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Agenda: Discovery Labs

Located right on the exhibition floor, the Discovery Labs will provide an in-depth look at new technologies to help solve your treasury pain points.

Much of the recent focus on payments has been on the proliferation of new payments platforms and providers. Less attention has been paid to the fact that traditional rails are not taking the competition lying down. Upgrades to core real-time payments rails, to SWIFT and to the linkages between existing instant payment systems are arguably more important to treasurers than the latest innovation in portable POS terminals or BNPL. Use this lab to see what your banks and traditional payment mechanisms, as well as newer players are doing to make your lives easier. 

The pandemic is still testing firms’ working capital management to the limit. Everyone pays everyone else later so DPOs and DSOs rise. Inventories are volatile – demand for some products falls, others cannot meet demand because of supply chain disruption. The conflict in Ukraine will complicate any return to normal, forcing companies to continue to focus ruthlessly on working capital efficiency.

The ‘E’ in ESG is driving the most visible changes in corporate behaviour at the moment, and treasury is responding across funding, cash management and investment. But the ‘S’ is becoming more important and will be more difficult to deal with, especially in global organisations. Here are some practical treasury leaders making a difference. 

2:00pm -2:40pm

The drive for working capital

Recent economic and political disruptions have highlighted not just the importance of working capital management, but also the sector-specific impacts of those disruptions. Lockdowns hit hospitality harder than tech, but chip shortages hit tech harder than hotels. Net working capital days vary widely across sectors for good reason and other measures of working capital efficiency should be taken in a sector-specific context. That said, there are broad lessons to be learned from the experiences of the past two days, and some companies have done much better than others. So in this session, three treasurers from leaders in three different sectors give their advice on building working capital best practice in a post-pandemic world of climate change and Great Power politics.

2:00pm -2:40pm

Can traditional rails stay relevant?

The worst kept secret in payments has been the creaking, insecure, slow, expensive shambles otherwise known as the US payments system. As other countries moved to real-time payments and to the consolidation and modernisation of payment rails, the US lagged, costing poorer citizens and businesses billions. FedNow, the US version of modern RTP, doesn’t launch till 2023 and the US system is a metaphor for the wider battle between traditional and new rails. Buy-now-pay later models are hitting credit card firms – though Mastercard has just launched its own version. Platforms can provide their users with faster payments and better transaction reporting than many banks – despite ultimately relying on them. And the many flavours of tokenisation, from digital currencies to tokenised funds and securities further complicate the picture. So, are the efforts of traditional providers enough or will consumers (and so business) continue to use newer payment methods and providers? If the latter, what must treasurers do to enable the business while keeping risks to a minimum?

2:00pm -2:40pm

Making the most of sustainable finance

Given the maturity of the ESG funding markets, companies now have to consider more carefully which instruments deliver the funding costs they want with the ESG-outcome that makes the most sense for them. Firms can choose from use-of-proceeds bonds or bonds linked to any number of ESG-related KPIs. They can also choose from a growing and somewhat confusing palette of green, social, sustainability and sustainability-linked bonds, loans and trade/SCF funding. So, what was once a niche decision to issue an ESG-linked bond for a small funding cost saving and some cosmetic PR, has become a core business, treasury and finance decision around market, structure and the ESG KPIs the company should develop or attach itself to. This company has thought hard about how its own ESG stance should be incorporated into its financing and has started to ‘green’ its loan and other funding programme. Here the treasurer explains their thinking.

2:40pm -3:20pm

Getting smart about inventory financing

How times change. In a world of hyper-efficient, just-in-tine supply chains, inventory funding may have fallen down large firms’ list of priorities. Even then, unless an entire supply chain back to every manufacturer and materials supplier was just-in-time, some firms had to fund inventories to ensure those efficient supply chains kept running. Not any more. Inventory is now an important buffer against disruption and is the only real guarantee of being a reliable supplier or end-seller. But funding inventory ties up working capital and can be hard to arrange.  Newer off-balance sheet structures are available, involving third-parties or SPVs as buyers of (usually) insured bundles of inventory from a company. These effectively hold the inventory as consignment stock (there is no commitment from the company to purchase the inventory from the SPV) until the company has orders for its own products. So are the complex accounting and regulatory questions of these structures worth the effort? Are these kinds of highly bespoke structures the only way to get around costly on-balance sheet funding? Or do other techniques like tokenisation represent a better way forward?

