The Treasurer POST-PANDEMIC ECONOMICS MODERN SLAVERY PLAN YOUR ACHIEVEMENTS Shortened supply lines and What treasurers need to know Why mindful management innovation are the way forward to protect their organisations can deliver better team results June/July 2020

THE MAGAZINE OF THE ASSOCIATION OF CORPORATE TREASURERS JUNE/JULY 2020 The Magazine of The Association of Corporate Treasurers

THE STRATEGY EDITION Treasurers square up to the challenges treasurers.org/thetreasurer

THE BUSINESS OF TREASURY 2020

treasurers.org/thetreasurer Championing Sustainable Growth

6-7 October 2020 Harrogate Conference Centre

This event will bring together the treasury community, allow us to support and learn from each other and work towards rebuilding a sustainable future. We will focus on how treasurers can manage risk and survive through the current crisis and its economic, social and political implications as well as look at the impact of other major disruptors such as technology, the changing payments landscape, ESG and the end of LIBOR. We are currently working on an exciting programme and look forward to seeing you in October!

For more information and to book your place visit treasurers.org/annualconference20 INSIDE TRACK

EDITOR’S LETTER Today’s situation is unlike any we’ve seen. As I write, the lockdowns and remote working are ongoing. Around the world, policymakers are tentatively modelling a gradual lifting of The Treasurer restrictions. For now, with businesses and commercial activity mothballed, and medium- and is the official magazine of longer-term outlooks still difficult to call, life remains highly unpredictable. Will normality begin The Association of Corporate Treasurers to creep back in at the tail end of this year? It’s hard to say. Will the way we work ever fully return 69 Leadenhall Street, London EC3A 2BG United Kingdom to what it was? Few of us think so. +44 (0)20 7847 2540 For the time being, most of us have found ways to operate at arm’s length. There are signals that treasurers.org boards are getting clearer in their outlook and demands. Nevertheless, the situation will remain Policy and technical Naresh Aggarwal, a highly demanding one for some time. Sarah Boyce, James Winterton Weeks into lockdown, many treasurers are still closely focused on liquidity – a preoccupation Commercial director Denis Murphy that won’t recede any time soon. The bigger questions – when a recovery might start, the Director of marketing & communications Anne Hogarth impact on the global economies of vast central bank cash injections – are being asked with Technical review Joanna Bonnett, increasing urgency. Ian Chisholm, Steve Ellis, Anu Mensah, With all these thoughts in mind, this edition focuses on the strategic treasurer. As The Joe Peka, Alison Stevens, Neil Wadey, Association of Corporate Treasurers’ Business of Treasury regularly finds, treasurers are Peter Walker-Smith increasingly called upon for their strategic insights. This year’s research was conducted prior ADVERTISE WITH US to the spread of the pandemic and the wider onset of lockdown. However, respondents were as For advertising and sponsorship prescient as ever. This year’s findings show that technological advancement and business strategy opportunities, contact Simon Tempest +44 (0)20 7847 2580 will be priority areas for the year ahead. Communication and relationship management continue [email protected] to be in the foreground. See page 6 for an overview. The pandemic has influenced our perspective on many aspects of working life – technology THE TREASURER ©2020 Published on behalf of the ACT by foremost among them. On page 10 we find out how treasury technology has helped treasuries Think, Capital House, improve short- and mid-term cash visibility, supporting that role of the strategic treasurer. And 25 Chapel Street, London NW1 5DH while arguing the case for meaningful cash investments will be undeniably difficult just now, +44 (0)20 3771 7200 thinkpublishing.co.uk the opportunity cost for treasury technology is lower mid-recession than at other times and the pay-offs potentially easier to delineate. Editor Liz Loxton As thoughts turn to recovery, it will be crucial to continue to develop thinking and practices Managing editor Rica Dearman Designer Grant Pearce around green and sustainable finance – not to mention the contributions that Account director Kieran Paul treasurers make to ESG. Navigating the differing market standards, ratings Executive director Jackie Scully and aligning with public sentiment are all issues explored in our ESG feature SUBSCRIPTIONS on page 16. Europe, incl. UK (per annum) As we continue to weather the economic and business storms heralded 1 year £285 | 2 years £405 | 3 years £525 by the pandemic, I hope you find this edition helpful. Rest of world 1 year £320 | 2 years £495 | 3 years £655 Keep safe and well in these unprecedented times. Members, students and IGTA/ EACT members [Self-certified members of National Treasury Associations, including the AFP in the US] 1 year £142 – UK and Europe (MUKEU) [email protected] 1 year £185 – rest of world (MRoW) Follow us on Twitter @thetreasurermag For information, visit treasurers.org/ thetreasurer/subscription

Printed by Pensord THIS ISSUE’S CONTRIBUTORS ISSN: 0264-0937 RACHEL WILLCOX PATRICIA CARRIER JAMES LEATHER is is a business journalist is the project manager a treasury consultant who writes about of the Modern Slavery with experience finance, management Registry at the of large and very and technology. Over Business & Human small entities, her 20-year career Rights Resource through treasury The copyright of all editorial in this magazine is reserved she has written extensively for Centre. She has previously transformations and turnaround to the publishers. None of the articles published may be trade and national publications, worked at the UN Principles of situations. His first treasury roles copied, duplicated or reproduced in any form without the prior consent of The Association of Corporate Treasurers. and interviewed C-suite level Responsible Investment (PRI) were at BAT in the Netherlands The Association of Corporate Treasurers, the publisher and executives. Twice shortlisted for and ShareAction. She holds and then in the UK. He has editor cannot accept responsibility for any claim which may MCA/Management Today writing an LLM in Public International worked in Australia in metals, be made against a contributor arising out of the publication of any article or letter. The views and opinions expressed awards, her feature on mental Law, and her feature on modern construction and at Deloitte. in this magazine are not necessarily those of the Council health is on page 14 slavery appears on page 20 His LIBOR article is on page 24 of The Association of Corporate Treasurers.

treasurers.org/thetreasurer June/July 2020 03 CREDIT HOTSPOT CORONAVIRUS

As the global pandemic evolves and markets react, we’re producing reports, video, webinars, and commentary across different sectors and regions to give you in-depth insight into the potential credit implications of the coronavirus.

Read our latest research at fitchratings.com/coronavirus

fitchratings.com What do you think of this issue of The Treasurer? Please write to [email protected] CONTENTS or tweet @thetreasurermag

COMMENT 16 BUSINESS OF “If you’re launching a green bond, you know 06 TREASURY 2020 what’s expected of you” A brief look at the findings of this year’s treasury survey

POST-CORONAVIRUS 08 ECONOMY Kallum Pickering outlines three main trends for the economic ecosystem following the COVID-19 pandemic

A DAY IN THE LIFE 42 Meet Nichol Burgess of Treasury Consultancy Services

INSIGHT STRATEGY AND 10 AUTOMATION Why now could be an appropriate time for companies to update their treasury technology projects

MENTAL HEALTH 10 14 Employee wellbeing is at the forefront of managers’ concerns more than ever during the pandemic lockdown

STRATEGIC TREASURER 16 More and more organisations are investing in green and sustainable finance 20 SUPPLY CHAIN 20 Corporates and investors are dedicating more resources 24 Eight major risks that to tackling modern slavery boards can expect to 34 focus on during a crisis TECHNICAL Managing liquidity Preparing for the LIBOR during the transition as the deadline 36 24 unprecedented crisis is pushed back to next year

Money market funds 34 CAREER (MMFs) have become the 28 LEADERSHIP latest adopters of ESG practices 14 38 Yield better results Could trade receivables for your team by being more 30 be the right direction flexible when it comes to for your organisation? setting objectives

The key advantages of CALENDAR 32 investing in MMFs during 41 Don’t miss these ACT

GETTY; IKON IMAGES IKON GETTY; today’s pandemic society event and course dates

treasurers.org/thetreasurer June/July 2020 05

2020 THE BUSINESS OF TREASURY THIS YEAR’S BUSINESS OF TREASURY FINDINGS SHOWS TREASURERS PRIMED FOR A POST-PANDEMIC WORLD: WITH LIQUIDITY, TECHNOLOGY AND LEADERSHIP THEIR PRIORITIES

The Association of before – even during the 2008 were afoot. The new priorities Corporate Treasurers’ global financial crisis. identified by treasurers are Business of Treasury report Although the research behind perhaps this year’s most was released in the midst of the report was conducted just striking finding. the COVID-19 crisis. before the crisis struck and prior The full report is available Treasurers are in the front to widespread lockdowns, it online at treasurers.org/hub/ line of liquidity and cash is clear from the findings that research/business-of-treasury. management, and the spotlight treasurers already believed In the meantime, here are the is shining on them like never that fundamental changes most notable findings.

IT’S TREASURERS WHO Where treasurers spend the most time ENSURE LIQUIDITY 1 40% Treasurers themselves say that cash and 35% liquidity management are the essence of their role. That was true before and 30% is certainly priority number one today. 25% Treasurers are playing an invaluable role in maintaining the financial health 20% and stability of their organisations and, 15% indeed, the wider economy. As one 10% respondent put it: “Good treasury can ensure a company’s continued survival 5% and success; bad treasury can open up 0% unexpected and catastrophic risks.” 2013 2014 2015 2016 2017 2018 2019 2020 2020 new

Corporate finance Business strategy Treasury operations and controls Capital and liquidity management Risk management Pension management Regulation Communications and relationship management l Technology advances l Tax/pension/insurance management l Change management

Respondents were asked: in which area do you currently spend the most time? Base: 202 respondents

06 June/July 2020 treasurers.org/thetreasurer COMMENT

TREASURERS’ PRIORITIES Future priorities: where treasurers expect to spend more time ARE SHIFTING 2 Technology advances This year we asked treasurers about their likely priorities for the year ahead. Business strategy The answers revealed a new set of Communications and relationship management priorities for the modern treasurer, Change management including: technological advancement; Regulation business strategy; communications and Capital and liquidity management relationship management; and change Risk management management. These four areas now take Corporate finance precedence over traditional areas such as regulation, treasury operations and tax/ Tax/pension/insurance management pensions/insurance, which appear more Treasury operations and controls as accepted must-haves. -10 0 10 20 30 40 50 60 Crucially, this shift of priorities requires that treasurers develop new Respondents were asked: compared to the current position, in 12 months’ time do you expect to spend more skills and behaviours. or less time on each of the following in your day-to-day role? Base: 202 respondents

AUTOMATION IS Treasurers’ top internal concerns over the past three years 3 REDEFINING TREASURY Technology advances We asked treasurers about their main issues within their organisation. Their Mental health and wellbeing top concern was technology advances; Quality of financial data for strategic second was mental health and wellbeing. planning and decision-making Not what you’d have expected perhaps, Leadership ability to deal but a compelling finding, nonetheless. with new challenges This year’s survey examined how Recruitment and resource planning treasurers are leveraging technology. Diversity and inclusion The picture is one of technology allowing treasurers the space to increase their Interdepartmental communication and collaboration strategic and value-adding contributions Learning and development to their organisations. The fact that 87% of organisations are pushing forward in l 2018 0% 20% 40% 60% 80% 100% investing in automating treasury activities l 2019 is a finding that also has long-term l 2020 Respondents were asked: how concerned would you say your business is about implications for treasurers. each of the following internal factors at the moment? Base: 101 respondents

TREASURERS WANT Where treasurers feel they need to develop themselves 4 TO DEVELOP THEIR LEADERSHIP SKILLS Leadership and strategic competencies This year’s research reveals that treasurers are closely focused around the skills and People management skills capabilities needed to progress their Communication and careers. The top three areas of focus relationship-building skills for personal objectives? Leadership and strategic competence; people Treasury technical skills management skills; and communication Technology-related skills and relationship-building skills. Corporate finance Business strategy Treasury operations and controls Treasurers also felt that a lack of Qualifications Capital and liquidity management Risk management Pension management leadership skills was the most significant Regulation Communications and relationship management issue holding back their team members. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% l Technology advances l Tax/pension/insurance management l Change management l Rest of the world l UK l Total Read The Business of Treasury 2020 in full at treasurers.org/hub/research/business-of-treasury Respondents were asked: which of the following are the areas of focus for your personal objectives and development?

treasurers.org/thetreasurer June/July 2020 07 POST-CORONAVIRUS MORE INNOVATION, LESS GLOBALISATION THE PANDEMIC HAS FLAGGED WEAKNESSES IN HEALTHCARE SYSTEMS THE WORLD OVER. SOLUTIONS FOR FUTURE CRISES ARE CLOSE AT HAND. KALLUM PICKERING FLAGS THREE MAJOR TRENDS FOR THE POST-COVID-19 ECONOMIC ECOSYSTEM

