TOMATO CATCH-UP: Newsletter Issue 171 – April 2014

Your monthly resource on working capital, process optimization and issues relating to the world of corporate treasurers, IT professionals and bankers!

Introduction:

We don’t say thank you enough. So here’s our opportunity! Thank you to our loyal readers; you encourage us to find information that helps you in your work and professional life. Thank you for comments on issues on which you have practical experience. Thank you for examining our website on issues you need to deal with, recently especially legal requirements. Thank you for inviting us to organize Brown Bag lunches where you can discuss issues with individuals from other companies. And last, thank you for giving us the opportunity to learn from your challenges so that we can pass them on to other companies. We can’t say thank you enough.

Enjoy the variety of topics in the newsletter!

Your Tomato

Regula Spottl and the Tomato Team

Topics

Raising the Value of Treasury Staff

Companies depend on the right staff in treasury functions to assist them in maintaining and enhancing their competitive profiles. A recent GTNews newsletter focused on developing and retaining treasury talent. That got us to think about our experience with clients in this respect.

We at Tomato see treasury departments from a wide angle. We are introduced to structures and processes that need attention. Yet we often find staff members who don’t trust management, feel they are wasting time on nonessential and inefficient flows and are frustrated with their environment.

Technology certainly helps to maximize productivity since the appropriate technology helps to eliminate mundane repetitive task and to reduce human error. Technology can help especially in “morning cash management”, cash forecasting, generating journal entries and treasury reporting. When these processes work optimally, treasury can spend time to “explore different ways to deliver value to the business, such as global collaboration, analysis of forecasted exposures and optimization of global bank and liquidity structures”, suggests Jason Torgler of Reval.
Details in Maximizing Talent: How Technology and Keep Treasuries Lean and Mean (Registration required, free)

Apart from technology being optimized, it’s important to have the right people in the positions that require their specific strengths. Once that’s in place, it becomes clear what skill sets new people need for open positions. However, when hiring, technical skills are often less critical than choosing people who fit into a team, people who have energy and a great attitude.

We at Tomato have not only helped clients with the optimization of structures and processes, we’ve coached them to identify the best use of their talent, eliminate boring, repetitive tasks, and make individuals understand that they actually share one and the same goal: to make their department successful and a great place to work.

If you would like a second opinion, or if you need a person you can call on for days at a time, Martin Schneider is the right person. We often act on behalf of finance staff, working as part of your staff and play an internal role. All this without making it a whole project! Also, if you prefer, we conduct consulting work is performed at your office. However, we perform 80% of our work for clients from our office in Kloten. Ask us what we can do for you!
Auf deutsch: Unser Vorgehen…

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Martin Schneider an der Hochschule Luzern, 24.5.14

Seit mehreren Jahren doziert Martin Schneider am Institut für Finanzdienstleistungen IFZ der Hochschule Luzern im Rahmen des Kurses Swiss Certified Treasurer.

Am 24. Mai 2014 wird Martin jungen angehenden Treasurern das Thema Financial Flow Management aufnehmen und Lösungen aufzeigen, die sich aus 150 Corporate Projekten in 20 Jahren ergeben haben.

Swiss Certified Treasurer ist ein berufsbegleitender einjähriger Studiengang in Zusammenarbeit mit der Swiss Association of Corporate Treasurers (Swiss ACT). Er beginnt in diesem Jahr am 3. April. Details…
Details im Blog…

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On Weight and Balance: Metaphor for Business

Felix Huber is a “flight” safety specialist and CEO. His take on weight and balance being crucial in flying a plane resonated with Martin Schneider and Andreas Carl, both avid pilots.

In a recent piece in Incentage’s newsletter, Mr. Huber remembered how crucial weight and balance are to flight safety. “A few centimeters out of your safety configuration made you tail heavy or nose heavy. There is simply no tolerance area.”

Weight and balance is a useful concept in business as well. Inefficient structures and processes, outdated technology or systems, incompetent management or staff, unethical business practices, an inefficient messaging structure etc. equal operating outside “safe flying limits” and potential difficulties walking away from the crash site on your own two legs (for non-aviation readers: that defines a successful landing in pilot’s slang). Incentage Newsletter…

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Ongoing Issues Treasurers Face: Part 3

Installment 3 in our monthly series “Treasurers’ 5 Items Plan” offers 5 Ways to Reduce the Risk of Fraud in Treasury. Again, these suggestions are as valid as they were in 2005 when we composed them.

In addition to the established inspections of treasury activities by internal auditors, an unscheduled auditing has to take place.
The auditors running the internal audits of the treasury have to rotate and continue to study further all matter pertaining to the subject of treasury.
Additional audits by external auditing companies must be run.
Employees in trading locations must be rotated according to a random timetable.

