Treasury-en
Treasury
Trinity provides a modular system that can be tailored to individual requirements, enabling effective management of account balances, foreign currencies, financing and investments, interest rates, liabilities, planning and reporting.
Denis Iuliano, Head of Accounting, SCIO Automation GmbH
Topics
Loans and Investments
The following section focuses primarily on corporate loan and investment management within the broader context of contract management.
Does your company have financing or investment needs?
Effective liquidity planning identifies funding requirements and surplus liquidity at an early stage. The more accurately incoming and outgoing cash flows are forecast in terms of both amount and timing, the more precisely financing gaps and investment periods can be determined.
Optimised planning gives companies valuable time to explore favourable sources of financing or compare the returns offered by different investment opportunities.
The market price risks arising from financial transactions are covered in the articles on interest rate risk management and foreign exchange management. Information on guarantee management and trade finance can be found by following the relevant links.
Financing Requirements
Internal financing is generally more cost-effective than financing through external counterparties. In practice, however, companies often need to rely on banks or other providers of capital.
Long-term loans and promissory note loans are agreed with repayment terms of varying complexity, while shorter-term money market financing is typically arranged in the form of straightforward term loans or commercial paper.
Unlike fixed-rate arrangements, which are relatively easy to calculate, variable interest rates are more difficult to forecast. They are therefore often converted into fixed cash flows through swaps or hedged in other ways. Interest rate hedging, however, does not remove the need for ongoing interest calculations and valuation of the underlying floating-rate loan.
The applicable interest rate is often linked not only to a specific reference rate, but also to the company’s own credit rating. Financial and non-financial covenants, such as ESG criteria, may affect the cost of borrowed funds. This becomes even more difficult to forecast when pricing is additionally structured through margin grids.
Managing the wide range of cash flows and risks arising from financing requires a powerful treasury management system that provides reliable calculations and planning data for optimal liquidity management.
In addition to maintaining an up-to-date overview of total bank exposure, monitoring limits and credit facilities is particularly important for corporate finance managers. They need to know how much financing capacity remains available with a bank or banking group and how the company’s leverage is developing.
Other key considerations include the cost of capital, remaining maturities and, where applicable, valuations in accordance with international standards. Flexible analyses by financing type, lender and syndicate, investment and project, currency risk, capital and interest rate commitment, as well as simulations and scenario analyses as part of comprehensive financial planning, quickly exceed the capabilities of spreadsheets. Spreadsheets generally provide neither reliable audit trails nor sufficient drill-down functionality.
Trinity TMS Functions at a Glance
- Set-up and management of financing instruments
- Money market loans
- Commercial paper
- Bullet loans
- Instalment and annuity loans
- Promissory note loans
- Bonds and equities
- Capital market financing
- Leasing of movable assets and real estate
- External counterparties and intercompany financing
- Automatic generation of interest and repayment schedules
- Automatic integration of all cash flows into liquidity planning
- Fixed and variable interest rates with support for various interest calculation methods
- Consideration of business day conventions and holiday calendars
- Support for any currency
- Management of syndicated financing and consortium loans
- Audit-compliant, multi-stage processing workflows
- Portfolio and credit line allocation
- Document attachments
- Collateral management
- A wide range of analysis and reporting options
- Ready-to-use reports
- Maturity radar
- Accounting module for automated posting processes
Benefits
Maximum Transparency and Risk Reduction
- Up-to-date overview of all financing arrangements and money market and capital investments
- Reliable basis for optimised interest rate hedging worldwide
- Flexible, multi-level pivot analysis
- Monitoring of limits and credit facilities
Time and Cost Savings
- Simple entry and management of financial transactions
- Automated generation of interest and repayment schedules
- Automated transfer of cash flows into planning and cash positioning
- Consideration of bank holidays, weekends and business day conventions
Process Optimisation
- Management of the entire lifecycle of financial transactions, from planning and execution through to repayment and interest calculation
- Automated valuation and posting to the ERP system
Audit Compliance
- Full traceability of all processing activities through audit trails
- Historical records of transaction and market data
- Recognised valuation methods, including valuation adjustments such as Credit Valuation Adjustments
- Individual user permission profiles for front, middle and back office functions
- Rule-based workflows with dual-control approval processes
Investment Requirements
If liquidity planning identifies surplus funds that cannot be used effectively within the business, the question arises as to how these funds should be invested.