When it comes to economic more healthcare spending from trade and immigration, INNOVATION upswings, the past is rarely and a more active trade and rising economic nationalism Third, expect innovation a good guide to the future. industrial policy to onshore had already started to put to accelerate. A crisis can Nothing about the way production of key medicines globalisation in goods trading be the mother of invention. the world looked before the and equipment. into reverse in recent years. The coronavirus shock is financial crisis, with mostly That crises reveal US-led protectionism under likely to spur innovation in stable politics and economic shortcomings that governments the banner of President Donald many fields, ranging from exuberance in major parts of address thereafter is not really Trump’s ‘America first’ trade a more efficient use of the advanced world, could have news. The partial repair of the policies had triggered a trade labour and communications provided even a remote signal global banking system after the war with China. technology to increased use about the key traits of the 2008/9 financial crisis is a case In Europe, the UK’s decision of 3D printing. past decade. in point. However, there are to leave the EU will raise Many companies that have But even in the depths of an crucial differences between trade barriers between the already used such technologies unprecedented recession, three now and the 2008/9 experience. world’s fifth-largest economy well in recent years, especially trends seem to be emerging that Unlike repairing the and the world’s largest those in the US tech sector provide clues about the future. financial sector, which required single market. and in high-end European growth-sapping increases in And in Asia, an ongoing manufacturing, have vastly HEALTHCARE regulation and capital in the dispute between Japan and outperformed their peers. First, the state is set to play banking system, improving and South Korea extends well If working habits change a much greater role in day-to- reinforcing healthcare sectors beyond trade and is rooted permanently, especially working day life and economic activity, across the world should not in the messy legacy politics from home, that will further especially when it comes to drag on economic growth. of World War II. raise demand for technologies healthcare provision. With no past excesses to deal Now, reacting to the that facilitate remote working. Across the world, the with, there is no payback in the disruption in global trade Expect higher investment coronavirus pandemic has years to come. No boom, no flows and supply chains, in the years to come as many revealed that: 1) existing bust. Meanwhile, building manufacturing and production companies upgrade their capital healthcare facilities have a more resilient healthcare industries will shorten and stock and adjust working struggled to handle a sudden system will involve higher diversify supply chains further, practices. This was slowly surge in demand; and 2) some capital investment – in hospitals as well as raising inventories. happening anyway, but now countries rely too much on and factories – and more As they forego some of the it will happen faster. long-distance imports for crucial spending on research, doctors earlier gains of globalisation, Robotics, 3D printing, remote medicines and equipment, and nurses. That should be some trade-orientated sectors technologies facilitated by cloud which creates a dangerous good for economic growth. will lose a bit of momentum in computing – these will soon bottleneck when demand line with a slowdown in trading become the standard for many rapidly picks up. SHORTER SUPPLY LINES in goods. more companies and workers. In response, governments Second, expect accelerated A public policy response to In the long run, the resulting are beginning to reinforce their deglobalisation in goods ‘onshore’ strategic industries jolt to productivity from faster healthcare systems. Beyond the trading. Frustrated by slow and produce vital medicines innovation may be stronger than near-term surge in spending growth in the post-Lehman and equipment at home will add the drag from deglobalisation to beat the virus, expect world and the increasingly to this trend of deglobalisation in goods trade, as long as sweeping regulatory change, visible costs borne by the losers in trading in goods. governments do not turn

08 June/July 2020 treasurers.org/thetreasurer COMMENT

POST-CORONAVIRUS MORE INNOVATION, LESS GLOBALISATION Improving and reinforcing healthcare sectors across the world should not drag on economic growth

away too much from market- travel, shipping and traditional based models. store retail. The critical point is that, as We may also see interesting long as many societies remain distributional trends in open to the sharing of ideas, commercial real estate, with globalisation may continue slower gains in retail and office to flourish, but in a more space set against faster growth in nuanced form. industrial space and warehouses. As we enter even further Across countries, the winners into the age of information, will likely be those nations globalisation may take the with stronger legal systems form of increased sharing and transparent institutions and pooling of ideas. that will allow them to benefit Coupled with the most from enhanced revolutionary trade of information. Open production societies, both advanced and technologies such as emerging, will do well. Closed advanced robotics and societies and those with less- 3D printing that make than-transparent institutions, it cheap to manufacture including the likes of China items locally or even at and Russia, will find the new home, consumers will situation less favourable. benefit from increased An event on the scale of trade in blueprints rather the virus pandemic and the than in goods. recession will almost certainly Technological advances may have profound economic, make onshoring more cost- financial and political effects efficient that importing. that will be felt for a long time. As these trends play out, we No one can say for sure what will likely see winners and losers is around the corner. However, within and across economies. economic logic and the lessons On a sector basis, the post- of history suggest that the coronavirus recovery will involve global economy could look structurally higher growth very different during the for healthcare, technology post-coronavirus recovery. and for the manufacturing of machine tools and advanced manufacturing equipment. Kallum Pickering is senior Against these positive economist at trends we will likely see Berenberg Bank structurally weaker growth in

treasurers.org/thetreasurer June/July 2020 09

IKON IMAGES streamline treasury functions across tools to automate and mission-critical tech ranges The list today’sof potentially overnight in some cases. technologiesof – seemingly or transformed towards all sorts approaches have been refined During lockdown, attitudes and and importance technology.of many things, not least, the role reshaped our perspectives on than usual. testing that seems more serious scenario planning and stress than usual, and informing detail and over shorter periods assessed and analysed in more into liquidity, which are being cash flow and have visibility perpetual need to forecast Likewise, the treasurer’s and urgency by the pandemic. has been given new meaning case scenario’ – a concept that and planning for the ‘worst- or mitigate risk, looking ahead working lives totrying avoid risk averse. They spend their treasurers are inherently This existential crisis has STRATEGIES health, corporate company’s financial As guardians a of to increase automation and strategic technology projects. to increaseautomationandstrategictechnologyprojects. Why now may be a good time for treasury departments Why nowmaybeagoodtimefortreasurydepartments SURVIVAL

Lesley Meall advisory at PwC. Among the Stebbings, head treasuryof controlled manner,” says David activities effectively andin a management and operational is able to carry out key risk is key to ensure that treasury effective use of technology partners and their customers, banking and technology for the treasury team, their ‘new normal’. be reflected in our eventual All of which seems likely to distant colleagues connected. that are keeping socially videoconferencing systems and the collaboration and and sustain remote access; risks; technologies to support or currency and commodity such as: managingliquidity Technology has certainly flexed and lockdowns “In an era homeof working, its muscles during the pandemic explorestheissues

treasurers.org/thetreasurer

STRATEGY ANDAUTOMATION and use such data to manage control be obtained,” he says, can such ongoing visibility and Only with dedicated technology changing forecasts are needed. decisions based on rapidly during a crisis situation, prompt more strategically. “Especially departments to think and act visibility and enabling treasury short- and mid-term cash For example, by improving for Zanders, Switzerland. treasury advisory services Balkys, who leads corporate uncertain times,” says Elvadas technology can help treasury in our clients, we have seen how lockdowns. “Working with during the pandemic and certainly flexed its muscles Treasury technology has TOOLS FORTOUGH TIMES cannot record calls). than insecure phones that or unapproved trading, rather better mitigate unauthorised trading portals (as they can in-house support) and online onus is on vendor rather than cloud-based systems (as the with potential to assist are various technologies he cites

June/July 2020

11 STRATEGY AND AUTOMATION

The cybersecurity threat to treasury departments has not diminished during the pandemic liquidity, borrowing and automated. It will create more insists on physical signatures hedging to minimise cost time for strategic thinking,” said and documents. We do – among other things. a third respondent. need a development in Responses to The Association Justifying investment can digital signatures.” of Corporate Treasurers’ be difficult even without a (ACT’s) Business of Treasury global public health emergency JOINED-UP THINKING 2020 survey indicate that and its dire consequences At Tideway, which is many corporate treasury in the background. On the constructing and delivering departments and treasurers upside, opportunity cost is a sewage tunnel, the Super were planning to increase regarded as lower in recession Sewer, under the River Thames, their focus on automation and than at other times. This may a treasury technology strategy strategic technology projects help the more than 50% of to maximise treasury efficiency even before the pandemic. treasurers who told the ACT and flexibility, for example, by The lockdowns shone a bright that they expected to spend using tools based on software light on the benefits of doing more time on technological as a service (SaaS) clearly so. There was a sense among advances during 2020. The demonstrated its value. “Our survey respondents that the areas in which treasurers’ TMS used to be hosted on- profession’s evolution towards organisations are investing premise, and we have recently greater strategic involvement a great deal are: cybersecurity moved to a SaaS version, so it’s is linked to automation, (43%), automation (28%) now in the cloud and that has particularly where it can and (for 25%) new treasury been really useful,” says Elina improve connectivity between management systems (TMS). Todorova, assistant treasurer, systems, eliminate operational These objectives seem likely Tideway. Prior to this shift, the and repetitive tasks, and enable to remain on ‘to-do’ lists going team couldn’t have accessed the treasurers to glean greater forward, even if priorities TMS from non-work laptops, strategic insights from data change, timescales shift and and it is now easier to switch they have access to. strategies evolve. modules on and off. Levels of automation do seem The level of automation PLANNING AHEAD to have influenced the relative and connectivity between the big treasury team – there are These possibilities were ease, speed and effectiveness systems used by the treasury just four of us – and operational reflected in responses to with which some treasury teams team also proved invaluable. efficiency has always been Business of Treasury survey have been able to respond “Our strategy takes account a priority.” questions on how treasurers to the changing demands of the fact that Tideway is Its TMS, FIS Integrity, expect their role to be impacted and working patterns of the delivering a project. The integrates with its NetSuite by fintech developments over pandemic – especially where company and potentially accounting system. “Our the next two years. “Within remote access to the software the treasury team will shrink TMS receives payment files our treasury department, we and systems that treasury relies as the tunnel construction from NetSuite and exports automate quite a lot and we are on was already in place. nears completion, so for every accounting journals into it,” looking at efficiency. As a result, Mid-lockdown, Rob Scriven, technology decision we’ve says Todorova. “The TMS also I think we can have a more group treasurer and planning made, there’s been a cost- integrates with the trading value-adding and strategic manager at Cairn Energy, benefit analysis for the expected platforms that we use for cash role, rather than focusing on told The Treasurer: “All our time frame,” explains Todorova, investments in money market treasury operations,” said one technology works remotely adding: “We have automated as funds and it talks to Bloomberg, treasurer. “We will be relying and we are all used to working much as possible and created so that it can import market more on data,” another said. on the move, so I have not seamless operational flows as rates into the TMS.” Payments “Advances in technology will seen any impact. The only much as we could within our are not as sophisticated as they make more manual processes problem is when somebody overall strategy. We are not a could be, but after considering

12 June/July 2020 treasurers.org/thetreasurer STRATEGY AND AUTOMATION

tactics for a treasury technology strategy can be scuppered by bad timing. “How I wish that I had been able to introduce a number of treasury systems before the COVID-19 crisis,” says Christof Nelischer, who recently became group treasurer at International Personal Finance. As he told The Treasurer in April 2020, he had been planning to launch a TMS project, introduce electronic trading and an intercompany netting system, but the challenges of the coronavirus and the lockdown meant that these plans needed to be put on hold, given the immediate focus on responding to the situation in hand. Nelischer has extensive experience of formulating and implementing cutting-edge treasury technology strategy in his previous treasury role at Willis Towers Watson, so he is rueful about the missed opportunity at International Personal Finance. “Sadly, the current crisis highlighted how beneficial it would have SWIFT a while ago, a business challenges have been overcome an unusual attachment or been, had we been able to case could not be made for around remote home working, providing the IP address for implement earlier,” he says, a costly time-consuming more of this seems likely, a market news server to a before putting an optimistic installation, because Tideway although cybersecurity aspects stranger, it is often our human spin on the situation. “On a will only have a high volume of may demand more attention. curiosity or desire to be helpful positive note, the crisis has payments for three to four years. For example, says Stebbings: that lets us down,” says Naresh shown the benefits of operating “There may potentially be Aggarwal, associate policy and from a systems-based set-up, FOCUS ON CYBER increased cyber risk from less technical director at the ACT. with automated operations and Some costly and time- inherent security in home So all treasury departments much improved visibility of consuming technology spend is wi-fi networks.” need a formal strategy to our financial position,” he says. unavoidable. The cybersecurity Treasury is having to deal mitigate the risks (the ACT Something good can come out threat to treasury departments with more and increasingly shares insights on how at of even the worst-case scenario. has not diminished during the sophisticated external attacks, treasurers.org/hub/treasurer- pandemic and it seems unlikely but the weakest links in magazine/why-treasurers- to do so. Even if the future is not the security chain remains must-wake-spectre-cyber-risk). Lesley Meall characterised by more social people. “Many of the risks is a writer and editor specialising distancing and intermittent stem not from technology, TIME IT RIGHT in finance and lockdowns, now that some of but simply from human Even with the best-laid plans, treasury technology