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5. Tax Considerations in M&A with a Swiss Company

In “Tax Priorities when Acquiring a Swiss Company M&A”, Susanne Schreiber and Simon Juon of KPMG Switzerland offer practical recommendations from a Swiss tax perspective to increase the value provided by an M&A process when acquiring Swiss companies. Key issues include tax due diligence, acquisition structure and acquisition financing. Full story…

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SWIFT launches a new Business Continuity service

Press release 10 March 2014 – “SWIFT launches a new business continuity solution to support global payment systems… The Market Infrastructure Resiliency Service (MIRS) is a backup service for Real Time Gross Settlement (RTGS) systems - electronic platforms used for the continuous settlement of high value and multi-currency cash payments between banks.“ MIRS processes and settles payments in real time.

SWIFT hosts and technically operates MIRS based on instructions, parameters, and other data provided by the customer. Press release… - MIRS FAQ…

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What Treasurers Need to Know About Cash Pooling in China

Now that Chinese regulators allow for cross-border cash pooling in the Shanghai Free Trade Zone, corporate treasurers have questions about documents, structures and quotes involved in the implementation. Ulrike Glueck, an expert on China from law firm CMS, answers some of the important questions in a FAQ document provided by Eurotreasurer. The questions include

What treasurers need to know
Requirements for a company to be eligible for the cross-border cash pooling in the FTZ: (a) for RMB cash pooling and (b) FX cash pooling
Legal hurdles and what to watch out for when drafting contracts
Possibility of zero balancing
How cross-border cash pooling compares to Western standards

FAQ about Cash Pooling in China…

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Explaining IT in Terms of Value not Cost

CIOs provide value to their companies, but explaining it to executives with a focus on the ‘cost to value” is not helpful. Educating executives about the budgetary difference between operational and strategic investments helps to change the dialogue to value, suggests Gerri Martin-Flickinger, CIO of Adobe.

In her cio.com blog “Moving the IT Conversation from Cost to Value”, Ms. Martin-Flickinger explains how she realized that their approach wasn’t working. “We were using all of these complex financial models to report on how we were spending our IT dollars…but the model was too complicated to tell the right story.” Executive peers simply didn’t pay attention to the role that depreciation plays in the IT budget.

Ms Martin-Flickinger offers this advice: make it simple. “I started using a pie chart that had only three sections: operations, new delivery, and depreciation…This made a major difference with my CEO…Every time I went in to talk to the executives, I brought that pie chart with me. I found that the dialogue changed the focus on the three parts of the budget.” Details…

Makes sense? Too easy? Tell us what you think!

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Zen and the Art of Service-Oriented IT

Not just the word Zen in the title but also the concept ITaaS (IT as a Service) is eye catching. Less hype is the idea that IT needs to evolve from service provider to service strategist. Michael Biddick, CEO of Fusion PPT, suggests in his article in informationweek.com that CIOs must compete on quality. To do IT-as-a-service well, they must keep process, technology, and cultural aspects in equilibrium.” He suggests:

The process: Aim for quick wins that have an immediate impact. Set realistic progress milestones, and make it transparent.

The technology: Automate as much as possible. “If a process can't be automated, at least automate enforcement and compliance to ensure that the right checks and balances exist.”

The culture: ITaaS affects multiple groups. Resistance from a group or even a single person can disrupt progress. Don't let it get that far! “Identify naysayers and address concerns -- to a point.”

Biddick further suggests that if you decide to hire a training provider, choose one that customizes the content and makes it specific to your organization. Full story…

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Adding Concrete Steps to Brainstorming

Brainstorming has been under scrutiny for not producing ideas that can be put into action. MIT researchers have upgraded the concept into a 7-step technique for putting ideas to action to make the process useful. The 7 steps are:

Define the problem and solution space.
Break the problem down.
Make the problem personal.
Seek the perspectives of outsiders.
Diverge before you converge.
Create “idea resumes.”
Create a plan to learn.

The concept, complimented a 5-step technique for producing ideas from 1939 warrants trying out. Full story…

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From the Desk of Regula Spottl, Greensboro, NC

It’s not just me in North Carolina being far away from Zurich. We at Tomato also work with companies in North Carolina on SWIFT projects i.e. bank relations. These are companies affiliated with, or subsidiaries of, Swiss corporations. It’s no surprise to me. North Carolina has been attracting automotive, textile and all kinds of manufactures from various countries because the state is known for affordable, devoted and loyal workers, excellent community colleges that work directly with companies to educate people in the skills these companies need, and good relations between business and communities. For example, we worked directly for clients from Greensboro, Charlotte, Winston-Salem, Rocky Mount and more. I find that exciting! We should hold a Tomato event here such as a jazz festival, golf outing, visit to a football game, or a NC style barbecue (this has a rich history and is totally different from a typical barbecue)!

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And from the Desk of the Tomato Home Office, Kloten, Switzerland

Enjoy our spectacular view thanks to our proximity to Zurich Airport...

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Spectacular Airbus A380 View from Our Office