Money market transactions generally have a straightforward structure and maturities of less than two years. Typical instruments include overnight deposits and fixed-term deposits. In some countries, certificates of deposit, commercial paper and medium-term notes are also commonly used investment instruments.
Depending on their maturity, medium-term notes may also be classified as capital investments. Long-term investments such as bonds, funds and equities are relatively uncommon for companies, as this would imply that higher returns can be achieved in the financial markets than through investment in the company’s own operations.
However, some companies use securities investments to prepare for major capital expenditure, acquisitions or pension obligations. Others manage treasury shares or equity interests in affiliated and third-party companies.
In addition to maintaining a standard liquidity buffer to protect against unexpected payment defaults, companies also manage operational and, in some cases, strategic financial investments. These may likewise be exposed to default, interest rate or foreign exchange risk.
For this reason, most companies limit their investment activities to a small number of instruments that are generally considered low risk.
In all cases, money market and capital investments should also be managed within a treasury management system, as their cash flows affect both daily cash positioning and ongoing liquidity planning.
Trinity TMS Functions at a Glance
- Set-up and management of financial investment instruments
- Overnight and fixed-term deposits
- Commercial paper
- Bonds and zero-coupon bonds
- Equities and fund units
- External and internal counterparties, including the in-house bank
- Automatic interest calculation
- Automatic integration of all cash flows into liquidity planning
- Fixed and variable interest rates with support for various interest calculation methods
- Consideration of business day conventions and holiday calendars
- Support for any currency
- Audit-compliant, multi-stage processing workflows
- Portfolio and limit allocation
- Document attachments
- A wide range of analysis and reporting options
- Ready-to-use reports
- Maturity radar
- Accounting module for automated posting processes
Best Practice
Especially in times of rising interest rates, it is essential for finance managers to keep a close eye on both existing financing arrangements and, in particular, those approaching maturity. Following a prolonged period of low interest rates, awareness of refinancing risks has declined in many companies. At the same time, the COVID-19 crisis may have reduced earnings, while the number of banking relationships has often been minimised to cut costs. These factors can restrict the scope for refinancing decisions and, particularly under time pressure, may result in unnecessarily high financing costs.
Such situations can be avoided through forward-looking liquidity and financial planning:
Sufficient lead time based on complete information not only helps identify additional financing requirements at an early stage, but may also provide access to a broader range of alternatives, for example by obtaining competing offers.
The same applies to money market and capital investments, where early enquiries can also help improve returns.
A particular advantage of Trinity TMS is that financing and investment opportunities can also be offered to the company’s own group entities through the in-house bank. Local users communicate their requirements to central treasury and generally receive more favourable terms than they would from external counterparties. Central financial management retains a complete overview of all receivables and liabilities, can apply market-based interest rates and arrange external refinancing or temporarily invest surplus funds.
Trinity TMS generates interest and repayment schedules for all loans and borrowings. Floating-rate loans are valued on the basis of automatically imported interest rates, with the option to include valuation adjustments such as CVA and DVA, which supplement market price risk by taking counterparty default risk into account. For syndicated financing arrangements, the Treasury Management System supports the management of individual lenders’ shares within the syndicate.
All cash flows arising from financial transactions are immediately incorporated into daily cash positioning without the need for duplicate data entry and are available for a wide range of analyses. Loan agreements can be attached to the relevant financial transaction as documents or generated directly from the system, for example as master agreements for intercompany loans. Loans can be assigned to any number of portfolios, while ESG criteria and other classifications can be recorded and analysed individually.