IKON IMAGES IKON the practical and psychological behaviour. Whether it’s opening objectives, principles and

treasurers.org/thetreasurer June/July 2020 13 CRISIS Positive mental health has become one of the defining issues of This situation is a real wake- up call to companies, warns our times. Rachel Willcox looks at the impact of COVID-19 and Matthew Steans, a manager in the benefits of paying long overdue attention to mental wellbeing treasury advisory at EY, who set up Stigma Statistics, an initiative aimed at providing real data on Even before the spectre 2016, largely due to a significant juggling professional and family suicide and suicide attempts of COVID-19 had reared rise in mental-health-related commitments. Technology has to help formulate suicide- its ugly head, the mental presenteeism, absenteeism and been an enabler to allowing vast prevention strategies, having health of employees was already staff turnover. swatches of people to work from confronted his own mental on the business radar, having But in the face of a new home, but the ‘always-on’ culture health demons. Steans says transitioned from a niche benefit normal, medical researchers it facilitates can add to the middle-aged men at particularly to a mainstream strategic concern. writing in JAMA Internal challenge of maintaining good high risk of suicide could well But as the global health pandemic Medicine have set off alarms mental health and make it hard be the hidden casualties of rages on, we face the reality that about a mental health for some to disconnect. this pandemic. the relentless task of maintaining pandemic quietly taking hold Steans is hopeful that positive positive staff morale in 2020 internationally alongside SUPPORTING EMPLOYEES changes over the past few years, might just be companies’ biggest COVID-19, warning of an What is also increasingly such as greater openness in business challenge to date. overflow of mental illness that obvious is that the mental health discussing mental health at work A poll conducted last June by will inevitably emerge from this backlash of COVID-19 will have and more provision of support the Reward & Employee Benefits crisis. It points to the fallout of a long half-life. Looking ahead overall, including mental health Association found more than previous large-scale disasters to a return to some semblance first-aid training, will continue two-thirds of organisations had including the SARS epidemics, of normality when teams are their upward trajectory. “It comes a strategy in place for monitoring at least partially back in offices back to having open and honest employee wellbeing, up from 30% together and the onus will be on conversations about how team in 2016. Almost two-thirds of Creating regular employers to help staff navigate members are feeling,” he says. respondents said mental health an onslaught of mental health For Alex Hyde, a treasury was the number one wellbeing opportunities challenges forced upon them recruitment specialist at BIE priority in their boardroom, and for staff to by bereavement, the financial Executive, the death of his wife 46% reported having a dedicated impact of the pandemic and a few years ago sent him on a mental health strategy in place raise any a host of other anxieties. downward mental health spiral in 2019, up from 16% in 2018. problems they Emma Mamo, head of that brought home the need Zoe Sinclair, founder of workplace wellbeing at UK-based for employee mental wellbeing Employees Matter, launched face is key mental health charity Mind, says to be at the heart of business. This Can Happen – a conference creating regular opportunities Hyde believes that authentic dedicated to mental health issues hurricanes and the World Trade for staff to raise any problems leaders who acknowledge that in the workplace – in 2018. “Some Center attacks, which were they face, whether personal or we all have mental health, all of companies are box-ticking; some accompanied by increases in professional, is key. “As many staff the time, will be better placed to are doing less than they would depression, post-traumatic stress move to remote working, this is all help on this issue and have more like; and in some cases there are disorder, substance abuse and a the more important, with check- engaged, happier workers. They frustrated people not getting broad range of other mental and ins now frequently happening will also then be better placed the senior buy-in they need. But behavioural disorders. virtually. If you’re worried about to support those in their team without doubt we are seeing more Under the current the wellbeing of a co-worker, if they experience mental companies coming on board.” unprecedented situation, try to ask open questions, listen health problems. The business response to leaders and managers broadly non-judgementally and try not “If you’re asking your team not employee mental wellbeing understand that personal issues to make assumptions about their to be on email over the weekend is not all altruistic: research loom large for everyone – from mental health. Even if they’re but you do it yourself, it sets published by Deloitte in January staff dealing with the ambiguity not willing or able to talk to you the wrong tone. There’s a huge found that poor mental health of a furlough situation to those at the moment, you’ve at least amount of pressure on people costs UK employers up to £45bn struggling with new ways of let them know you’re there for working in treasury and I think a year, an increase of 16% since working and the challenges of them if and when they need it.” it’s definitely harder for people

14 June/July 2020 treasurers.org/thetreasurer INSIGHT

CRISIS

further down the organisation to want to stick a plaster over But for leaders and Nonetheless, she is confident to speak up. That’s why it’s so it, but that doesn’t work. Good management teams to go missing that we’ll look back on this important for leaders to share management is preventative – it’s in action on this matter would period as a turning point for their experiences – it makes it about making sure the mental be a false economy. Deloitte mental wellbeing recognition. easier to not be OK,” Hyde says. wellbeing of your team is valued.” estimates that on average for Reflecting on his own Considering that even under every £1 spent on supporting experiences, Hyde says it was MENTAL WELLBEING normal circumstances managers their people’s mental health, the kindness of his line manager RECOGNITION acknowledge the need to do more employers get £5 back on that made all the difference. “His Amid employee concerns that but say they are hampered by their investment in reduced response was so kind. You don’t admitting to poor mental health other organisational pressures, presenteeism, absenteeism and necessarily need to have an HR would be a career-limiting move, the concern is that looming staff turnover. policy, you just need to react in psychotherapist Simon Parke economic instability could In the meantime, COVID-19 a human way.” believes that confidentiality result in mental health being seems to have tipped the balance is crucial. His company, The relegated further down the list still further into accepting how Mind Clinic, provides corporate of corporate priorities. “Everyone every aspect of life can impact programmes offering employee is so focused on survival and a person’s mental health. “For support and counselling. “Mental adapting. The next question companies to support across Rachel Willcox is wellbeing is a distraction to is, what’s going to happen six these issues requires a culture a freelance writer and editor profit for some companies,” months from now when budgets change and that doesn’t happen Parke admits. “Companies tend are stretched?” Sinclair asks. overnight,” Sinclair warns.

treasurers.org/thetreasurer June/July 2020 15 STRATEGIC TREASURER

THE RISE OF GREEN AND SUSTAINABLE FINANCE How straightforward is it for organisations to invest in projects with environmental benefits? Rebecca Brace talks to treasurers about what their firms are doing

16 June/July 2020 treasurers.org/thetreasurer STRATEGIC TREASURER

For many corporations, interchangeably, but each has that is gaining traction in the green and sustainable a distinct meaning. sustainability conversation. financing has become • Green finance. Kwok Liu, “It’s about the philosophy of a significant area of focus in deputy treasurer, funding & investors when they make a the past couple of years. As investment at National Grid’s decision on where to allocate Tom Bolton, head of corporate group treasury, explains: “We their capital,” explains Liu, finance at Thames Water, points see green financing as a type of “which includes both financial out: “It’s something that’s been financing where proceeds are considerations and the positive around for a long time, but in used to specifically fund certain impact that can be achieved what feels like a relatively short projects with environmental in terms of social benefits and space of time, it appears to have benefits. The market standard benefits to the planet.” become mainstream.” in Europe is for this type of This topic will only become issuance to be aligned with the While ESG factors may be top more important in the future. International Capital Market of mind for many companies, Before the coronavirus Association’s [ICMA’s] Green when it comes to debt issuance crisis escalated, industry Bond Principles.” it’s clear that different parts of commentators had pinpointed • Sustainable finance. the market are at different levels sustainability as one of the top Sustainable financing, Liu says, of maturity. considerations for treasurers involves linking the coupon At this stage, green bond this year. While the current paid to a sustainability metric issuance is seen as a well- situation may hinder planned or goal, and aims to promote trodden path for companies activity for some, sustainability wider sustainability criteria – not least because of the continues to be an important or commitment to the UN’s structure brought by the topic for companies around Sustainable Development ICMA’s Green Bond Principles, THE RISE OF the world. Goals – “but it’s a product that which are intended to provide For treasurers, navigating is perhaps not as well developed guidance for issuers, investors the green and sustainable as green financing”. and underwriters. As Lisa finance market is something • Transition finance. As well as Dukes, deputy group treasurer of a challenge – not least green and sustainable financing, of power company Drax, says: GREEN AND because some areas of the another emerging area is that “If you’re launching a green market are at an earlier stage of transition financing. The bond, you know what’s expected of development than others. focus of this is on sectors that of you.” Sustainable finance At the same time, there’s a are currently ‘brown’, but are and transition finance, in SUSTAINABLE certain degree of overlap and working to transition to green. contrast, are at an earlier stage confusion when it comes to the In March, UK gas distribution of development, and as Dukes terminology used to describe network Cadent announced remarks, “there is definitely the different routes available. that it had issued the UK’s first a lack of structure around FINANCE transition bond in the form of those markets.” WHAT’S IN A NAME? a 12-year €500m issuance. The Likewise, green and Where language is proceeds will be used to reduce sustainable financing is more concerned, terms like greenhouse gas emissions. developed in some regions than ‘green finance’, ‘sustainable • Impact investing. While in others, with Europe appearing finance’ and ‘transition not a form of financing, impact to be particularly advanced. finance’ are sometimes used investing is another term Thames Water was the first UK corporate to issue a green net zero, so demonstrating US private placement, with our commitment to that is a £705.1m issuance in March really important.” 2018. “At the time, investors Another consideration is the had relatively limited knowledge role that green and sustainable of concepts such as the green financing can play in improving bond principles,” says Bolton. a company’s reputation, and “There has definitely been a thereby increasing its appeal as a noticeable change in the past place of work – for both current six to 12 months – but not to and prospective employees. the extent that investors are Bolton says, “Staff are interested. bringing multiple ESG analysts We have got a big commitment along to meetings.” to what we call public value – it’s one of our strategic goals. DEMAND AND DRIVERS And staff certainly buy into Demand is being driven by that.” Likewise, he says that a number of different factors, prospective employees are including investors as well as taking a keen interest in the the board, the workforce and organisation’s environmental the company’s customer base. credentials: “We are attracting “We see a lot of demand for a lot of highly motivated green bond issues, especially graduates, and they are from debt investors in Europe,” asking questions.” says Liu. “We see them More broadly, customers are becoming more focused on ESG, increasingly driving demand More companies are looking to invest in and we know it’s becoming an for evidence of organisations’ green finance increasingly important part of green credentials. “We have their investment process.” He a customer arm that supplies adds that certain investors have electricity to B2B,” says Dukes. carbon intensity achieving a In the case of Derwent London, dedicated green bond portfolios, “We are the largest provider of benchmark,” says Dukes. She this has included putting in and investors are particularly renewable energy, and there’s adds that while the company place a five-year, £450m RCF, keen to invest in green assets. a massive demand for that type has also been reviewing green which includes a £300m ‘green’ “And on the equity side, I know of energy. People want green loans and green bonds for some tranche – the first such facility the equity investor relations energy – they want to be able time, “given that we already to be agreed within the UK’s real team gets a lot of questions to say in their annual report and had a strong ESG slant to both estate sector. around ESG as well.” to all their stakeholders that our core and working capital “Lenders have a green agenda, “Investors are showing a lot all their energy is green.” She finance, we didn’t see green too, and want to issue green more interest in green issues, also points out that individuals bonds as a compelling addition products,” Joshi comments. with many keen to make greener are mandating investment at this stage.” “You’re effectively pushing on investment choices,” adds Jay managers to take on more green Joshi, meanwhile, says, “the open doors. If you go to your Joshi, treasurer of property and ESG investments within property and construction sector bank and want to talk about investment and development their portfolios. has a large carbon footprint, so green financing, it’s probably business Derwent London. we have a responsibility to do already on their agenda.” “I can’t remember the last time GREEN AND SUSTAINABLE what we can to reduce that.” In January of this year, I went to an investor meeting FINANCING IN ACTION National Grid issued a €500m where climate change and ESG Different companies will Customers are green bond, with the proceeds weren’t on the agenda.” approach this area in different set to finance electricity But demand isn’t just ways, whether their focus is on increasingly transmission projects with coming from investors. As Liu green revolving credit facilities environmental benefits. “We explains: “The board cares; our (RCFs) or sustainable bonds. driving demand went for green because it’s the equity investors care; and our Drax, for example, was the first for evidence of most developed market,” Liu stakeholders care. National global generator to issue an says, although he adds that Grid plays a very important ESG-linked term loan. “The organisations’ the organisation is monitoring part in the UK’s transition to margin was adjusted based on green credentials the market to see how different

