A treasury forward-planner for the rest of 2018

As the summer holidays get under way, set aside some time to pre-plan the rest of the year. Michelle Price outlines five key areas on which to focus

As is often the case at this time of year, thoughts start to turn to escaping the office and the busyness of business for a few weeks.

However, before you switch off (or at least slow down a little as all your colleagues disappear for a few weeks), we thought it might be timely to suggest a few topics that you might just want to ponder for the remainder of 2018 while you have a little more thinking time.

Some of these are quite esoteric, but summer is the perfect time to check that the foundations of the treasury function are firm and ready for the onslaught come September.

1. Codes of Conduct in FX and money markets – have your counterparty banks signed up?

Market participants who have signed a Statement of Commitment to the Global FX Code can now publicise the fact by signing up to a public register.

A consolidated list of signatories can be found on the Global Index of Public Registers.

By signing, market participants can signal their intention to adopt and adhere to the Global FX Code’s good-practice principles – something all corporates should be asking their banks to do and which they should also consider adopting themselves.

A similar register for the UK Money Markets Code is soon to be published on a microsite hosted by the Bank of England.

For those who have not yet signed a Statement of Commitment, the ACT has provided Briefing Notes and a list of other, relevant resources here.

2. Be prepared: Brexit

At the ACT’s Treasury Forum late last year, more than half of treasurers polled had not started planning for Brexit and were in ‘wait and see’ mode.

In April 2018, at the ACT’s most recent Brexit breakfast briefing, the number had fallen only marginally. Once things finally start moving, they are likely to snowball and, to the extent possible, treasurers need to start developing contingency plans now.

A number of ACT and relevant third-party resources for corporates are available here, and we will continue to host Brexit events as conditions evolve.

3. Cash management – new products, old problems

The world of cash management and payments is evolving in response to changes in bank business models as a result of regulation (ie the move away from notional pools) and technological advances (particularly blockchain).

Treasurers might want to consider solutions such as virtual accounts for cash pooling; using Ripple or SWIFT gpi for cross-border payments; and the launch of various utility products for KYC management.

Read about the 2018 Smart Cash Management Conference talking points here.

4. UK payments messaging consultation

The UK payments industry is moving to ISO 20022, which is the new global standard for payments messaging. This standard creates a common language for payments data across the globe.

The Bank of England is consulting on the contents of the new payments message, which will be used by CHAPS, Faster Payments and Bacs.

We hope you have responded to the consultation direct (it closes on 18 July). Alternatively, please email your views to the ACT.

5. Tax, accounting and geopolitical risk

New accounting standards are settling in. Now is the time to consider:

  • IFRS 16, Leases – what is the impact on key ratios and covenant calculations?
  • IFRS 9, Financial Instruments – is there an opportunity to adopt hedge accounting previously unavailable?

Tax reforms are not going away:

  • The changes in the US may have a material impact on liquidity in financial markets if surplus cash is finally repatriated;
  • Base erosion and profit shifting regulation is a reality; and
  • Financial transaction tax is still a possibility.

Geopolitical uncertainty is on the rise again. Keeping abreast of sanctions regulations as relationships deteriorate could become very time-consuming during the second half of 2018.

Have a great summer!

About the author

Michelle Price is associate policy and technical director at the ACT

This article was taken from the August/September 2018 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership

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