Festival of Treasury Transformation - a roundup from Day 2

Notes from Festival of Treasury Transformation – Day 2

A data-science led approach to cash forecasting: a case study

Vincent Delort, Capital Markets & FX Risk Manager, JTI

JTI’s data science project on cash forecasting was performed to estimate cash generation within the group, to identify funding needs for both local and central demand, and to plan repatriation through dividends. 

This cash forecasting model also helps the group’s FX risk management team to identify transactional FX exposures and mitigate the related risks. The team aim for high accuracy forecasting to ensure effective hedging and FX risk mitigation. 

Basic statistical forecasting and AI cash forecast model were demonstrated:

  1.  The former approach, statistical forecasting is likely to be replicated and adapted to other businesses, which looks at all historic data and information that may have an impact on future forecasts. 
  2. The latter model, AI cash flow forecast is currently being used at JTI and provides a wide range of flexibility. JTI introduced ‘4 sprints model’ in action:
  • The first sprint was created to cleanse the previous data and to outline the scope and base models; 
  • The second sprint added internal factors such as the output of a production site and improved modelling by adding seasonality and outlier detection which led to 2% accuracy increase; 
  • The third sprint took external factors into consideration and added Naive model in order to faster adapt to trend changes; 
  • The final sprint added Regression model based on AP/AR data availability and finalized the model by assembling the 4 sprints;

As a result of using this AI cash flow forecasting model, the accuracy of the automated cash flow forecasting is 20% higher than that of manual forecasting. The workload of cash forecasters fell by 80%, allowing them back more time for more strategic work. To the entire business, the more precise forecasts ensure more efficient management of the cash and liquidity.


Business continuity planning and transformation: the strategic view

Caroline Stockmann, Chief Executive, ACT

Simon Neville, Group Treasurer, Reckitt Benckiser

Paul Rosen, Head of Treasury Advisory & Assurance, NatWest Treasury

Davinder Valeri, Director, Strategy, Risk & Performance, CPA Canada

Key challenges faced by treasurers and financial professionals:

  • technology use when working from home;
  • new working environment;
  • supply chain;
  • health & safety maintenance when working from home;
  • team and company-wide communication.

As countries lift lockdown, additional stress on social interaction arises, particularly around mental health. All organisations would need to adapt to a more hybrid model of working going forward, the panel agreed.

Large corporates and financial institutions have not encountered a massive increase of cyber-attacks thanks to their sophisticated systems and stringent financial control by the regulators. For SMEs, the panel suggested to have more practical security measures in place and more attention and awareness to be paid.  

Post-crisis recovery will be implemented in new measures with more resilient and sustainable business models required. The panel shared a few tips for corporates, particularly for those SMEs:

  • Identifying critical weaknesses in your supply chain;
  • Implementing long-term thinking of business strategies;
  • Broader engagement with stakeholders;
  • Understanding the overall business objectives and planning with a sustainable method.


The future of cash-flow forecasting

Caroline Stockmann, Chief Executive, ACT

James Adams, Group Treasurer, Chalhoub

Nicolas Christiaen, CEO & Co-Founder, Cashforce

Gerard Tuinenburg, Director Systems, Innovations and Transactional Banking, Treasury, Unilever

Ginny Wu, Group Financial Controller, Walker Shop Footwear

Current COVID-19 pandemic has accelerated many treasury processes but CFF is at the forefront of that process

  • Current situation with CFF is worse than the start of the pandemic, as geographic variations make a different prognosis
  • Scenario planning is required for CFF: Base line, best case, worse case – allows for range analysis
  • Lack of trends makes it difficult for AI and Machine learning programmes to translate trends as no prior examples to compare

                   -Trend data is currently very short term – using previous weeks rather than months and years

                   -Current situation provides strong data points for future crises

                   -Build in different risk data including counter-party and geopolitical

There has been a change in horizons for CFF

  • More focus on short and medium-term, which makes it difficult to reconcile with longer-term working capital forecasts
  • Difficulties in accessing the appropriate data when forecasting timeline shift

                  -Potential for errors to be introduced in haste

However, there are opportunities in the current changes

  • CFF becomes more visible to the whole organisation
  • CFF becomes more business-driven than just a treasury process

                  -Treasurers need to understand the whole business and context

  • Effective CFF can act as an early warning system for the business – It is a necessity not a luxury

Effective CFF

  • Accountability and monitoring crucial

             -Enables the building of effective feedback loops

  • Behavioural aspect to CFF

             -Increased engagement with business units

            -Not realistic to expect technology to replicate this

  • Aligned processes such as sales, creditors and debtors’ analysis need to be accurate as well
  • Treasury education for non-treasury staff helps to provide the context for CFF

Future of CFF

  • Opportunity to leverage automation techniques and APIs to minimise inputs

           -Still needs people to translate data effectively – not just a ‘black box’ process

  • Increased focus from the business maximises opportunity for investment


Using SaaS platforms to deploy multi funder working capital solutions for corporate treasurers

Brian Shanahan, Director, Informita

Maurice Benisty, Chief Commercial Officer, Demica 

Frederic Bourgeois, Managing Director, UK & Ireland, Coface 

Merisa Lee-Gimpel, Director, Head of Trade Innovation, Lloyds Banking Group 

Richard Walker, Group Treasurer, Nomad Foods

The world of working capital solutions and trade finance is widely considered to be under-invested from a technology perspective. Recent years have seen start-ups and established players race to find solutions to this problem with new technologies such as blockchain and AI designed to transform the market whilst new financing techniques have been developed by aggressive new entrants into the market: all focussed on an estimated $1.5 trillion gap between the demand and supply of trade finance globally.