18 June/July 2020 treasurers.org/thetreasurer STRATEGIC TREASURER

Sustainable practices and standardisation of the include supporting terminology,” says Joshi. But he wind-energy generation also notes that if requirements become too onerous, investors may be deterred – “so it’s about getting that balanced approach.” Meanwhile, although not all companies will be focusing on green or sustainable financing at this stage, there may be other steps available to them. Dukes, for example, notes that Drax has embedded ESG metrics into the company’s working capital programme. And as she points out, a further consideration is that listed corporates that do not issue debt are still likely to be rated by one of the ESG rating providers. She advises that companies should find out whether they have a rating, determine how this compares to their peers and take steps to improve the rating if necessary. “While you may not be looking to issue debt, there is genuinely an increase in areas develop. “We could that the more significant of which is relatively small,” other stakeholders – whether certainly look at transition benefits lie in strengthening the he explains. “You also need to that’s customers, suppliers or financing, and in the future company’s relationships with get a second-party opinion on even future employees – that we could look at sustainable stakeholders, from employees the framework.” are looking at that type of financing,” he says. “But we’re to policymakers and investors. In addition, Liu says the information and assessing waiting to see how the market “When you embed a green process involves reporting you against it,” she concludes. develops, because those two agenda throughout the whole on the impact of the projects “You might not be getting forms of financing are business, you’ve then got to look funded by the financing. While finance on the back of it, but currently somewhat behind at the cost or the benefit across this does take more work, he it’s still important to be able green financing.” the whole business, too, because notes that there is generally to say, ‘we are doing the right the benefits will really come a greater demand for this thing for the right reasons, DOWN TO THE DETAILS further down the line – and not type of information from and this is what we’re doing For companies looking at green specifically on the cost of the stakeholders, “so we are to improve’. And if you do and sustainable financing, the debt,” he says. probably going to be producing then decide to embed that cost of going down this route Alongside costs, treasurers this information anyway.” into financing, you’ll get an will be a major consideration. will also have questions about easier life and will hopefully While companies may save the practicalities. Liu says that FINAL THOUGHTS be appropriately rewarded.” a couple of basis points on where legal and administrative With some parts of the market margins, this may be erased requirements are concerned, a more developed than others, With thanks to Naresh Aggarwal by the cost of carrying out green bond is not very different it’s clear that more progress is for his assistance necessary verifications. to a standard bond. “The only needed in some areas. “There Nevertheless, as Joshi points thing that’s different is the use are a few things that we need out, “It’s not actually about Rebecca Brace of proceeds statement in the the green product markets to is a freelance reducing margins on the debt documentation, and there’s the do before things can develop business and facilities or savings on the green financing framework that further, and this is mainly finance journalist associated costs.” He argues you have to put in place, the cost around transparency, disclosure

treasurers.org/thetreasurer June/July 2020 19

THE RISE OF MODERN SLAVERY IN GLOBAL SUPPLY CHAINS WHAT CORPORATE Tackling modern slavery is increasingly a pressing topic for company boards and between corporations and TREASURERS NEED their investors. Modern slavery – defined as making people work against their will and TO KNOW under threat of punishment – is understood as part of Businesses, governments and the the ‘social’ element of ESG considerations, and as such public are all showing greater interest ought to be on the radar of in supply chains and their potential for corporate treasurers. At the Business & Human exploitative practices. Patricia Carrier Rights Resource Centre sets out the issues (BHRRC), we track and analyse

how companies report on their GETTY

20 June/July 2020 treasurers.org/thetreasurer SUPPLY CHAIN

strongest enabler of corporate Investors are asking companies action on modern slavery, with more resources allocated to about their policies and due address this issue when those senior people were engaged. diligence on modern slavery Their engagement is partly driven by a recognition that to drinks company Monster Environmental awareness greater attention on modern Beverage demanded the has also helped to drive change. slavery, prompted by media company assess its risk for Climate change is causing more coverage or the introduction modern slavery after it stated people to migrate, which has of national legislation, brings it had a minimal risk in spite the potential to create a growing increased reputational risk of scoring poorly on the population of migrant workers to companies. KnowTheChain benchmark. at risk of exploitation. National As a result, the company policies, such as the UK’s post- INVESTORS undertook an impressive Brexit immigration and visa What’s more, investors are overhaul of its policies and schemes, are likely to increase increasingly vocal about the practices. Similar shareholder risks to vulnerable migrant risks of modern slavery within pressure was applied to Coles workers seeking work. companies’ operations and global and Woolworths in Australia. Businesses are also finding supply chains. The UN-backed This momentum is causing modern slavery is an issue Principles for Responsible companies and investors to receiving greater attention Investment (PRI), representing rethink their fiduciary duties to from rating agencies and more than $86 trillion in assets, shareholders – looking beyond governments. As investors is increasingly engaging on the short-term profits and more continue to demand data on issue as part of the S in ESG. The about long-term societal good. modern slavery, rating agencies FAST Initiative (Finance Against This has received a boost from will have to respond and provide Slavery and Trafficking) is a Larry Fink, CEO of BlackRock, comparable, consistent data multi-stakeholder initiative that the huge US investor with that can be used as part of an THE RISE OF has developed a blueprint for the $6.84 trillion of assets under investor’s own due diligence financial sector and professional management. Rathbones into companies. service providers to speed up Investment Management, The EU’s non-financial MODERN SLAVERY action to end modern slavery. meanwhile, is using compliance reporting directive (EU NFRD) A child working inside The Organisation for Economic data on the FTSE 350 provided links modern slavery to statutory a pot-making factory Co-operation and Development’s by the Modern Slavery Registry Strategic Reviews within in Bangladesh IN GLOBAL SUPPLY CHAINS Responsible Business Conduct to push companies to raise their corporate reporting. As part of for Institutional Investors human rights standards. a renewed sustainable finance references the UK Modern WHAT CORPORATE anti-slavery initiatives through Slavery Act in the context of our Modern Slavery Registry the need for transparency and through our influential around due-diligence practices reports on FTSE 1001 companies. of companies operating in TREASURERS NEED We’ve seen this issue taken high-risk sectors. up by governments as well as On an individual level, responsible companies and investors are asking companies TO KNOW investors as an urgent risk about their policies and due demanding serious action. diligence on modern slavery. A 2016 report by Hult They use civil society research University in the UK found that and materials such as the 77% of companies surveyed KnowTheChain2 benchmarks thought there was a likelihood and BHRRC’s data on companies’ of modern slavery occurring in modern slavery policies and their supply chains. The same practice to ask these questions. report found engagement by For example, in 2018, a Modern slavery awareness senior business leaders to be the shareholder resolution put protest in London

treasurers.org/thetreasurer June/July 2020 21 USE YOUR TIME WISELY TO SECURE A BETTER FUTURE

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CLEAR SIGHT LINES IN SUPPLY – PUMA

Keeping supply chains free with them and place rigour from exploitative labour around supply chain finance.” or unsustainable business Sustainable SCF is Women and children workers after a day working at a practice is an imperative that attracting interest from construction site in India is climbing ever higher up the intergovernmental bodies, corporate agenda. For high- businesses and the public. profile consumer brands, in “The amount of impact you strategy, Valdis Dombrovskis all of which represent a risk to particular, sustainable supply can create by making the of the European Commission businesses. Modern slavery is chain finance (SCF) is proving supply chain sustainably based has announced a revision of one of the most difficult abuses an effective means of building is far greater than by trying the NFRD, which requires to police given that it occurs far brand loyalty and safeguarding to support a single client on companies to disclose material down the supply chain where corporate reputation. their sustainability goals,” says environmental and social there is low visibility. The best For sports brand Puma, Senel. Puma’s approach is a information, including on way to combat modern slavery, building a sustainable SCF sophisticated one, she says, human rights. therefore, is to address other programme across its supply resting on a strong internal Recent analysis by the Alliance labour rights issues. For example, chain has had some desirable model of sustainability key for Corporate Transparency modern slavery is directly linked outcomes, enabling it to performance indicators (KPIs). of more than 1,000 companies to fair pay practices, so enforcing support its suppliers financially The bank is agnostic as to found disclosure under the decent and timely wages for and incentivising them to whether companies should EU NFRD to be very poor workers in supply chains makes become more sustainable. use third-party mechanisms or in the area of supply chain modern slavery less likely. Partnering with HSBC and rely on their own sustainability management and human rights. Action on issues such as living leveraging the bank’s rating system, but they This supports the rationale wage, freedom of association, global footprint, need to be clear behind the revision called for health and safety and collective the sports brand about desired by Dombrovskis, namely that bargaining throughout supply has created a outcomes. “What needs information being provided is chains will help mitigate the tiered pricing structure for to be in not comparable or reliable and risks of the most severe forms suppliers any client does not meet users’ needs. of exploitation. Treasurers have based on conversation Internationally, Modern Slavery a crucial role in protecting an internal is a clear Acts, placing reporting and other companies from such risks, set of sustainability requirements on companies, supporting best practice by sustainability goal – an have been introduced in the matching the proactive steps criteria – established UK and Australia, with an Act taken by companies and facilitating target that being considered in Canada, and investors, and thereby helping supplier they want to amendments being considered to eradicate modern slavery. payments via its meet through their to strengthen UK legislation. purchasing and logistics supply chain.” 1 B&HRRC reports, which can be found at Meanwhile, there is a modernslaveryregistry.org/pages/FTSE_100_ platform, GT Nexus. For corporate treasurers, reports, highlight best practice among growing movement in Europe corporates and include recommendations for The financing programme, two key points for building companies, investors and governments which went live last year, or maintaining a sustainable to introduce mandatory human 2 A resource for companies and investors to rights due diligence (mHRDD), help understand and address forced labour represents a multimillion-dollar SCF programme is buy-in from risks within supply chains at knowthechain.org requiring by law that companies facility, covering suppliers across sustainability representatives Other resources: 17 mainly Asian countries. and procurement colleagues to identify and prevent adverse unpri.org fastinitiative.org HSBC’s Burcu Senel, head work against an agreed set of human rights impacts, including mneguidelines.oecd.org modern slavery and other of propositions, global trade KPIs. “The dialogue completely labour abuses. Initiatives for and receivables finance, says changes when procurement, Patricia Carrier treasury and banking partners such laws are gaining ground in the bank looks at sustainable is project finance from a number of are aligned. The treasurer’s Germany, Finland, Switzerland, manager for the angles. “The ways we engage role is in bringing everyone the Netherlands, Norway and Modern Slavery Registry at the with our clients are multiple to the table.” recently in Mexico, with talk of Business & – and this is a fast-moving She sees a positive future pushing mHRDD across the EU. Human Rights space,” she says. “We really for sustainable SCF. “Every All of this being said, it’s Resource Centre in the UK; www. want to partner with our clients, client is on a different type of important to see modern slavery modernslaveryregistry.org; to understand their goals and journey, but we do see a lot as at the extreme end of a business-humanrights.org challenges and then co-create of co-creational opportunity.” spectrum of labour rights abuses,

treasurers.org/thetreasurer June/July 2020 23 TECHNICAL

LIBOR | MMFs | ASSET-BASED FINANCE | INVESTMENT | MANAGING RISK | LIQUIDITY

RISK-FREE RATE REGULATORS HAVE RENEWED THEIR CALLS FOR CORPORATES TO PREPARE FOR THE END OF LIBOR. JAMES LEATHER TALKS TO EDWARD OCAMPO ABOUT INTERNATIONAL BENCHMARK REFORM

24 June/July 2020 treasurers.org/thetreasurer BENCHMARK REFORM

As a former senior adviser in these benchmarks. An at the Bank of England, evolution in bank sources where he led work of funding, including the developing and promoting decline in interbank unsecured alternatives to LIBOR and lending transactions – the key contributed to the 2014 Fair inputs for IBOR settings – has and Effective Markets Review also been a factor. Uncertainty (FEMR), Edward Ocampo has surrounding the sustainability had a close involvement on of these reference rates the development of alternative represents a potentially serious benchmarks. Currently source of vulnerability and advisory director at Quantile systemic risk. In 2013, the G20 Edward Ocampo, Technologies and a non- asked the Financial Stability advisory director executive director at the Board (FSB) to undertake a at Quantile FICC Markets Standards Board fundamental review of major Technologies (FMSB), here Ocampo talks interest rate benchmarks and to treasury consultant James plans for reform to ensure that changes in the value of their Leather about LIBOR transition. those plans are consistent and financial contracts. coordinated, and that interest What are the main drivers rate benchmarks are robust So, which currencies behind LIBOR reform? and appropriately used by are impacted? Interest rate benchmark market participants. All major IBORs across the reform stems from the Alongside that, derivative G20 are undertaking decline in confidence in the markets had decided as far benchmark reform. However, reliability and robustness back as 2008 that IBORs it is the sustainability of LIBOR of the major interest rate were not the ideal rate for that is imminently in peril. benchmarks, such as LIBOR, valuing derivative contracts; LIBOR is published in five EURIBOR and TIBOR. Cases the financial crisis made it currencies: USD, EUR, GBP, of attempted manipulation clear they were not risk free. JPY and CHF. USD, GBP and false reporting had This created a huge move to and CHF are most impacted undermined confidence value derivative contracts off because there are no IBOR risk-free rates (RFRs) such as alternatives for these KEY RATES SONIA. Once this happened, currencies. The plan is to move the risk management benefits completely away from IBORs of adopting RFRs as the to new RFRs: SOFR, SONIA EURIBOR – Euro Interbank reference rates for these and SARON respectively. Offer Rate contracts, rather than IBORs, Other FSB members, IBORs – Interbank became apparent. including those in Europe Offered Rates Finally, in 2017, the Financial and Japan, are pursuing a Conduct Authority (FCA) ‘multi-rate’ approach, whereby LIBOR – London Interbank made clear that LIBOR’s they have reformed their Offered Rate availability could not be existing IBORs to strengthen SARON – Swiss Average assured beyond end-2021 them, while also encouraging Rate Overnight due to the absence of active adoption of alternative RFRs. underlying deposit markets. There is still some debate as SOFR – Secured Overnight So, for LIBOR, it is about to whether reformed IBORs Financing Rate transition to alternative rates, are a long-term solution. The rather than further reform. drivers to move away from SONIA – Sterling Over Night Market participants who these are strong and may Index Average fail to transition to alternative accelerate as derivatives TIBOR – Tokyo Interbank rates over the next two years markets in major currencies Offered Rate face many risks, including legal move to robust, transaction- uncertainty and unforeseen driven RFRs.

