’t and that’s a pity. A bank is as much a services provider as other suppliers of the company. Of course changing banks is not something you do every year but that does not mean you should never do it or never have a look at your banking costs.

Although even if another bank proves to be less expensive, it should not always imply to change the bank, as the indirect costs of a bank change should also be taken into account and you always have the option to renegotiate.

The first step when looking at your banking costs is how your payments look like. Is your company doing only national payments or SEPA or are you transferring (or receiving) money from outside the SEPA region and/or transferring non-EUR payments? This matters because a national payment and SEPA payment will cost you around 0,10 EUR per transaction while an international payment can costs on average EUR 6. The potential saving on international payments is much higher.

There are several ways to reduce the transactions costs:

• Reduce the amount of transactions. This is often easier said then done because you have to pay your bills and your customers pay theirs to you. However, with international companies there is often a number of intercompany transactions. These transactions do not necessarily have to go via the bank account. They could be settled via in house bank or internal current accounts. Often these intercompany transactions are international transfers or non-EUR payments which brings me to the next point
• Analyse the foreign currency transactions. As said above these transactions costs around EUR 6 per transaction (and I have seen banks charge up to EUR 50 per transaction) so the saving potential is big, if you do a lot of these transactions. You can ask yourself do you need to pay your supplier in foreign currency? Can I receive my invoice in EUR instead of foreign currency? Often complex questions leading to more questions (hedging?). It is not always possible to change transacting in foreign currency so another solution to reduce transactions costs is to move the bank account to the home country of the currency. This way the “foreign” currency becomes domestic and therefore transactions costs move from international (EUR 6) to domestic (EUR 0,10), a big potential. Of course there are some limitations to this.

As I meet more and more treasurers, and more and more of our external stakeholders, inside and outside the UK, there is a common theme which emerges around lack of understanding of the role of treasury, particularly in those organisations who are not large enough to have a full-blown treasury function, or who have grown and never really understood the need for specific treasury expertise. In the UK it seems a challenge for SMEs, and where I am at the moment, in the Middle East, it is a potential issue for the many family-owned businesses here. This may be nothing new to the reader. But I wonder how best to tackle it?

As the ACT’s Chief Executive, I am coming from the position which says that the voice of treasury is critical in business, and I am therefore passionate about advocating for treasury skills to be present in all businesses, in some form or other. And I know we as a membership body can help – whether providing courses tailored to those who have to carry out treasury activities, but are not treasurers, to organisations who ideally need to form a team of specialists due to their size and nature. However, the challenge is how to get the message across without seeming a hard sell? In fact, the ACT is a not-for-profit, and our purpose is to be the voice of treasury for good. Our Royal Charter means we also are committed to public benefit – so it is not all about the hard sell and making profits.

If you are reading this, you are likely to be an advocate for treasury – but what is your experience of others? When I was a CFO I was always a treasury ‘fan’, so did not need any persuading. But I am told it is not always the case. So how do we get our voice out there? The ACT is a small organisation, as are the other EACT members, but through our membership and stakeholders we make a real impact. So, if the entire readership of this newsletter were to each take on a challenge to 1) go somewhere to talk about how important treasury expertise is – in the workplace, at an event, at a university, or 2) identify a CFO who needs persuading and then do just that (maybe through a case study of what can go wrong?) – that would create far more awareness than the EACT members can do alone.

I would love to hear your feedback – in the UK we will be looking at providing some materials such as ‘what treasury can do for you’ and maybe an elevator pitch, and happy to share when available.

Caroline Stockmann
Chief Executive
ACT

Recent EACT publications:

• EACT welcomes the publication of Global FX Code of Conduct
• EACT responds to EC ESA consultation
• EACT and other corporate end-user associations welcome the European Commission’s proposal on EMIR review
• EACT responds to the European Commission’s consultation on mid-term review of the Capital Markets Union

• For NFC-s (those that are under the clearing thresholds), the financial counterparty would be responsible for reporting transactions to the Trade Repository
• For all NFCs, the obligation to report intragroup transactions would be removed
• The obligation to report historic transactions (‘backloading’, i.e. transactions that were entered into after the date of application of EMIR and which were still outstanding at the start of the reporting obligation) would be removed for all counterparties
• The obligation to centrally clear transactions would apply on an asset class by asset class basis; currently when the clearing threshold is exceeded in one asset class, transactions in all asset classes are subject to the central clearing obligation

European Commission consultation on Fintech - Until 15 June

Learn more >>

News from PCTA:

• The recent changes in the Management Board of Polish Corporate Treasurers Association (PCTA)

• Latest news from PCTA life:

ACT – UK Association of Corporate Treasurers

27 September, Hong Kong
Asia Treasury Leaders’ Forum
Join us this September in Hong Kong for the region’s leading treasury event. Bringing together treasury and finance professionals from across Asia, this is the ideal opportunity to exchange ideas with your peers and find out more about the latest regional developments and trends in treasury.

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8 November, London, UK
ACT Treasury Forum
This invitation-only event is the perfect platform for leading treasury professionals to come together – sharing and debating the key issues of the day in an informal and interactive setting.

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8 November, London, UK
ACT Annual Dinner
Taking place in the elegant surroundings of the Great Room at the Grosvenor House Hotel, this event provides you with a fantastic opportunity to network with your peers whilst enjoying a superb three course meal, fine wine and entertainment in one of the most prestigious venues in London.

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ACT webinars
Giving direction on regulatory change and key treasury concerns Led by the ACT’s policy and technical experts, ACT webinars give direction on regulatory change and key treasury concerns direct to your desk, wherever you are in the world.

For details of our 2017 webinar programme visit treasurers.org/webinars

To attend an ACT event or webinar, book online at treasurers.org/events. For more information, email events@treasurers.org or call +44 (0)20 7847 2589.

ACT – UK Association of Corporate Treasurers

8 June, London
Corporate tax for treasurers
Join us for an overview of the core international tax concepts to consider when structuring cross-border activities, such as intercompany funding transactions.

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13 June or 12 September, London
Treasury in a day
A one-day introduction aimed at anyone new to treasury, looking to broaden their understanding of the function or who wants to improve their ability to have better conversations with management, operations, banks or with treasurers as customers. You will learn about the role of a treasurer within the context of business, and you will be introduced to key treasury concepts and financial instruments commonly used.

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13 September London
Foreign exchange
Learn about the different types of FX risk and develop an ability to advise both commercial operations and senior management about FX risks and on the responses available to meet those risks from a treasurer who has real experience in this area You will also learn about some of the instruments used to manage FX risks, how they are traded and some of the risks around this, together with the controls that should be used to deal with those risks.

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14 September London
Interest rate risk
Gain a deeper understanding of the many aspects of interest rate risk, how it affects different firms and its inevitability. This PC-based course will teach you the concepts for evaluating the different aspects of interest rate risk with hands-on modelling experience.

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• To view more ACT training courses or to book online, visit academy.treasurers.org/training
• For more information contact Radmila Trkulja at rtrkulja@treasurers.org or tel +44 (0)20 7847 2573
Members of National Treasury Associations benefit from special rates on ACT-led training courses.