Cash & Liquidity ManagementFXFX topping treasury concerns

FX topping treasury concerns

Bob Stark spoke with The Global Treasurer at Kyriba Live in Las Vegas on the top three concerns treasurers are contending with

Foreign exchange (FX) continues to be the most pressing concern among treasurers, according to Bob Stark, Vice President of Strategy at Kyriba.

Fraud and “visibility” followed closely behind, he said.

“Big events are happening. Whether they’re events they we know about, like Brexit, or coronavirus, which is more surprising, last minute and emergency-oriented event,” said Stark, speaking at Kyriba Live in Las Vegas yesterday.

“If treasures aren’t understanding exactly what they’re exposed to, and how it impacts earnings, then they had some explaining to do to the CFO who has to in turn explain it to shareholders.”

Currency volatility in the third quarter of 2019 alone cost businesses in North America and Europe $12bn. Stark acknowledged that firms struggle with FX fluctuations.

“That sounds like a simple scenario: ‘How can I not understand how the euro affects me?’ But some organisations are not in a position where they can adequately explain that,” Stark says.

According to a recent report released by the Strategic Treasurer, 76 percent of corporates believe the threat of fraud has increased over the past year while 50 percent also saw an increase in the number of fraud attempts.

“[A company] may have protections where they saw it coming, and they’re able to luckily or proactively avoid it. But there’s a lot of organisations that don’t and they learn from their mistakes.”

Standardisation is key to preventing fraud he said.

“Make sure that even one-time payments are still treated with the same rigor as if it was repetitive payment to a customer. That doesn’t mean it’s the same number of approvals, but it’s just standardised. Standardisation means you know how this payment has been dealt with no matter what the scenario was.”

With faster and real-time payments, Stark said visibility will be key. “As treasury becomes more real time, that daily basis isn’t going to be good enough. It’s going to need to be an hourly basis. We will get to that point as the technology goes there, but that’s the way treasuries going.”

“To not have visibility on a daily basis of your actual cash and what you’re projecting for, let’s say the next few weeks. That’s almost inexcusable these days.”

Stark noted that the benefits of increased visibility will be key in fighting fraud and increasing treasury’s efficiency.

“Treasurers recognise that if they don’t have visibility, they’re putting their organisations in a precarious position,” he said.

“Let’s say there was fraud. How would you know it occurred if they didn’t have visibility into the payments, that are going out the door that day, the cash that cleared your accounts, or even the exposures on FX standpoint, you wouldn’t know what to do if you don’t have visibility on an immediate basis.”

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