treasurers.org/thetreasurer June/July 2020 25 SARON SONIA TIBOR

Typically, how has each broad-based market buy- country gone about in. In sterling markets there ED OCAMPO transitioning? is now little interest in a The work relating to RFR credit-sensitive GBP LIBOR Edward Ocampo worked at which provides portfolio risk transition is being taken alternative, with the prevailing Morgan Stanley for 24 years, management services for forward by national working view being that markets can where he was an MD in the fixed- derivatives markets, and a groups convened by adapt to overnight RFRs for income division and a member of non-executive director at the supervisory authorities (a most applications. the board of directors for its UK FMSB (fmsb.com), a standards bank. In 2014, he joined the Bank setting body that aims to raise recommendation of the FSB). USD market transition has of England as a senior adviser, standards of conduct in global While this work is market-led, so far proceeded at a slower where he led the work to develop fixed-income, currencies and the official sector is taking pace. SOFR, an entirely and promote alternatives to commodities markets so that meaningful steps to support new rate introduced by the LIBOR and contributed to the they are more transparent, fair and encourage the transition Federal Reserve in 2018, was FEMR. He is now an advisory and effective for all participants process. National working selected as the RFR. It is a director at Quantile Technologies, in those markets. groups are providing guidance, secured rate that tracks the helping to establish RFR US Treasury repo markets, and infrastructure and product these markets experienced conventions, as well as setting unexpected technical volatility RFRs that have flown under different currencies have targets for key transition last autumn. While SOFR enjoys the radar to date? What selected different RFRs and milestones. The International strong support among major might the impacts be? are transitioning at different Swaps and Derivatives participants in derivatives Without meticulous planning, speeds. So, what was once Association (ISDA) is also and capital markets, some US cessation of LIBOR poses a relatively simple facility that playing a critical global role market participants – including systemic risk. Market-wide had one margin and referenced through the implementation regional and mid-sized banks LIBOR transition efforts one family of rates (IBORs) of robust contractual – are keen to explore a credit- need to accelerate as we would probably need to fallbacks in the event of sensitive USD LIBOR alternative approach the end of 2021. incorporate different reference a LIBOR discontinuation. for lending markets. For such However, one consequence rates and different margins. a rate to take hold, it will need of LIBOR transition is that Where is the transition to be robust, representative new RFR curves need to be What should we expect most advanced and where and compatible with a SOFR- adopted as the discount rate from the rest of 2020 is it least advanced? Why centric ecosystem in derivatives for valuation and margining and beyond? do you think that is? and capital markets. of cleared derivatives. This I will focus on sterling markets, Across currency areas, sterling The status of the USD as is currently planned for EUR as these are the most advanced markets have made the most a major international reserve and USD in July and October and will hopefully establish progress. That is mainly due currency also increases the 2020, respectively. It is not precedents for other currency to the choice of SONIA as complexity and scope of necessary in GBP because areas. I would highlight five key the RFR alternative. Other transition efforts. SONIA is already used for milestones in rough order of alternatives were considered, discounting. Transitioning when we should expect them: including the Bank Rate and What do you think are the curve is particularly A change in sterling interest- a Gilt repo rate. SONIA – an the most useful lessons challenging for bilateral 1 rate swap conventions unsecured overnight deposit for other markets? swaptions with post-July from LIBOR to SONIA. This is rate – was eventually chosen by I think the most useful lesson and October exercise dates. important signalling and will the UK national working group from sterling markets is that Consultations are ongoing, further encourage liquidity after the Bank of England took transition from LIBOR to RFRs but it may be challenging in SONIA products. This on and reformed it to ensure is feasible. We are not there to avoid unforeseen value shift began in March and its reliability and robustness. yet, but progress has been transfer in some swaption will continue to accelerate. SONIA is well established, encouraging, plans are in place contracts due to the change Publication of the ISDA having been in use since 1997. and implementation is well in cleared discounting. 2 fallback protocol, expected It is stable and closely tracks under way. Another consequence late Q2 2020. This is a crucial Bank Rates, off which the SME is that we might see the step that will allow market and retail banking sectors Do you foresee any splitting out of multi-currency participants to mitigate the risk price their lending. For all of consequences of the borrowing facilities into their of LIBOR cessation in bilateral these reasons, SONIA enjoys transition from LIBOR to separate currencies, since derivatives markets.

26 June/July 2020 treasurers.org/thetreasurer SARON BENCHMARK REFORM SONIA

The daily publication of 3 a SONIA-compounded index by the Bank of England, expected to be available in Q3 2020. The availability of a single unimpeachable source should greatly facilitate the use of compounded SONIA. The cessation of new 4 GBP LIBOR cash products by the end of Q1 2021 (formerly Q3 2020). This will be facilitated by the implementation of loans systems enhancements to support compounded SONIA in syndicated lending (targeted for end-Q2) and risk in LIBOR transition that Recent deals have evidenced the availability of the new The FCA is will include case studies solid progress in SONIA and SONIA compounded index. very focused relevant for members of SOFR take-up. In December of A significant reduction on ensuring The Association of Corporate last year, Shell signed a $10bn 5 in the stock of LIBOR Treasurers. While there are SOFR-linked revolving credit referencing contracts. This that customers many issues to consider, I think facility (RCF). In March, BAT will mitigate the significant it is particularly important signed a £6bn multi-currency operational risks associated are treated that service providers price RCF linked to SONIA and with a big bang transition fairly when instruments linked to new RFRs SOFR. And in April, Riverside through the operation of transparently and, wherever signed a £100m SONIA- fallbacks. The target for this replacing LIBOR possible, cross-reference linked RCF, the first facility to in GBP markets is Q1 2021. relevant inputs against complete following the onset associated with each of independent pricing sources. of COVID-19. If I were a borrower with these. Identify and implement Although the aim to cease LIBOR exposure in loan system changes which may How has LIBOR transition issuance of all new LIBOR- contracts and I wanted be required to accommodate been impacted by linked GBP products by to transition, what do these conventions. COVID-19? the end of Q3 this year has you think my first steps STEP 3 There have been large moves been moved to end-Q1 2021, should be? Don’t hesitate to seek out in LIBOR-RFR spreads, but authorities have not so far STEP 1 independent advice from no material change in ISDA's made changes to the end-2021 Carefully consider the publicly relevant professional plans at this time. And while timeframe.3 So the issue of available guidance on LIBOR service providers. the spread might make it LIBOR transition will require transition provided by more expensive for borrowers continued focus. national working groups and to transition during the How will I know if I am 1 fca.org.uk/markets/libor/conduct-risk-during- international authorities. For getting a fair deal? crisis, recent rate moves do libor-transition 2 risk.net/derivatives/7523706/lloyds-and- example, the Working Group The FCA is very focused on demonstrate that RFR-linked riverside-sign-sonia-revolving-loan 3 fca.org.uk/news/statements/impact- on Sterling Risk-free Reference ensuring that customers are loans can provide materially coronavirus-firms-libor-transition-plans Rates has recently published treated fairly when replacing lower borrowing costs in a a very helpful paper detailing LIBOR and has published a period of financial distress. James Leather the path to discontinuation helpful paper Conduct risk On the other hand, corporates is a freelance of new GBP LIBOR lending. during LIBOR transition1. Banks are facing so many challenges treasury and finance STEP 2 and other wholesale market right now that LIBOR transition professional Familiarise yourself with participants are also focused may be well down the list of with an interest all available alternatives to on facilitating a fair and priorities. Despite the widening in international benchmark LIBOR-based instruments effective transition. The FMSB of the spread, new SONIA loan reform and the product conventions is planning a paper on conduct deals are still getting done.2 SOFR treasurers.org/thetreasurer June/July 2020 27 MMFs SPONSORED CONTENT

CASH GETS A CONSCIENCE

WITH THE NUMBER OF ESG FUNDS ESG matters are all MMFs globally. These assets increasing in prominence are benefitting from a low AND ASSETS UNDER MANAGEMENT in financial markets, and base effect. We estimate euro- GROWING, OPTIONS FOR INVESTORS so it comes as no surprise that equivalent AUM of just €70bn money market funds (MMFs) for the year ending December ARE OPENING UP. ALASTAIR SEWELL have been among the latest 2019, compared with more SETS THE STAGE FOR A GROWING adopters of ESG practices. than $6 trillion across all MMFs. ESG PRESENCE AMONG MMFs This is not to diminish the Defining ESG in MMFs impact of the broader ESG MMF managers are increasingly processes that investment incorporating ESG in their managers are either investment processes, either implementing or already have as part of their traditional in place. On the contrary, we investment underwriting see investment managers Expanding number of named ESG MMFs process and risk/return strengthening their ESG analysis or, more explicitly, as processes and resources, (Number of funds) what we would characterise as and also more traditional ‘named’ ESG MMFs. We define MMFs adding some element 35 an ESG MMF as one that has a of ESG to their governing 30 specifically stated ESG element documentation. By our count, in its investment objective or around two-thirds of European 25 strategy description. Most such short-term MMFs had some 20 funds will also feature ESG, or element of ESG language in an ESG theme, prominently in their governing documentation 15 the name of the fund. as of the end of December 10 Regardless of the 2019. This year we have already approach, the reality is that seen more funds added to 5 ESG-orientated investment that list. strategies are in high demand. 0 We estimate that assets under Applying ESG management (AUM) in named Some funds pursue Jan 11 Jan 17 Jan 12 Jan 13 Jan 15 Jan 18 Jan 16 Jan 19 Jan 14 Jan 10 Jan 07 Jan 20 Jan 08 Jan 09 ESG MMFs grew by around exclusionary approaches 30% in 2019, which is well to ESG, whereby they seek Source: Fitch Ratings, Lipper ahead of the 15% growth in to exclude either specific

28 June/July 2020 treasurers.org/thetreasurer issuers (for example, issuers new for MMFs: they have Financials dominate MMF allocations subject to elevated political always reacted to headline or public scrutiny) or issuers news relating to governance Corporate 6% from certain sectors, such events. What has changed is ABCP 7% as thermal coal producers. the formalisation of ESG risk Others will use internal or processes around these types Agency external ESG ratings, both of issues. 10% to exclude issuers with low ESG ratings or, in a more Conclusion Banks integrational approach, to The combination of AUM 77% underweight lower-rated growth, new fund launches issuers while overweighting and increased adoption of higher-rated issuers. ESG supports our view that The consequence of these demand for, and assets of, differences in approach is named ESG MMFs will continue Governance is the ESG factor affecting Fitch’s that named ESG MMFs may to rise. However, there financial institution ratings most often have quite different asset are differences in the way (ESG relevance score of 4 or 5) allocations. That being managers adopt ESG. Some said, governance tends to take a broad-brush approach, (Number) rank highly in most named while others provide named 180 ESG MMFs’ investment ESG funds. It is important that processes. MMFs invest investors understand exactly 150 heavily in financials. Fitch’s how fund managers approach ESG relevance scores, which ESG and, for named ESG 120 show the extent to which funds in particular, how the environmental, social or ESG process can influence 90 governance factors influence fund allocations. our credit-rating decisions, 60 show that governance is 30 the most common factor Alastair Sewell influencing our credit- is senior director at Fitch Ratings 0 rating decisions on financial Environmental Social Governance institutions. In a way, this focus on governance is nothing Source: Fitch Ratings

treasurers.org/thetreasurer June/July 2020 29 ASSET-BASED FINANCE SPONSORED CONTENT