2:40pm -3:20pm

Panel discussion: The treasurers’ opinion

It’s important to keep up with the big picture in payments, but day-to-day, treasurers are less concerned with the cutting edge and more with the complexity of their current banking arrangements and the knock-on effects on efficiency visibility, fraud and security. They may not be as interested in faster payments as they are in the efficient scheduling of payments – matching them to cashflows or timings linked to working capital requirements. Or they may be more interested continuing to eliminate manual processes and better exploit their existing ERP and TMS technology. To find out what your peers really care about in payments, this panel brings together treasurers from three very different organisations to describe where they are putting time and resources in the payments space.

2:40pm -3:20pm

Green deposit, green light?

Recently an increasing number of banks have announced the launch of green deposits programmes as cash management solutions for corporate clients. Generally this means sub-12 month term deposits where the cash finances an equivalent amount of the bank’s green asset pool. Often corporates need to fulfil certain eligibility criteria such as minimum deposit amount and certain level of ESG ratings to use these programmes. So why are banks keen to attract green deposits at a time when corporate cash is at an all-time high and they have been discouraging treasurers from depositing more in conventional accounts? What are the yields on green deposits relative to other short-term alternatives? And what kinds of eligibility criteria are required to use these new schemes? Find out here.

3:20pm -4:00pm

Refreshment break

3:20pm -4:00pm

Refreshment break

3:20pm -4:00pm

Refreshment break

4:00pm -4:40pm

Better data, better forecasting, better working capital 

It’s a cliché, but managing what you can’t see is not very easy. The larger and more complex the company, the more difficult that visibility is and the more likely that the data needed to create it is tied up in manual processes and disparate, poorly connected MIS, TMS, ERP and other systems. Creating a better technology foundation able to deliver visibility into the data is a key first step in better working capital management. For example, access to near real-time intra-day cash balances not only helps better hedging, it drives cash forecasting and cash management. And broader shared visibility starts to break down the silos between treasury, procurement and the business. This treasurer went back to these basics in an attempt to solve long-standing working capital pain points. This is what they discovered.

4:00pm -4:40pm

Greening your supply chain

Much the focus on what treasury can do in pushing sustainability through the supply chain has been on green SCF – linking suppliers’ funding costs to their meeting defined ESG KPIs. These indirect measures are a good start and innovation in this space continues. But the real sustainability issues in supply chains lie in more mundane areas such as consignment stock, returns policies, and so-called ‘reverse logistics’ that includes the ability to repair and refurbish products, recycling and ensuring a cascade of sustainable practices that flows smoothly throughout the supply chain. These are business not treasury decisions, but as companies move towards more meaningful definitions of green supply chains, treasurers will find themselves at the centre of the data and financial complexities such practices entail. This company is at the forefront of the push for green supply chains: this is their view.

4:00pm -4:40pm

Staying ahead of the payments curve

Some businesses, particularly newer digital natives, have little choice but to embrace the latest payment technology: they have no legacy infrastructure to deal with and, often, their business models incorporate high levels of innovation in customer UX, including payment channels and financing options. The latter create complexity around visibility, reporting, fraud and chargeback risk, security, and so, ultimately, cashflow, forecasting, liquidity management and all the traditional treasury pain points. So, how do they do it? How do they cope with constant change in the business? Which next generation payment technologies do they believe are here to stay and which can be ignored? And how do treasuries need to restructure if they are to make the most of the payments revolution?

4:40pm -5:20pm

The path to continuous optimisation

In-house banking and payment hubs are hardly new, and neither is their availability in the cloud. The underlying concept is straightforward: minimise the movement of physical cash and bank account activity and do as much of what would have been provided by commercial banks to business units as possible internally. But the true benefit of implementing a SaaS in-house bank and/or payment hub is what comes next. These solutions provide companies with the foundations for working capital efficiencies across a broad range of intra-company activities from payments to cash and liquidity management to tax. While the savings in bank fees, the cost reductions achievable through OBO-structures and so on are significant, it is the information flows through the in-house bank and the use of the technology and data together to drive further optimisation that provide the long-term value.

