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ACT Cash Management Conference 2015


The beginning of February saw the Association of Corporate Treasurers’ (ACT) Annual Cash Management Conference 2015 held across two days in London. The conference brought together Treasury and finance professionals from over 200 companies to discuss working capital, innovation in payments, treasury challenges in emerging markets, the requirements for running global treasury functions and next generation Treasury technology.

The conference was particularly timely with firms being increasingly asked to juggle regulatory change across increasingly global and complex operations, whilst containing or reducing costs and seeking to foster technological innovation. Cashfac attended the conference and caught up with a few of the speakers to get their views on some of the challenges and opportunities in cash management as well as the key topics, issues and themes to come out of the conference.

Matt Cornwall, Assistant Treasurer, CAPITA

CAPITA are the UK’s leading provider of business process outsourcing and integrated professional support service solutions.

Jonathan Williams, Director of Strategic Development, Experian

Experian are a leading global information services company, providing data and analytical tools to our clients around the world and helping businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making.

Alastair McGill, MD Global Business, Cashfac Technologies

Cashfac helps firms managing multiple bank relationships, with large numbers of bank accounts, operating across geographically dispersed locations and serving large volumes of clients to better manage their money and deliver transparency, control and compliance to the cash management lifecycle.


Roundtable discussion

The corporate cash environment has been revolutionised by regulatory change and technological innovation. How are companies adapting their cash management strategies to keep pace?

MC: Both the adoption of SWIFT and SEPA have driven changes to cash management processes. Straight Through Processing (STP) via SWIFT FIN and FileAct have certainly revolutionised the payment process, but equally the requirement to enhance controls to ensure all processes are structured sufficiently to meet audit requirements, whilst realising the benefit of STP. Electronic Bank Account Management (eBAM) continues to be the solution that most corporates desire in terms of the standardisation and automation of bank account openings and mandate management, but unfortunately this is still on the horizon requiring further bank development.

JW: Most businesses impacted by regulatory change such as SEPA have done the minimum to comply with the timescale set by the industry and regulators. For the most part these migration projects have ruled significant change to cash management processes out of scope due to the mission critical nature of the function. Following a successful migration many businesses, including Experian, are looking at how they can improve their operations by looking at such topics as rationalising their accounts, using pooling or sweeping to concentrate cash into a single view of their cash position and consideration of the use of standards across the business such as ISO20022 XML.

Harmonisation of processes facilitates centralisation of treasury and payments functions at least logically if not geographically and organisations should consider, in light of their operations, what makes sense for their business needs.

In the SEPA example, with further changes in February 2016, with Eurozone IBAN-only payments and XML becoming mandatory, and in November 2016 with those changes applied to non-Eurozone accounts and the new SEPA scheme rules becoming active, there is still work to do.

AM: Matt’s right, the opportunity to achieve STP is enhanced through greater standardisation and through the work of organisations like SWIFT. We’d also agree with Jonathan’s point regarding the trade-off between the short-term necessity to achieve compliance and the ability to use the changes to gain benefit from process or technological change. However, whilst harmonisation may allow for centralisation of treasury and payments functions it is possible to benefit from pooling or sweeping and achieve that consolidated view of cash in either a centralised or distributed environment – it’s something that we’ve been helping clients achieve for a number of years.

Following the ACT conference last week, what did you feel were the most salient topics discussed and the key takeaways from the conference? 

MC: It’s key that Treasurers face an ongoing environment of further regulation facing both the corporates and our banking groups. The impending implementation of Basel III will continue to be interpreted differently by banks, which needs to be factored into future liquidity pricing and requirements for corporates. Security, liquidity and yield are always important factors to take into account for Treasurers, however, these will become more prevalent going forward with changes in counterparty risk in the banking sector, indirectly via the behaviour of Central Banks and changes in the interest rate environment over coming years.

JW: I think the issues which were of most interest were the evolving practices in treasury and cash management. There appears to be no “big bang” revolution but continued improvement in data, visibility and standardisation continue to drive treasury and cash management processes to become even more efficient. This fits with a desire from many Treasurers to really get to grips with the challenges each organisation faces and ensure Treasury is more than fulfilling its role.

AM: Beyond the inescapable topic of regulation the conversations we had with many of the attendees focused on how to improve transparency and optimisation of cash across operations. There remains a frustration that it still proves difficult for many treasurers to achieve a real time consolidated view of cash. This is not a problem unique to treasurers in the UK, some research we’ve commissioned recently across the Asia Pacific market suggests the same issues exist there.

What were the key elements that you discussed during your speaker slot?

MC: The presentation incorporated the “Integration of Cash Management Functions during the M&A process”. This focussed on the importance of a rigorous due diligence process prior to the acquisition as well as encouraging support from third parties including your relationship banks and legal teams. Identifying key issues such as bank mandates, funding and potential FX exposure are important before integrating. Building relationships with the incumbent finance team is also key to facilitate the integration post-completion.

JW: In my workshop with James Lockyer and a well-informed treasury and bank audience, we discussed how the Eurozone migration to SEPA had gone and the problems which are still apparent: local practices, lack of clarity on returned payments and inconsistency in charging, all summed up by the phrase “we want a Single Single European Payments Area”.

Not every country has the same set of conditions and services and the sooner we get to a consistent SEPA all the way across the EU, the better.

In particular I reminded the audience that, having breathed a sigh of relief on hitting the migration deadline, there is still work to be done: the move to ISO20022 XML payment files throughout the EU, the retirement of niche payment schemes, such as ELV in Germany and Austria, Téléchargement in France and Norma 58 in Spain, and the change to IBAN-only payments will all have some impact on payment processing.

In summary, a question I get asked frequently is “What is SEPA 2.0?”; the best answer I’ve heard is “SEPA 2.0? We don’t have SEPA 1.0 everywhere yet”.
According to an ACT survey conducted last year, almost three quarters of the treasurers surveyed said that their companies plan to ‘aggressively’ reduce the cash on their balance sheets. What are some of the ways that corporates can future-proof their cash management strategy whilst creating value through working capital optimisation?

MC: From my own company’s perspective, Capita typically manages a net debt position on a daily basis avoiding the build-up of cash surpluses. This strategy helps to fund our ongoing strategy of small bolt-on acquisitions through the optimisation of our working capital and reduction of bank debt. As well as the adoption and standardisation of account reporting and payments via XML and effective cash pooling, corporates have found the use of Receivables Financing a useful and more popular mechanism to optimise working capital, permitting the extension of payment terms, whilst securing their supplier base.

JW: The key to this is, as ever, timely data. Adoption of the ISO20022 standards and XML and the change to near real-time position reporting will give businesses the tools they need to maintain good control of their finances and improve cash. There are many solutions to some of these problems that can demonstrate good ROI but rely on specific features of a country or bank’s infrastructure. The way to future proof these benefits, though, is to rely on standard methods of both data exchange and data format.

AM: Future proofing a cash management operation starts by defining the network over which you need to exert control and respond to. That network extends internally to all parts of the company’s operations and externally to include the supply chain and bank partners. Connectivity across this network is paramount, without it you will never have a fully visible view of the company’s real time cash position. Without the transparency it’s not possible to manage effective pooling or sweeping strategies and refine the limits to make cash optimisation as effective as possible. And as change to regulation and market forces is inevitable you want to create a cash management operation that can flex quickly, so rules based, workflow driven systems that can be changed rapidly to respond are essential.