UNDERLYING up by a bank. Drawdowns or repayments of notes happen generally monthly, but can be structured to happen more frequently where required. The bank, or the vehicle supported by the bank, typically funds ASSETS itself by issuing asset-backed IS TRADE RECEIVABLES SECURITISATION RIGHT FOR commercial paper. (The assets YOUR ORGANISATION? TOM HUNTINGFORD SETS OUT that support the bank conduits asset-backed commercial paper THE POSSIBILITIES are the senior notes that are issued by the SPV, which in turn Trade receivables capital structure. The advance out of collections daily/weekly are backed by the receivables securitisation enables rate will be determined by and out-of-funder drawdowns held at the SPV.) companies to access factors like the number of monthly or multiple times committed financing by selling late payments by customers, a month, depending on Who can use trade their receivables, at an interest the number of dilutions or client requirements. receivables securitisation? cost that compares favourably credit notes offered, and The SPV then issues a Trade receivables securitisation to many other forms of funding the extent to which receivables note to the senior funders – is most likely to be adopted – as long as certain criteria are are concentrated on typically via a conduit set by non-investment grade met. So how can businesses specific debtors. or non-rated corporates. decide if this route is a Invoice terms can go up to competitive form of financing 90-120 days – and in some for them? cases 180 days – depending on the sector and funder Trade receivables requirements. Invoices are securitisation: an overview normally sold on a daily Securitisation is the issuance basis with settlement of securities based on underlying assets. In the case of trade receivables securitisation, the assets are trade receivables – in other words, invoices issued to clients that are fully payable and enforceable, but not yet at their due date. While trade receivables securitisation comes in many different forms, broadly speaking it involves transferring receivables to a special purpose vehicle (SPV) on a true sale basis. The corporate remains responsible for collecting payment, with underlying customers unaware that securitisation has taken place. With the receivables sold to the SPV, the company applies a methodology to determine the advance rate, which can be up to 90% of the value of the receivables, depending on the transaction

30 June/July 2020 treasurers.org/thetreasurer Investment grade companies will likely already have a low CASE STUDY: GLOBAL FREIGHT AND LOGISTICS PROVIDER cost of funding – so the lower the company’s rating, the Acting as both adviser and reporting agent, the client wanted to include numerous contracts more attractive this approach Demica structured and put in place a €550m trade agreements with differing terms and a committed becomes. That said, companies receivables securitisation for a global freight and three-year revolving facility. which are in a very precarious logistics provider. The structure involved the set-up of an Irish financial position may The $7bn global player, with 160 operating orphan SPV using the client platform, rather than not be in a position to companies and a presence in 17 countries, had a bank platform, to maximise refinancing options. $1bn in receivables and a B+ rating. Its aim was The outcome included: undertake securitisation. to secure an efficient, scalable framework to • Senior notes structured to an implied AA rating, Securitisation will typically include 17 of its operating companies across eight priced at base + 120bps to balance price, structure be used for a portfolio size of countries, with additional countries to be included and flexibility; $80m-100m – but companies in over a second phase. • Cash release mechanics to optimise liquidity; that opt for a simpler structure Indications from banks suggested that advance • Platform-enabled inclusion of un-billed may occasionally be able rates of 65-75% would be achievable, due to high receivables, which increased the programme size; to use this approach for a customer concentrations and reserve-related • European Securities and Markets Authority- $70m or even $50m portfolio, issues. The company, however, was seeking compliant transaction reporting via depending on funders’ appetite. advance rates of around 75-80%. In addition, Demica’s platform. Other considerations are as follows: • Enforceability. The receivables should be • Contracts. Some contractual difficult to determine whether up an SPV will know at any enforceable once the due date agreements with customers receivables are enforceable. given point what the costs will comes, without any further will stipulate that receivables be and how much funding it action needed by the company. cannot be transferred or Advantages of trade will receive. The ability to tailor financed, although this may receivables securitisation a programme also makes it not be insurmountable. For companies that fit the straightforward to assess the • Carve-outs. Highly levered criteria, the benefits of trade optimal accounting treatment. companies will also need to receivables securitisation can Last but not least, the make sure there are carve- be considerable. If companies cost of funding will be outs in place in their existing are selling in multiple countries, substantially lower than for facilities allowing for the securitisation tends to be a other forms of funding, such sale of receivables or that much better tool than traditional as corporate funding including these can be waived by asset-based lending or factoring a direct corporate loan or existing lenders. facilities – not least because it public bond issuance and • Portfolio performance. is easy to add new countries, asset-based lending – and Companies should consider new debtors and new sellers. although factoring can be very whether the receivables In addition, factoring and competitive in certain markets. portfolio has a historical other facilities are typically In other cases, securitisation is performance of at least 12- uncommitted, or committed likely to be a cheaper option. 18 months, and preferably for only 12 months. With In conclusion, trade 36 months. They should also securitisation, companies can receivables securitisation ascertain whether the portfolio generally get a commitment won’t be the right solution shows low defaults and low of three years for most for every company. But for dilution levels, and whether the programmes. What’s more, organisations that meet the portfolio is highly concentrated. funding is not dependent criteria outlined above, the • Location. If the seller on the performance of benefits can be considerable. of receivables is in a non- specific debtors – provided Organisation for Economic the portfolio’s performance Co-operation and Development continues to be good, the Tom (OECD) jurisdiction, the sale company will continue to Huntingford is senior of the receivable to the SPV access funding. director, may be complicated. Likewise, The transparency associated structuring, for debtors based in non- with securitisation is another at Demica OECD jurisdictions, it may be benefit. A company that sets

treasurers.org/thetreasurer June/July 2020 31 INVESTMENT SPONSORED CONTENT ¥ € PASSING THE £ the industry met its obligations during this volatile period. You could view it as a real-life stress test. Not only did funds meet CRISIS TEST the need for cash from their clients, but they were also able MONEY MARKET FUNDS ARE PROVING THEIR WORTH to enhance their short-term DURING AN EVER-CHANGING LANDSCAPE WHERE CASH liquidity by 30-50%, proving IS KING. TONY CALLCOTT AND CAROLINE HEDGES SET that MMFs are agile and able to adapt quickly to stresses in OUT SOME KEY ADVANTAGES the markets when required.

COVID-19 has presented • Only government funds large redemptions from all asset Capital preservation numerous challenges would be allowed to remain classes, which led to fire sales as Crucially, MMFs continue to for money market funds as a constant net asset value investors flocked to safe havens. provide more diversification (MMFs); challenges that have (CNAV) fund. A newly created Liquidity diminished and central than bank deposits: the really tested their resilience. LVNAV, which sits somewhere banks acted swiftly around benefits of not placing all your Common questions investors between CNAV and variable the globe by cutting rates and eggs in one basket can be are asking us include: are MMFs net asset value (VNAV), injecting liquidity back into the amplified during a crisis. There still a viable option for your enabling funds to price at markets. Having learnt from will be winners and losers from cash, even during these the risk they represent. the lessons of the last crisis – this crisis. unprecedented market • Prime MMFs are either LVNAV ie that fast and drastic action is It is here that strict regulatory conditions? Also, do they still or VNAV, with LVNAV funds essential – central banks made criteria over the credit quality deliver capital preservation, priced at 1.00 as long as their it clear that they would take assessment of the underlying daily liquidity and yield? ‘shadow NAV’ remains within all necessary action to support issuer should come into effect. The global financial crisis a collar of 20bps. financial markets. MMFs invest in very highly rated and the eurozone sovereign • The new regulations MMFs were not immune from assets: AAA-rated funds have debt crisis led to an overhaul stipulated minimum thresholds this sell-off. Liquidity dried up in additional restrictions requiring of regulation across banks, for liquidity – LVNAV funds the assets that both MMFs and high proportions of AAA- insurance companies, repo must have a minimum of 10% treasurers purchase for short- and AA-rated assets in the markets and MMFs. The daily and 30% weekly liquidity. term investment purposes. US portfolio, with low exposure to January 2019 European Money These thresholds did not exist MMFs saw large movements in A-rated issuers that have long Market Fund Reform followed before and they have come to assets under management, as maturities (beyond six months). similar regulations of the US play a very important role for investors withdrew cash from The regulations also refer to a Money Market Fund Reform short-term MMFs. MMFs back to bank accounts diversification framework that in 2016. as a perceived safe haven. stipulates maximum allocations So, how have MMFs fared Though not a crisis anyone at not only an issuer level, but What are the regulations? in the COVID-19 crisis? was expecting, MMFs were a product level, too. As a recap, the regulations were Liquidity able to perform their key role In practice, for investments designed to ensure short-term Around the middle of March, of providing liquidity. This was beyond a one-day maturity MMFs would be well-positioned as the pandemic took hold done by repositioning their own, in our prime funds we target to withstand another crisis – ie throughout Europe and the US, already high levels of liquidity, a maximum exposure to each they would continue to function it became apparent that more which in turn decreased demand issuer well inside the regulatory during times of extreme stress serious and unprecedented for longer-term paper. To ensure cap of 5% of NAV. During an and cope with abnormally measures would be needed to continued confidence in USD evaluation of negative rating large redemptions. Aviva both contain the virus. Lockdowns, funds, the Fed also announced action, we also stress the contributed to, and lobbied for, store and school closures, support for MMFs. Some portfolios for a two-notch these changes. They represent national border closings and euro and sterling funds also downgrade of the underlying a total reform of the industry airline fleet groundings became experienced outflows. issuers, reduce the weighted and a new type of fund was normal. This severe and sudden This unprecedented event average maturity and life (WAM created – a low volatility net stalling of the global economy tested the money market and WAL) of the portfolio asset value (LVNAV) fund. created market volatility, with industry to its extremes. So and ramp up liquidity. This is The regulations are too some of the largest consecutive far, it is encouraging to see done while still providing all comprehensive to cover here, daily drops in equity markets that the new regulations the diversification benefits of but here are a few key points: we have ever seen. There were appear to have ensured that a pooled fund. Therefore, to 32 June/July 2020 treasurers.org/thetreasurer ¥ $