4:40pm -5:20pm

SWIFT: leading the payments revolution?

For all of the payments innovation of the last few years, traditional payment infrastructure remains the backbone of the global system. And that infrastructure is not standing still. Take SWIFT:  SWIFT GO is transforming the speed and transparency of low-value payments; new pre-payment validation removes a key cause of delay; a new in-flow translation service will ease the migration from the MT standard to ISO 20022, delivering tools for banks to rapidly benefit from rich data in a multi-format environment. SWIFT is also actively experimenting to see how its evolving platform could interact with the cross-border use of central bank digital currencies (CBDCs) and demonstrating that interoperability between different payments systems will be the key to success, including a proof of concept with EBA Clearing and The Clearing House (TCH).

4:40pm -5:20pm

Getting social impact right

If you thought moving to a greener treasury and business stance was hard, then the ‘S’ in ESG is going to surprise you. Most people can agree on what a green or sustainable agenda looks like, even if they may disagree on its necessity. But social ‘goods’ such as workplace diversity and gender equality in pay are more tightly bound to cultural norms and what seems obvious in one part of a business can be controversial in another. Social-linked instruments of course cover much more than these factors though, with everything from affordable basic infrastructure, to access to essential services to employment generation, and food security. Here the challenge is data: how can issuers prove that their funding programmes really affect any of these meaningfully? Taking up these challenges this company has committed itself to significant use of social-impact-linked finance. This is how they’ve begun.

Much of the recent focus on payments has been on the proliferation of new payments platforms and providers. Less attention has been paid to the fact that traditional rails are not taking the competition lying down. Upgrades to core real-time payments rails, to SWIFT and to the linkages between existing instant payment systems are arguably more important to treasurers than the latest innovation in portable POS terminals or BNPL. Use this lab to see what your banks and traditional payment mechanisms, as well as newer players are doing to make your lives easier. 

The pandemic is still testing firms’ working capital management to the limit. Everyone pays everyone else later so DPOs and DSOs rise. Inventories are volatile – demand for some products falls, others cannot meet demand because of supply chain disruption. The conflict in Ukraine will complicate any return to normal, forcing companies to continue to focus ruthlessly on working capital efficiency.

The ‘E’ in ESG is driving the most visible changes in corporate behaviour at the moment, and treasury is responding across funding, cash management and investment. But the ‘S’ is becoming more important and will be more difficult to deal with, especially in global organisations. Here are some practical treasury leaders making a difference. 

2:00pm -3:20pm

Workshop: Caught in a cash trap?

Trapped cash comes in many flavours. Some of it is locked up in highly regulated jurisdictions with strict capital controls. Some is simply stuck in places or structures where there is no tax-efficient way to repatriate it. And increasingly, given today’s geopolitical situation, some of it is trapped by sanctions against individuals, companies and companies that do business with sanctioned entities. What to do about cash that is nominally owned by companies but is not operationally available is one of the thorniest problems in treasury and most situations require a bespoke solution. That said, there are a number of broad approaches to the problem and in many cases new technology can be applied to these approaches to make them more efficient. In this workshop we will be looking at the latest challenges in trapped cash, including sanctions, and will deep-dive into the legal, regulatory, banking and technology solutions around them.

  • Sekar Sundaram

    Executive director & assistant treasurer, Parexel

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2:00pm -2:40pm

Who really needs instant payments?

Consumers love instant payments: they want mortgage payments to reduce interest immediately; they want their pay and other cash to be spendable as soon as it’s sent. And in theory instant payments are good for treasurers too: faster payments frees up working capital and allows finer-tuning of the cash conversion cycle; the risk of customers failing to pay is reduced and collection alerts can be more accurate; and, although fraud can be executed faster, it can also be identified faster. But treasurers say there are negatives too. Faster payments can create additional complexity and reduced visibility unless additional technology is used. This treasurer believes instant payments are the answer to a number of their traditional pain points, but only in conjunction with other changes to treasury technology and mindset.

