Members of the EuroTPG convened for their H1 meeting in sunny Stockholm recently and the themes that captured the most attention were the advantages that treasury can leverage from information technology; trends and innovation in cash management, including the pros and cons of virtual accounts; and how to deal with sanctioned countries, a significant issue for a subset of the members. Here’s some of what you missed.
• Wait, what? Virtual accounts will not solve all my problems? Following a lively debate over virtual accounts in a session led by guest speakers from Danske Bank Sweden, members concluded that the supposed panacea of virtual accounts was, well, not quite there. The selling point of virtual accounts is that many physical accounts can be eliminated, saving fees, and virtual subaccounts with their own account numbers will allow easier reconciliations as well as POBO and ROBO. But much can be achieved through setting up an in-house bank and IHB account structure in the ERP (not at the bank) to deliver the same benefits. One member said his business case for virtual accounts just “went from yes to no,” so members are advised to do the cost-benefit analysis carefully and assess alternatives for meeting the same objectives. Read more about the rise of virtual accounts here.
• Creativity to deal with sanctions. Several members have no choice but to sell to countries that are under trade sanctions, making collecting from customers a challenge; a couple of members mentioned not being able to collect and take out significant amounts of money from Iran. Sometimes, opportunities open up to get cash out indirectly via another country, but these windows are not consistently reliable. Some cite creative ways to use the cash, like holding meetings and events in a trapped-cash country, or buying and exporting commodities. Given a choice, members steer away from customers in sanctioned countries, usually relying on trade compliance or in-house legal teams to identify potential transgressions rather than making this a treasury responsibility. However, some argue treasury should be involved to limit the credit risk posed by sanctioned countries.
• How to leverage first-generation dashboards? Static reporting via spreadsheets or ERP outputs is increasingly being replaced or complemented by real-time dashboards which create opportunities for more dynamic discussions around liquidity needs, FX exposures and counterparty risk levels, for example. But what’s the next frontier? What additional data—internal or third-party—is required (economic forecasts, FP&A, etc.) to automate more of the forecasting aspects of treasury’s work by way of second-generation dashboards that provide predictive analytics? We heard what’s on the drawing board for one member who is grappling with the predictive capabilities of dashboards. And we look forward to learning about other members’ progress on this at coming meetings (with demos!).
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