January 2017

In a year filled with geopolitical change, the corporate treasurer’s role as the principle risk manager of the organisation is more under the spotlight than ever. From trends towards populism, cyber security/fraud prevention to US tax-driven changes, Jim Volkwein and Joseph Mauro highlight key corporate treasury trends to watch in 2017.

Published in iTreasurer in January 2017, this practical guide for US corporates entitled, ‘Five Corporate Treasury Trends to Watch in 2017’ sets out the risks they need to manage, the opportunities to explore, and a reminder that while some risks “remain uncertainties and don’t necessarily require action, just vigilance”.

Shift towards populism

The authors make the point that the UK vote to leave the EU on 23 June 2016 and the election of Donald Trump as president-elect “represent a trend towards populism, with potential changes to the world order and global trade that have underpinned our global economic system for decades”.

Treasurers need to consider how Brexit will impact liquidity management practices across the EMEA region and manage risks accordingly, ensuring clear visibility over cash across currencies, entities and banks. With the situation regarding cross-border trade still unknown depending on how hard or soft Brexit will be, treasurers should be prepared for renegotiation of trading terms with suppliers and customers if required.

Banking relationships in the UK and Europe will also need to be revaluated – changes in passporting rights come with Brexit, so the key is to understand how banks operate – “a passport from the continent into the UK, or from the UK into the continent”. It is also important, say the authors, “to understand where banking partners clear euros, should that be impacted”.

Cyber security/fraud mitigation

There are no silver bullets to eliminating cyber fraud”, say Volkwein and Mauro, and the paper sets out five areas corporations need to grasp to mitigate this ever present challenge: governance, culture, technology, training and process.

Other trends

These include tax-driven changes, and the article walks readers through Section 385 Regulations affecting cash pooling structures. Cash repatriation of funds held offshore under the current US tax code without incurring steep taxes may be possible if Trump’s pre-election economic plans on comprehensive tax reform actually happen. Instant Payments, “an EU specific version of real-time payments under the SEPA framework” is explained – the scheme starts in November 2017. And when the cash does come home, ask the authors, how should treasurers manage it?

Treasurers have told the authors that they have identified financial supply chain solutions to extend payment terms in a way that promotes a stable supply chain as high priority for 2017 – along with bank account rationalisation to reduce costs and increase control.

The full update can be downloaded in PDF form here.

Jim Volkwein is Managing Director and Head of Trade Finance & Cash Management Corporates, Americas and Joseph Mauro is Director and Global Head of Market Management for Trade Finance & Cash Management Corporate, Global Transaction Banking, Deutsche Bank

Jim Volkwein

Head of Trade Finance & Cash Management Corporates, Americas

Susan Skerritt

Joseph Mauro

Head of Market Management for Trade Finance & Cash Management Corporates, Global Transaction Banking

Joseph Mauro

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