With the crisis now shining a light on these grand plans, we bring the discussion back to basics. In this powerful session with technology provider Demica, along with bank and corporate representatives, we discuss the urgent and pressing needs of corporate treasurers globally when it comes to the deployment of working capital solutions, how banks are thinking about the deployment of capital in this environment and how can technology be leveraged to make the process quicker and more efficient.

  • Pandemic has brought challenges to WCS
  • Access to capital has become more constrained

               - But dependant on sector

  • Potential to provide support to 1st and 2nd tier suppliers

               - Provides supply chain security

               - WCS can act as an early warning system

How has pandemic affected investment in WCS?

  • No. of RFPs has increased
  • Many looking to implement and leverage technology

             - But some project postponement

  • Re-prioritisation as pain points have changed

$1.5 tr gap in working capital requirement

  • But liquidity not generally an issue
  • Number of providers looking for opportunities to deploy funds
  • Still sector-specific

Credit insurance industry

  • Surge in frequency of claim notifications

            - Not a major change in values

  • Payment performance is mixed, dependant on sector
  • Difficult judge non-payment is a liquidity or cash management issue
  • Providing up-to-date information helps with implementation of risk

           - Speeds up decision-making process

  • Some constraints: capacity for risk underwriting – again sector-specific

Use of technology

  • Implementation can be difficult with minimal resources

           - Not to be underestimated

  • Purpose needs to be easily understood throughout the business to get buy-in
  • Designing programmes – What’s the purpose?

           - Design around the purpose

  • Automation adds short term pain for long term gain
  • You will live with any solution for a long time – Take the time to get it right


Automating FX in the post-COVID world

Sat Khuntia, Head of FX Sales, Corporate Banking, Barclays

This session focuses on four key trends in the transactional FX space – automation, transparency, technology and cost optimization – and how treasurers can make the most of new technologies. 

COVID-19 has a significant effect on FX

  • Massive market volatility of currencies
  • Explosive growth in e-commerce
  • Need to be effective in FX Management

         - Automation of FX can support this

Automation of FX has accelerated due to 4 key areas:

  1. Digitalisation
  2. Transparency of price and rates
  3. Innovation
  4. Efficiency

1. Digitalisation

  • FX distribution continues to be digitalised

          - Currently 60% of daily turnover

          - Both single and multiple dealer

          - Significant increase in volume

2. Price Transparency

  • Ability to live stream FX pricing

         - Now available to individual consumers

3. Innovation

  • Distributed Ledger Technology (DLT) can reduce friction in cross-border payments

        - Significant activity in this area inc. Central Banks, but yet to become mainstream

  • Swift/GPI initiative improves the traceability of cross-border payments
  • APIs make connectivity to clients easier, with light connectivity

        - Live an interactive

4. Efficiency

McKinsey reports that the cost of international payments will reduce by 95% over time with automation and technology.

Automated FX solutions need a consultation and implementation but the benefits can be considerable


Bank connectivity: utilising APIs and Open Finance

Naresh Aggarwal, Associate Director – Policy & Technical, ACT

Dan Globerson, Head of Open Banking, NatWest

Conor Maher, Head of Transaction Banking, NatWest 

Kevin McCallum, Chief Commercial Officer, FreeAgent 



  • Application Programming Interfaces
  • Connectivity between technical and financial ecosystems
  • Many businesses developed from the use of API ecosystems e.g. Amazon
  • Banks see the benefits of APIs

               -PSD2 regulation has helped define priorities

  • APIs act as an enabler for certain problems

              -Ability to identify expensive pain points and look for solutions

              -Previously Point2Point connections were time-consuming and costly

APIs and accounting

  • Banking is central aspect of accounting
  • API enables customers to get bank data into accounts

           -Ability to move data between platforms

           -Processes can be aligned quicker with less cost

  • Small businesses have been early adopters but starting to move into larger organisations

Treasury and APIs

  • Able to see the benefits of quicker, cheaper collection of payments without the need to collect personal data
  • Able to minimise fraud while processing large volumes, with confirmation of payee
  • Opportunity for quick implementation, once the purpose is identified
  • Ability to connect with various financial ecosystems, not just FIs but also other corporates
  • Allows real-time payment confirmation and customer authentication
  • APIs enable easier connectivity between TMS and other software

               -Integration can take place in days

Supply chains and APIs

  • Ecosystem of interconnectivity

          -Facilitates faster line-of-sight of supply chain

         -Increase the velocity of trade

APIs and Banking

  • Larger players starting to normalise standards
  • Enabling open banking globally

         -Momentum is building

         -Mobility of data is a powerful tool

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