IMPORTANT INFORMATION Except where stated as otherwise, Services Licence to carry out fund the source of all information is management activities issued Aviva Investors Global Services under the Securities and Futures Limited (AIGSL). As at 23 April Act (Singapore Statute Cap. 289) 2020, unless stated otherwise, any and Asian Exempt Financial Adviser views and opinions are those of for the purposes of the Financial Aviva Investors. They should not be Advisers Act (Singapore Statute ensure capital preservation, as for dialogue with clients. By viewed as indicating any guarantee Cap.110). Registered Office: MMFs can adapt their portfolios leveraging technology, we are of return from an investment 1 Raffles Quay, #27-13 South Tower, quickly and efficiently. able to keep clients comfortable managed by Aviva Investors nor as Singapore 048583. with our overall strategy and advice of any nature. Information In Australia, this material is being Yield relay notable changes quickly contained herein has been obtained circulated by way of an arrangement Although yield is a secondary and efficiently. This enhanced from sources believed to be reliable, with Aviva Investors Pacific Pty but has not been independently Ltd (AIPPL) for distribution to consideration both for money two-way conversation also verified by Aviva Investors and is wholesale investors only. Please note managers and investors when allows for better transparency of not guaranteed to be accurate. Past that AIPPL does not provide any market conditions are volatile, future cash requirements to aid performance is not a guide to the independent research or analysis MMFs can deliver yield. During effective portfolio management. future. The value of an investment in the substance or preparation the wave of COVID-19-induced Government funds have been and any income from it may go of this material. Recipients of this central bank rate cuts across in demand. In the US, clients down as well as up and the investor material are to contact AIPPL in may not get back the original respect of any matters arising from, the globe, MMFs held on to are more agile in moving from amount invested. Nothing in this or in connection with, this material. higher yields for longer by prime MMFs to government material, including any references AIPPL, a company incorporated taking the weighted-average funds – as evidenced by the to specific securities, assets classes under the laws of Australia with duration of the portfolios out large migration in 2016 when and financial markets is intended Australian Business No. 87 153 to 60 days. US reforms were implemented. to or should be construed as 200 278 and Australian Company The current steep and Demand for our Government advice or recommendations of No. 153 200 278, holds an Australian any nature. This material is not a Financial Services License (AFSL upward-sloping yield curve Liquidity Fund (GBP) has recommendation to sell or purchase 411458) issued by the Australian makes overnight rates look increased, indicating the any investment. Securities and Investments particularly unattractive. This importance of these funds In the UK and Europe this Commission. Business Address: is not due to any increased as investors using bank material has been prepared and Level 30, Collins Place, 35 risk of default for issuers MMFs deposits seek alternative issued by AIGSL, registered in Collins Street, Melbourne, invest in, but due to an increase ways of finding safety. England No.1151805. Registered Vic 3000, Australia. Office: St. Helen’s, 1 Undershaft, The name “Aviva Investors” as in term and liquidity premium. Although it is too early to London EC3P 3DQ. Authorised used in this material refers to the MMFs tend to be highly make any lasting conclusions, and regulated in the UK by the global organisation of affiliated invested in banks, which the so far MMFs have navigated Financial Conduct Authority. In asset management businesses then governor (Mervyn King) of their way through this crisis France, Aviva Investors France is operating under the Aviva Investors the Bank of England said would successfully, delivering capital a portfolio management company name. Each Aviva investors’ not be the cause of the next preservation, liquidity and approved by the French Authority affiliate is a subsidiary of Aviva “Autorité des Marchés Financiers”, plc, a publicly traded multinational crisis, but the solution. Banks yield. In large part, this is down under n° GP 97-114, a limited liability financial services company are now well capitalised as a to the enhanced regulations company with Board of Directors headquartered in the United consequence of the post-global implemented in recent years and Supervisory Board, having a Kingdom. Aviva Investors Canada, financial crisis regulation and that require high degrees of share capital of 17 793 700 euros, Inc. (“AIC”) is located in Toronto the central banks have used liquidity to manage volatile whose registered office is located at and is registered with the Ontario them to not only inject liquidity markets. One thing we can 14 rue Roquépine, 75008 Paris, and Securities Commission (“OSC”) as registered in the Paris Company a Portfolio Manager, an Exempt into the market, but also to be sure of, they will continue Register under n° 335 133 229. In Market Dealer, and a Commodity support the real economy. This to provide an essential Switzerland, this document is issued Trading Manager. Aviva Investors benefits MMFs as clients can tool for investment and by Aviva Investors Schweiz GmbH. Americas LLC is a federally obtain more attractive yields liquidity management. In Singapore, this material is registered investment adviser with than a bank deposit during being circulated by way of an the U.S. Securities and Exchange a time of unexpected interest- arrangement with Aviva Investors Commission. Aviva Investors Asia Pte Limited (AIAPL) for Americas is also a commodity rate cuts. Tony Callcott is distribution to institutional trading adviser (“CTA”) registered global head of investors only. Please note that with the Commodity Futures How have MMFs adapted liquidity sales; AIAPL does not provide any Trading Commission (“CFTC”), and Caroline independent research or analysis and is a member of the National to this crisis? Hedges is global Technology has enabled head of liquidity in the substance or preparation Futures Association (“NFA”). AIA’s us all to adapt and deliver portfolio of this material. Recipients of this Form ADV Part 2A, which provides management at material are to contact AIAPL in background information about the a seamless transition for Aviva Investors respect of any matters arising from, firm and its business practices, is clients. Group video calling or in connection with, this material. available upon written request to: is the new norm and essential AIAPL, a company incorporated Compliance Department, 225 West in a fast-changing market. under the laws of Singapore with Wacker Drive, Suite 2250, Chicago, This applies both to internal registration number 200813519W, IL 60606 communication between holds a valid Capital Markets RA20/0562/23042021 investment desks, as well ¥ treasurers.org/thetreasurer June/July 2020 33 £ or taking care of loved ones? What happens if there are MANAGING RISKS layoffs? Are employees able to perform all of their day-to-day duties from home? AND C-SUITE Now more than ever there is an increased importance in embracing automation and technology. Working with EXPECTATIONS software as a service-based solutions (SaaS) ensures employees can access the DURING A CRISIS data they need and carry out everyday tasks no matter where they are. Automating manual TREASURY FUNCTIONS ARE OFTEN THE FIRST PORT OF CALL processes not only mitigates WHEN IT COMES TO BOARDS SEEKING CLARITY ON RISK AND some key person risks, but also LIQUIDITY. SIMON SHORTHOSE OFFERS SOME POINTERS ON reduces errors. EIGHT KEY ISSUES Internal processes, tools and controls During times of crisis, enough cash, figuring out what 5. FX and interest rates; As companies adjust to new treasury and finance are key person risks they have and 6. Debt and counterparty risk; processes and mandates, often called upon to answer how they can support that. 7. Revenue volatility; and business continuity issues are strategic questions from the Ultimately, there are eight 8. Supply chain disruption. sure to arise. And business CEO, CFO and board, and to main risks CEOs and CFOs continuity plans (BCPs) that ultimately calm the storm within will tend to focus on. It is up Human resources weren’t made to be long-lasting the organisation. As they look to treasury and finance to be A major concern to CEOs, CFOs will, over time, show gaps in to balance policy changes while able to address and mitigate and the board when it comes processes and systems that can assessing news and data in these risks: to treasury and finance is key become increasingly dangerous uncertain times, it is up to 1. Human resources; person risk and competency to the business, especially if an treasury to focus on business 2. Internal processes, tools reduction. Boards and investors organisation is reliant on manual continuity, activating liquidity and controls; ask: what will happen if a portion processes and spreadsheets. and minimising the disruption 3. Liquidity instability; of the finance and treasury Investing in systems that to the global supply chain. 4. Fraud; function is unwell, hospitalised support automation, business CEOs and CFOs need quick answers to questions they get from the board and investors about the company’s financial state. Do we have enough liquidity for the next week? The next month? Can I trust my liquidity forecast? Are we suffering fraud losses? How can we sustain supply chain disruptions?

What CEOs, CFOs and boards expect from finance In a crisis, the emphasis is obviously first put on people – focusing on employee safety and ensuring customers have what they need. After these concerns have been addressed, executives turn their focus to the business, asking whether or not they have access to the right data, making sure there is

34 June/July 2020 treasurers.org/thetreasurer SPONSORED CONTENT MANAGING RISK

continuity and expansive Supply chain Debt and counterparty risk discounting, companies can connectivity with other systems An increase in debt and reduce the cash conversion can help identify and fill bottlenecks counterparty risk is common cycle/supply cash flow, provide gaps, as well as facilitating when BAU is interrupted. Debt financial support for suppliers disaster recovery and enhance and supplier may be increased or managed with internal or external funding, visibility into cash, liquidity and bankruptcy differently, potentially increasing gain preferred buyer status, and financial exposures. unplanned costs. In regard to support alternate supply chain are common counterparty risk, some banks sourcing and diversification. Liquidity instability concerns, in certain regions may have an While the current crisis will In times of economic crisis, increased risk of insolvency, hopefully end as quickly as companies often have to deal especially in creating concern among the it began, treasury teams can with delayed cash collection a time of crisis C-suite and board. improve their preparedness for and uncertain revenue. To decrease debt and temporary and longer-lasting Customers may pay late or fraud and cybercrime is to counterparty risk, it is scenarios by practising BCPs, renegotiate payment terms to digitise payment workflows necessary to manage debt and implementing an active liquidity buffer cash reserves and stay and automate fraud protection counterparty limits. Companies strategy and pre-emptively solvent, or they may defer and detection. Doing so need to demonstrate their managing the aforementioned purchasing decisions until standardises payment controls capacity to responsibly increase risks. Treasurers who excel in conditions stabilise. to comply with internal leverage, refinance debt where each of these areas will not So how can companies payment policies, approval appropriate, reaffirm covenant only support their management stabilise their liquidity? By procedures and limits so that compliance and automatically teams, but also emerge as forecasting liquidity and setting only authorised payments manage board compliance limits valued strategic advisers, limits. Forecasting liquidity with are executed. And real-time for all counterparties. creating further opportunities scenarios and internationally fraud detection screens to influence and drive success. helps companies better payments against government Revenue volatility SaaS-based solutions support understand their liquidity sanction lists, corporate Revenue volatility can irreparably treasury and finance with needs. Additionally, undergoing payment policies and historical impact a fixed-cost structure. rapidly deployed solutions stress testing to determine data patterns to automatically But adapting to the cost for cash management, risk what happens if customers quarantine suspicious and structure can save a business. management, payments and pay late, don’t pay at all or non-compliant payments for Reducing costs is the key to working capital, ensuring CEOs if expected revenues don’t threat assessment. managing revenue volatility. and CFOs can answer the board materialise, and automating This can be done by reducing and analysts confidently when limit managements for FX and interest rates bank fees, and companies it comes to the amount of cash counterparties can help Fiscal strength of individual can save up to 80% on bank the company holds, what their mitigate liquidity instability. countries and their recovery connectivity, allowing them to FX exposure is, how they can timelines can greatly affect repurpose headcount for better sustain supply chain disruptions, Fraud currency rates. Hedges may uses. Additionally, forecasting how they are preventing fraud When normal processes are be skewed/incompliant and of cash enables companies to and more. disrupted due to a crisis, there is fluctuations in currency align to revenue and associated These solutions can deliver often an increased risk of fraud, valuations can cause unforeseen accounts receivable, and ensures automation, mitigate human especially if approval processes losses. Additionally, forecast shortfalls are covered and competency risk and decrease are being bypassed in order inaccuracy can shift the surpluses are concentrated to costs, create a unique control to continue operations. In fact, hedging focus away from cash earn some yield on excess cash. and risk offering for crisis there was a 667% increase in flows and towards balance management, build best-in- the number of phishing emails sheet protection. Supply chain disruption class business intelligence and reported from February to The best way to manage FX Supply chain bottlenecks guaranteed business continuity. March of this year as fraudsters risk is to have insight into all and supplier bankruptcy are This is so that treasury and looked to exploit the global company currency exposures, common concerns, especially finance will always be armed disruption resulting from the from which the exposures can in a time of crisis. And in order with the tools they need to COVID-19 pandemic. Disruption then be mitigated via hedging to stay afloat, suppliers may weather any crisis. to business as usual (BAU) or internal exposure elimination. request early payment to buffer presents ideal conditions for And having insight into how cash reserves and stay solvent. fraudsters, and if a company is currencies are impacting In cases like this, treasury Simon Shorthose reliant on spreadsheets, there financial results at all times is needs to explore supply chain is managing director, is an increased risk of financial imperative to cost-effectively alternatives and working capital northern fraud, not just to treasury, but managing FX exposure and solutions. By implementing Europe, Kyriba to the entire organisation. risk, and avoiding unnecessary working capital optimisation One of the simplest ways to impacts to the company’s programmes like supply

IKON IMAGES IKON improve controls and combat bottom line. chain finance and dynamic

treasurers.org/thetreasurer June/July 2020 35 GLOBAL BANKING REALITY CHECK LIQUIDITY MANAGEMENT IS THE TREASURER’S MOST POWERFUL DEFENCE IN THE CURRENT CRISIS, BUT IT IS HAMPERED BY DIVERSE TECHNOLOGIES AND APPROACHES. BILL WREST LOOKS AT A CHALLENGE WHOSE TIME MAY HAVE COME

Invisible liquidity is capital. There has been a lot either individually or together. offer 100% coverage worldwide unmanageable liquidity. of talk recently about digital Realistically, the involvement using just its own network? This inconvenient truth transformation and clearly now of a specialist fintech Secondly, can such a global bank remains as valid today as it was is the time to address systemic with extensive application also deliver 100% consistency when the discipline of liquidity risk and key addressable gaps programming interface, SWIFT, of technology and data formats management first emerged. within the treasury function. secure file exchange and worldwide? In either case, Furthermore, while it may be Yet the underlying problem financial data format expertise perhaps 90% at best, or maybe widely acknowledged, it that creates this situation will also be required. in exceptional circumstances certainly isn’t widely resolved. is hardly a secret: effective even 95%, but not 100%. The number of global plumbing, or rather the lack Global banking As a result, for many global multinationals who can honestly thereof. Ultimately, treasuries Nevertheless, this is still by no corporations, multiple bank claim that their treasuries have need a single consistent and means universally accepted. relationships are simply a fact 100% real-time visibility of all increasingly immediate view of One frequently cited alternative of life. In some industries, such bank accounts worldwide is all bank accounts irrespective of is to use a single global banking as petrochemicals, relationship probably a figure tending the number of banks involved, relationship that fulfils all proliferation is an everyday towards zero. but that requires consolidating a corporation’s transaction reality where the winning of a Simple day-to-day processes multiple data streams that banking requirements worldwide. new contract almost inevitably have been exacerbated by the use myriad data formats and While this seems plausible at also involves opening an current crisis and treasury has underlying technologies. a superficial level, regardless account with the same bank as been thrust to the strategic A single consistent view of all of whether it is commercially the customer. It’s therefore easy forefront of the battle in terms accounts is perfectly achievable, advisable, it fails upon closer to see how treasuries can find of group-wide focus on supply but involves accepting that it is inspection of the practicalities. themselves with hundreds of chain management, cash not a challenge that banks and Firstly, is there really such a thing bank relationships and systems flow and protecting working corporates can readily resolve, as a truly global bank that can to manage.

