This 52 page report is the fourth Journey To Treasury Roadmap report from BNP Paribas, PWC, SAP, the European Association of Corporate Treasurers which tries to show corporate treasury departments where the action is. This year report focuses on four themes: liquidity management; digitalisation; cybersecurity and global tax reform. They held workshops with experts and practititioners across Europe which are summarised in the report - mainly by quotes from the corporate treasurers and experts who participated. Experts from BNP Paribas, PWC, SAP, the European Association of Corporate Treasurers provide comments in each of the sections and and are joined by different corporate treasurery practitioners, so the report is basically made of quotes from those involved. The quality and importance of the quotes varies, but overall the report is well worth perusing for some of the important pieces of advice and insight.

New dynamics in liquidity management 

Cash and liquidity management is a core activity for treasury functions globally, but the combination of regulatory and market developments, and the emergence of innovative banking and technology solutions, is challenging treasurers to rethink their cash operations and liquidity decision-making. The section covers: a negative view of cash, and the feasability of cash pooling. Comments included:

• Joanna Bonnett, Group Treasurer, PageGroup, “We regularly hold a surplus cash balance and we have not experienced difficulties in placing this with our banks. However, in a negative interest rate environment, some banks have charged subsidiaries to hold surplus cash in euros. We are now migrating our European entities to a single transactional banker and expanding our zero-balancing cash pool to centralise cash and in turn avoid the effect of negative interest rates.” 

This next part covered cash centralisation, with Massimo Battistella, Manager, Administration Services, Accounts Receivable, TIM S.p.A. commenting:

• “For us, the ability to centralise payments and collections into one location was one of the major value propositions of SEPA (Single Euro Payments Area) and embedded into the SEPA formats. It is therefore frustrating that diverse rules in Europe affect the choice of location for a payments factory, and in some cases there need to be workarounds or transitional approaches until the regulatory environment is clearer and more consistent. For example, one option we have found is to centralise payments, but channel these payments through an account held in the name of the relevant subsidiary (i.e. payment in the name of (PINO) instead of payment on behalf of (POBO).”

After case studies on their inhouse bank (from Solvay) and the use of virtaul accounts (from Hoffman la Roche), there is a summary of virtual accounts, a discussion of the challenges, the impact of Open Banking, how to use the technology and combining this with accelerating payments, the report concluded that, “Treasurers should be starting now to consider the implications and opportunities both for their treasury and finance function and for the wider business, and identify particular operational, commercial or strategic benefits that may be derived.”

Talking tax

Here the speed of international tax changes was stressed and David Ledure, Tax Partner – Belgium, PWC, pointing out that, “Tax rules have generally been rule-based in the past, but new rules are increasingly principle-based. This is less black and white, and requires more interpretation.” While the need to adopt a combined tax and treasury approach was also stressed. The tax reform checklist is important:

• Perform an internal audit of vulnerabilities in the way that treasury operates: for example, are there locations where profits are booked but that lack substance?
• What structural changes need to be made to address this?
• Can the locations of your treasury centres be justified? Tax authorities will ask the same questions, so you need robust answers. If the explanation is clear, document it; if not, you may need to change it.
• Identify friction points in cash and treasury management processes and structures. What is causing these points of friction? What techniques exist to address them (e.g. POBO and COBO could enable simpler banking and liquidity structures, easier bank account administration and centralised processes)? Are barriers to implementing these techniques real or perceived?

And the case study on Delphi Technologies adoption of “A new tax culture in treasury management” has important lessons for corporate treasury departments.

Digital Treasury

The report has grand statements about the role of technology in corporate treasury. The report concludes that success in digitalisation can only be achieved by:

• Treasury should aim to remove complexity, improve transparency and control and free up resources to ‘do more with less’ as part of its digital agenda.
• Today’s solutions can be configured to meet specific requirements of each treasury func- tion, as opposed to requiring vendor customi- sation that can be expensive to implement and maintain.
• Digital technologies should not represent a new cost, but demonstrate savings or additional value.

The three case studies contain important ideas and thoughts: 

• “Honeywell: The power of connected™ in treasury” and their “Streamlining KYC with Docusign”  
• Dassault Systems. “Enabling best-in-class treasury through digitalisation”
• Digital cash transformation at GE.

Cyber-risk and Fraud 

The report, of course, stresses that “cyber risk and fraud has emerged as treasurers top priority, cited by 82 percent of treasurers in the ACT’s Business of Treasury 20172 report.” And as expected it goes through the main threats:

• Common forms of cyber-attack 
• Need to share experiences
• Combatting fake vendor and CEO scams
• Payment fraud in practice
• Cloud v. On on premise solutions
• Re-imagining system access.

But it is the case studies, as nearly always, that provide the nuggets of insight:

• A Pioneering Approach to Cybersecurity: IBAN Verification from PRINTEMPS
• Cybersecurity Q&A with Lionel Jouve, Director, Finance & Treasury, PRINTEMPS
• From weakest to the strongest link: Empowering our people in the fight against cyber criminals from Jeroen Helders, Group Treasurer, Royal Cosun.

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CTMfile take: This report is, like this review, too long, but it presents a huge amount of work, some of which is really important. It is clearly not something to be read in one sitting, rather it needs to be dipped into when the key sections and case studies are relevant.