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Industry roundup: 16 September

AFP 2021 Pinnacle Award shortlist highlights treasury excellence

Bechtel, Health Care Service Corporation (HCSC), and Micron are finalists for the Association for Financial Professionals’ 2021 Pinnacle Award. Sponsored by MUFG, the Pinnacle Award was established in 1997 to recognise excellence in treasury and finance.

Finalists were selected by a jury of treasury and finance professional peers. Decisions were based on innovative solutions that progress the efficiency and effectiveness of their organisation’s treasury and financial operations. Voting is currently open for the submissions, and the Grand Prize winner will be announced during AFP 2021. MUFG will make a US$10,000 donation to a charity of the winner’s choice.

Bechtel’s entry focused on using a robotic process automation (RPA) tool to query the human resource (HR) management system database daily and compare against treasury management system data to identify if signatories had terminated or changed positions. When the solution ran for the first time, it generated 280 tickets that impacted 390 bank accounts where the signer had some type of HR position change or termination. The tool is now used daily to identify position changes in real-time to enable timely update of bank records, comply with long-standing audit recommendations, and prevent fraud/financial loss.

HCSC’s submission centred on treasury becoming more data-driven, which meant upgrading skills, process efficiencies, automation, technology, and digital visualisation techniques to better capture treasury data. In response, HCSC’s treasury team underwent a complete digital transformation. New teams were created, including a dedicated treasury systems solutions team, expanded forecast teams, and created enterprise banking service solutions function. Technology platforms were optimised, while data was centrally organised to make better decisions.

Micron’s entry focused on optimising fund allocation. The treasury and automation teams developed an artificial intelligence tool designed to pull data from treasury systems that were already being aggregated into a single daily file. The first week it was implemented, the tool advised a reallocation of cash investments that increased the portfolio yield by low single digits of basis points. The treasury staff now runs the model daily to search for further opportunities to increase revenues through more optimal allocation.

"AFP is proud to recognise the 2021 Pinnacle Award finalists, as they set the global standard for excellence in treasury and finance," said Jim Kaitz, president and CEO of AFP. "These teams at Bechtel, HCSC and Micron demonstrate innovative solutions that advance not only their organisations but also the treasury and finance profession as a whole."


Yooz launches tool to optimise digital invoice payment workflow

Yooz, a purchase-to-pay (P2P) software provider, is extending the capabilities of its end-to-end platform for accounts payable automation with YoozPay, an add-on to automate the digital invoice payment workflow. With the tool, companies of any size can onboard and pay vendors directly inside the Yooz platform and generate cash-back as a recurring revenue stream.

With YoozPay, companies can capture, review, approve and pay invoices and create a real-time audit trail for their ERP system in a single web-based solution. Vendors are onboarded with a single email address and select their preferred payment option with one click, ranging from virtual credit card and ACH to electronic or paper cheques.

Once the AP team has selected an invoice, specified the full or partial amount to be paid and selected a payment method, YoozPay takes over, from paying batches of invoices and following an automated or manually defined payment schedule to ERP reconciliation. If a vendor chooses to be paid by virtual credit card, payment is executed instantly. 

"The business disruption caused by the pandemic has demonstrated that companies need to accelerate their digital transformation and embrace automation to stay in business and remain competitive," said Laurent Charpentier, COO and CIO of Yooz North America. "With YoozPay, they now have another powerful tool at their disposal. It turns the AP function into a strategic asset that saves time and money, contributes to the bottom line and provides financial intelligence in real-time."


ESG-labelled debt can address climate funding gap in infrastructure, report claims

Issuance of green infrastructure and project finance bonds is expected to rise as more governments adopt a net-zero carbon emission target by 2050, according to a report from Fitch Ratings. This will be supported by strong investor demand for ESG-labelled bonds. Fitch says it believes the bulk of financing required to address climate transition and adaptation will be allocated to sustainable infrastructure assets, such as renewable energy, and to upgrade existing assets to function in a 2°C temperature increase scenario.

The achievement of net-zero emissions by 2050 will require a plunge in fossil-fuel consumption. This will affect infrastructure associated in the production, transport and use of fossil fuels and could constrain medium- to long-term profitability and capital access for infrastructure asset owners. Fitch considers oil production and refining, liquids transportation, oilfield services and coal-fired power generation to be highly vulnerable to climate-related financial risk.

Climate change mitigation could require investment upwards of US$13 trillion by 2030, but the International Energy Agency estimates that current investment levels are one-third of that required. Infrastructure also faces adaptation costs for the physical risks caused by climate change. Changes in precipitation, temperature, sea levels and more extreme weather events can affect the operation and performance of infrastructure assets. Roads, railways, airports, seaports, as well as coastal and urban infrastructure, are among the most exposed sectors.

There has been consistent demand for high-quality green bonds in recent years. Green project finance bonds can limit an investor’s exposure to non-green activities compared with green corporate bonds, where the issuer may have carbon-intensive operations outside of the bond’s specific use of proceeds. As banks increasingly impose negative screening policies on fossil-fuel-related activities, reallocation of capital towards sustainable investments can meet requirements under new climate-focused financial regulations.


ABA calls for interoperability as Fed develops FedNow

In a comment letter to the Federal Reserve, the American Bankers Association (ABA) has offered feedback on a recent proposal to revise Regulation J to accommodate the new FedNow Service, which is expected to go live in 2023. The proposal would create a new subjection in Regulation J that will apply solely to FedNow Service transactions.

In the letter, ABA called on the Fed to strive towards interoperability with the TCH Real Time Payments Network and, at a minimum, to adopt policies and procedures that are consistent with existing industry practices. ABA also recommended that the definition of "immediately" in Reg J remain undefined, at least until the FedNow Service conducts a technical assessment of what would be reasonable.

ABA also recommended that the Fed change its intended plans to apply Electronic Funds Transfer Act and Uniform Commercial Code Article 4A to consumer transactions with any inconsistencies to be governed by the EFTA, emphasising that EFTA should apply only to consumer transactions. The proposed method would create legal gaps in the areas of finality, acceptance and allocation of liability among participating banks, ABA said. The association added that any gaps created by removing the application of UCC 4A to these transactions can be better addressed in FedNow Service Operating Circulars, which ABA also urged the Fed to make subject to public notice and comment.

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