36 June/July 2020 treasurers.org/thetreasurer SPONSORED CONTENT LIQUIDITY

Access to this brave new world inevitably depends on having the right connectivity and visibility

The environment we are all capability that includes all of trend is fundamentally changing structure, a treasury with real- having to come to terms with a client’s other banks. However, the whole business of liquidity time visibility has the alternative and the new norm in terms of this is something a suitably management. Treasuries no option of funding subsidiaries the way we deal with things qualified fintech can provide, longer need to be constrained on a just-in-time basis through has evoked dramatic changes by aggregating access to all of by only having access to end- an in-house bank structure. to our working lives. Treasury a corporate’s electronic banking of-day batch-based data; needs to be proactive rather systems behind a single logon. real-time intraday liquidity Optimal versus suboptimal than reactive, and to do this Then a treasury only needs management across a growing One of the ironies of the current decisions need to be based to sign on once to see and number of countries is now an crisis and its unprecedented on real-time or near real-time manipulate all the corporation’s achievable reality rather than economic and market effects is reporting and reconciliation. balance information across all just an aspiration. that in a sense it re-emphasises System connectivity, future- its bank relationships. By the However, access to this brave the sheer scale of the liquidity proofing of file formats, multiple same token, they can also use new world inevitably depends visibility problem that has payment siloes and reporting the same portal to screen and on having the right connectivity plagued treasuries for decades. systems are key to treasury’s place investments across their and visibility. While some bank It represents a vitally important ability to efficiently manage bank relationships, plus enjoy liquidity platforms offer some new opportunity, but one liquidity, mitigate risk exposure a consistent and enhanced additional visibility of third- that is effectively inaccessible and protect working capital. experience for making party bank balances by polling without consolidated multi- Some corporates have payments more generally. for MT940s, this still constrains bank connectivity. A further already invested in top end The easier placement of treasuries to ‘following day’ irony is that complete treasury management systems investments ultimately benefits liquidity management. On the connectivity and visibility are (TMSs) that are also sometimes both corporates and banks. other hand, real-time balance already readily achievable with promoted as potential solutions Some banks offer excellent visibility means that investments the assistance of the fintech to multi-bank (in)visibility. Again liquidity products, but in the can be made before daily community, but banks and the reality is more prosaic, current environment these payment cut-off times, adding corporates have hitherto opted because the core competence of are missing out through an extra day of return to surplus to use suboptimal alternatives. a TMS is sophisticated financial opportunity leakage. Treasurers cash. At the same time, far Financial plumbing in and of analysis rather than systems have to traverse so many bank more efficient management itself may not be particularly integration. Therefore, a TMS will accounts and investments in of intraday overdraft limits enthralling, but the benefits only usually be connected to just such a fragmented manner becomes possible, which is a to treasuries and banks of its the top few of the corporate’s that they may simply miss key risk area if limits become correct deployment most are. bank relationships. some of the most attractive a scarce commodity, because Perhaps for treasury, this is one opportunities, to the detriment in normal times they are the of the few positives to emerge Logon and system of both parties. By contrast, rails that enable the flow of from the current crisis in terms proliferation in a single consolidated payments throughout the of now being the perfect time Probably the starkest physical environment where all of the day. Granted, the extent to evaluate the overall operation illustration of the gulf corporate necessary plumbing has already of these opportunities will and whether it is truly fit for treasuries have to bridge in been done behind the scenes, to some extent depend on purpose against the backdrop of their liquidity management is filtering and accessing the individual banks’ capabilities unforeseen challenges that now the proliferation of bank logon best investment opportunities – for example, not all support seem like daily occurrences. tokens. It’s not uncommon becomes trivial. This can be intraday balance reporting – 1 feedroad.com/global-real-time-payments- for larger treasuries to have done manually or automatically but in most cases treasuries market-2020-growth-analysis-and-forecast- to-2024 a drawer full of tokens that with preconfigured rule sets. will be able to make appreciable they must search through just gains and/or savings. to assemble a report on their Real-time liquidity This real-time balance overall cash position. Then rinse management visibility also opens the door to and repeat for all the possible The already strong growth simpler and more cost-effective Bill Wrest is director investment opportunities of real-time payment systems methods of intercompany of sales and they need to screen before around the globe looks set funding and the optimal use strategy placing any cash surplus. to persist, with some research of internal liquidity. Rather than at Gresham Realistically, no single bank predicting close to 30% the cost and administrative/ is going to be able to cost- compound annual growth rate legal burden of creating justify building a single logon between 2019 to 20241. This an entire physical pooling

treasurers.org/thetreasurer June/July 2020 37 PLAN TO LEAD LEADERSHIP STYLES DON’T NEED TO BE RIGID. IN FACT, MINDFULLY AND FLEXIBLY ADAPTING TO TEAM OBJECTIVES AND PERFORMANCE WILL YIELD BETTER RESULTS. AMANDA BRADLEY EXPLAINS

We humans love to plan. It might sound like an odd through others, planning our It might look like it just We plan our workday, question, but think about it for a leadership style is one of the happens, but once you start our home life, what we’ll minute. You wouldn’t execute a best ways to make progress on to understand the mechanics do and who we’ll see. We set bond without planning. So, why the journey to great leadership. of leadership styles, you can objectives and decide on wouldn’t we plan how to lead? flex your behavioural choices strategies to maximise delivery. When the difference between Planning to lead brilliantly to maximise your team’s But when was the last time great contributors and great Just like good delegation, performance. Your first step you planned how you will be? leaders is the ability to deliver good management is mindful. is to choose a working model LEADERSHIP

for leadership styles to help deliverables over the next six to think through his options. injection, this could patronise you plan your leadership weeks. Think about who is on You’re also aware that on the and alienate him. To decide interventions. point for each task. What do day the injection settles, you’ll how much support is needed, There are many models of you know about that person? need to be willing to move into I think of a two-by-two matrix leadership and you or your What are their strengths? Commanding if things get a with level of task challenge company may already have What leadership style would bit tight. Given the potential on one axis and level of one you prefer. My personal best enhance those strengths for negative interpretation, support on the other. If the favourite is Daniel Goleman’s six and compensate for their you and Sam talk about that in task is low challenge and I give versions described in his book, weaknesses? What elements advance and agree that you’ll low support, Sam could be Leadership That Gets Results. are there to the project? And take that role if the need arises. demotivated if he works for In the book, Goleman lays what will those elements Because you’ve spent time too long on this type of work. out the following leadership require of the person delivering observing yourself and have High challenge task with low styles: Commanding, Visionary, them? So, which style would created a positive feedback support will cause stress. Low Affiliative, Democratic, work best for each phase of the culture in your team (see challenge but high support will Pacesetting and Coaching. project? As the work evolves, The Treasurer, Deals Edition, patronise. The sweet spot for The Commanding style is how can you best support February/March 2019, page management is high challenge, all about control: “Do this now”. that team member in getting 44, for a refresher), you know high support. I think of this Visionary leaders say: “Come a great result? you’re at risk of stepping in like scaffolding. You give the with me – it’s going to be Imagine you are the head and taking the lead, particularly support while the new learning great”, while Affiliative leaders of treasury and your analyst, as your natural leadership is being built, and then as the strive for harmony, putting Sam, is overseeing a capital style is Pacesetting. And you task becomes more familiar, people first. Democratic injection into an overseas know that given Sam’s quieter you take the scaffolding leadership gives everyone subsidiary. Sam is a diligent, nature, you could be tempted off, before thinking about a vote. Pacesetting leaders meticulous person, if a little to step in and rescue him. So, how to give individuals their are out in front, sleeves rolled you will also contract with next challenge once they’re up, doing awesome work and Great managers Sam that he can call you out if comfortable and thirsty for expecting their teams to keep you start to step in, using the new learning. up. Coaching leaders answer are generous Affiliative style to create the So, there it is: a leadership questions with questions. with their psychological safety needed plan for the project. You “I don’t know how to do this” for Sam to feel comfortable might have to flex as you go, elicits the response “Where do knowledge to do this. because the one thing you can you think you would start?”, guarantee about a plan is that it followed by some suggestions and create Learning by doing will change, so accept this and to try. opportunities Great managers are generous be willing to go with the flow All styles have their place. with their knowledge and a little. Here’s my challenge to But overusing one style makes for other people create opportunities for other you: make 2020 the year of us rigid leaders who only to shine people to shine. So, another mindful management. Tell your succeed some of the time. Take question for you – how can team what you’re doing and Commanding, for example. This shy and under-confident. you maximise Sam’s learning ask them to help you in your might be familiar to many of He is excellent at building opportunity while he delivers experiment. Seek feedback us – hierarchical and manager one-on-one relationships, the work for you? Sharing the along the way. Then, the next dominant, Commanding but finds speaking in groups way you think and why you are month, take what you learned leadership is useful because it’s harder. You could be purely making the decisions you are and do it all again, but better. quick. “Do this and come back delivery-focused and only making is another great way Together, you’ll work out which to me.” But it trains people to talk to Sam about meeting of building capability in your styles work best for you all in come back to you over and project milestones. Or, you team. Yes, it will take you given situations. Outputs will over again. I won’t spend this could plan your management and Sam a bit more time, improve. Objectives will be article elaborating more on style, tying the project to the but it will build your working met. And by the end of 2020, the styles. Goleman does a overall departmental objective relationship and make him you’ll know exactly why you’re much better job and his book to set direction in the first more effective and less reliant a good manager and where is mercifully short, so I’ll leave instance using the Visionary on you in the future. your growth opportunities lie. you to pick your model for style, then planning to be more Your leadership aim is yourself. The important thing Democratic whenever you to always give people the is to do just that. join Sam’s project meetings appropriate support for the So, let’s assume you have a to make sure he has the task. If it’s the first time a Amanda model in mind. Now you need opportunity to lead. In one- person has carried out a capital Bradley FCT is an executive to plan how you’ll deploy it. to-one conversations, you plan injection, you can expect to coach at To do that, grab a pen and jot to adopt a Coaching style to manage them more closely. Liberty EQ down your team’s three biggest give him the space and support But if this is Sam’s 21st capital

treasurers.org/thetreasurertreasurers.org/thetreasurer August/September June/July 20202019 4939 7 EASY STEPS IN TREASURY

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treasurers.org/thetreasurer June/July 2020 41 A DAY IN THE LIFE

“NO MATTER THE ASSIGNMENT, I NEED TO ESTABLISH A ROUTINE THAT WILL DELIVER RESULTS” TREASURY including treasury, external I love the independence of consultants, central and having my own company and CONSULTANCY local finance teams, IT bank the flexibility and diversity that SERVICES’ NICHOL relationship and IT specialists, brings, but you do need to have BURGESS ON THE third-party payment file and the courage and be in a position invoicing providers. A critical to take on that risk. My role is IMPORTANCE OF element was ensuring treasury about collaboration, so I also PLANNING, DEADLINES delivered the new banking work with a couple of other provider and new payment consultants, substituting for each AND DELIVERY channels in time for the roll-out other and swapping expertise. of a global finance system. Skills and tips for success? As a treasury consultant, In 2017, I took the plunge and So, managing the project on Be realistic about timescales, my day-to-day work is became a treasury consultant. time, with scheduled phasing, allow adequate time. Get all work focused around client My work is diverse. I can be was key. streams into action as soon as project work, so typical days are working on a multi-year treasury Projects by their nature possible, as delay in one area will few and far between. I spend a transformation all the way are a bit of an unknown. No impact other parts of the project. lot of time prior and during the through to smaller projects such matter the assignment, I need Absolutely key is understanding early stages of an engagement as advising on establishing key to establish a routine that will what your client’s needs are and working on a project plan, risks, which could be a matter deliver results on time and helping to ensure the solution outlining time frames, of a few days. to budget. you provide will meet them, but responsibilities and allocating I recently worked on a global With contract work, it can also assist on what they may not resources – my own input and banking implementation for take some time between early have considered. the client’s. Once I’m working on recruitment firm PageGroup. discussions and the beginning Build and keep momentum. a project, I keep key information It was very much a collaborative of a contract. Upfront I devote Be very organised and schedule on progress to hand at all times. time to researching potential short, regular meetings for each A bit about myself – I am I want to ensure clients and their contract key piece. You can always cancel a qualified treasurer and requirements. Only some a meeting, but it is often harder accountant with experience we have a strong conversations with agencies to schedule an emergency one gained across organisations start and good or potential clients reach at short notice. including British Airways (BA) the go-live point, but when Lastly, and importantly, work and charitable and private foundations for they do, I want to ensure hard but enjoy yourself. That equity organisations. This we have a strong start and sense of achievement in the includes significant commercial a successful good foundations for a end for you and your client finance, project and treasury outcome successful outcome. is priceless. experience. My sweet spot is very much around ensuring I am effort, with key support part of the business rather than provided by the in-house back or middle office finance. treasury team, along with other While at BA, I spent a period external consultants, who of time in risk management, were crucial in terms of helping hedging FX risk, investing cash us achieve global reach. The key and managing counterparty risk objective was the consolidation through the financial crisis – and of 19 bank partners to a I loved it. I pursued my career core global provider in 36 in treasury, gaining my AMCT countries, resulting in significant qualification, with absolutely efficiencies and an improved no regret. I then worked at control environment. Travelport where I managed the The scope included managing treasury transformation project. cross-departmental activity,

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