2:40pm -3:20pm

Panel discussion: The internet of things (that can pay)

Connected devices are no longer a novelty. A new car is part web, part API and part people carrier. The fridge that knows it needs more milk is a reality. But the next stage is embedding payment functionality into these devices so that their users, or the device itself, can make payments instantly. Pay with your car, with a voice-enabled assistant or perhaps just let that fridge both order and pay for the milk it needs. This happens to be one of the many ways in which card companies are reinventing themselves, as well as entering the BNPL market and creating online portals for connectivity with fintechs. And card-related payments aren’t going away: yes you can use digital wallets to circumvent card networks but consumers tend to load cards into those wallets and to use their cards as the payment method inside platforms like PayPal. In this session learn about how the traditional card brands have become anything but traditional.

2:40pm -3:20pm

Developing a cutting edge ESG programme

While many companies have understandably focused on surviving the pandemic, some have had the breathing space to develop cutting-edge ESG programmes. In the most advanced examples these begin with an explicit, top-down commitment to net zero targets and other objectives around waste, environment and the supply chain. These then translate into specific policies and governance frameworks which in turn drive specific changes across different departments. In the case of treasury these will include re-vamps of loan and bond financing programmes, evaluation of sustainability choices and financing for suppliers, changes to risk management programmes as a result of these choices (e.g. renewable energy, carbon trading), and a host of due diligence and reporting actions. It also affects how cash is managed and how corporate pensions are invested. This treasurer details their programme.

  • Alex Ashby

    Head of treasury, Tesco

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3:20pm -4:00pm

Refreshment break

3:20pm -4:00pm

Refreshment break

3:20pm -4:00pm

Refreshment break

4:00pm -4:40pm

Next generation working capital management

Corporate complexity is one of the key obstacles to better use of working capital: because of it, treasury cannot see where best to direct resources, internal liquidity can be more expensive to use than external and datasets, even when available, can be so difficult to manage that insights are hard to draw. Increasingly when faced with this combination of complexity and data overload, the answer is machine learning or artificial intelligence. These technologies are far better than humans at identifying patterns and anomalies in data and in running multiple scenario analyses across it. So what do the latest attempts to apply ML and Ai to the problem of working capital look like? How do they integrate with more traditional tools, systems and processes? And do companies have sufficient clean data to train them?

4:00pm -4:40pm

Commercial cards remain a key tool

In a world of digitalisation, AI and crypto, commercial cards may seem like yesterday’s news, even virtual ones. But none of the benefits of using commercial cards for B2B payments have gone away. They help make payments more time and cost-efficient; they can help secure the supply chain, improve cash flow and working capital, and they increase the visibility and control of spend to reduce risk of fraud and misuse. However, there are still perceived barriers to commercial card adoption from both buyers and sellers. This treasurer is a keen adopter and in this session explains the process changes required, the different obligations cards create in different jurisdictions and how to overcome resistance among suppliers reluctant to accept card payments.

4:40pm -5:20pm

Supply chain financing: cost remains the key driver of choice

Perhaps unsurprisingly, the pandemic caused a huge spike in supply chain financing for SMEs struggling to survive the multiple shocks to the economy seen over the past two years. Banks, development banks and non-bank funders have stepped up to meet this demand, and so large companies who wish to put SCF programmes in place for their supply chains have no shortage of solutions and providers to choose from. While funding cost will remain the key driver of this choice, firms should look at others. Receivables sellers require rapid turnaround not weeks of onboarding delays and the burden of risk managing lenders. Lenders want to invest in high-quality SCF deals with as much asset visibility for due diligence as they can get with automated risk monitoring tools and fraud prevention features. And the companies setting up SCF programmes for their suppliers want control over the funding universe for those programmes. Technology is the answer on all sides. See how the modern SCF industry is providing sophisticated solutions to all these needs and concerns.

4:40pm -5:20pm

Considerations for real-time liquidity management software

The big picture pros and cons of real-time payments have been debated for some time, but less attention is given to the technology, people and process changes that are required if treasuries push to roll out real-time payments across their estates. For example, batch-based back-office payments processing can never match the real time capabilities of fast payments front ends. So how can treasurers get the benefits of faster payments as well as the processing and reporting that goes with it? Do the larger ERP and TMS systems available incorporate sufficient functionality to bridge this gap or do treasurers need to invest in new real-time payments architecture? If so, how much does it cost and what are the implications on other legacy systems of implementing it? And does it have a sufficiently strong rules engine built in so that treasury can control payments the way they want to?