Payment transactions, interest, accruals and valuations can be transferred to financial accounting through the accounting module as part of an automated posting process.
Credit Facilities and Limits
Credit Facility Management
Credit facility management primarily focuses on credit lines. These may be granted to a company by banks or, where the company operates an Inhouse Bank, to its affiliated entities.
The purpose of such facilities is to limit access to the funds made available. Depending on its creditworthiness, a company may be granted overdraft facilities on current accounts by a financial institution, allowing the account to be operated with a debit balance and providing additional liquidity.
Trinity TMS Functions at a Glance
- Set-up and management of credit facilities, including utilisation for:
- Accounts
- Loans
- Commercial paper
- Guarantees
- Letters of credit
- Multi-purpose facilities
- Up-to-date information on available facilities and headroom
- External or intercompany counterparties
- Management of syndicated facilities and consortium arrangements
- Classification as:
- Uncommitted, committed or available until further notice
- Under negotiation, blocked, cancelled or expired
- Revolving facilities
- Calculation of facility utilisation
- Calculation of fees and commissions
- Flexible billing periods
- Consideration of business day conventions and interest calculation methods
- Integration of facilities and related fees into liquidity planning
- Support for any currency
- Maturity radar and follow-up reminders
- Historical development
- Audit-compliant, multi-stage processing workflows
- Portfolio allocation
- Document attachments
- Collateral management
- A wide range of analysis and reporting options
- Ready-to-use reports
Limit Management
The purpose of setting limits is to monitor compliance with defined parameters, for example:
- how many US dollars a foreign exchange dealer may trade with a financial institution per day (dealer limit),
- the maximum total amount of liabilities permitted with a banking group (volume limit), or
- the maximum losses that may arise from exchange rate fluctuations before appropriate countermeasures must be taken (loss limit).
Limits therefore do not represent the provision of funds. Instead, they are a control instrument used to monitor requirements and processes.
The definition of limits and reference values in a treasury management system should be as flexible as possible.
When used correctly, limit monitoring can provide effective support for a company’s treasury function. These features are particularly valuable when operating an Inhouse Bank.
Trinity TMS Functions at a Glance
- Definition and monitoring of limits based on:
- Freely selectable financial instruments and/or
- Dealers, entities and counterparties and/or
- Volumes and currencies and/or
- Results such as profit and loss or facility utilisation
- External and internal counterparties, including the in-house bank
- Individually definable weighting factors
- Aggregation on a gross or net basis
- “Effective from” logic for straightforward administration
- Audit-compliant, multi-stage processing workflows
- User-specific allocation of reporting results
- A wide range of analysis and reporting options
- Ready-to-use reports
Benefits
Maximale Transparenz und Risikoreduktion
- Aktuelle Übersicht über die Linienausnutzung und freien Headroom
- Einbindung in Liquiditätsplanung und Finanzstatus möglich
- Gleicher Informationsstand für alle Beteiligten
- Laufende Überwachung von Limiten
- Reduzierung unerwünschter Aktionen und Konflikte
Zeit- und Kosteneinsparungen
- Schnelle Information und aktuelle Übersichten
Prozessoptimierung
- Einfache Kontrolle von Vorgaben
Revisionssicherheit:
- Protokollierung und Historisierung der Änderungen im Zeitablauf
- Einstellbare Adressaten für Limitmeldungen
- Limite lassen sich einzelnen Anwendern, Instrumenten, Gesellschaften zuordnen
- Workflows auf Basis vorgegebener Regeln, Vier-Augen-Prinzip
Avalmanagement
Das Management von Avalen, also Bürgschaften und Garantien, den damit verbundenen Provisionen und die Überwachung und das Reporting der Haftungsverhältnisse lassen sich optimieren.
Bürgschaften und Garantien spielen immer dann eine bedeutende Rolle, wenn Geschäftsbeziehungen zusätzliche Absicherungen benötigen. Je nach Branche geht es um Anzahlungs-, Bietungs-, Vertragserfüllungs- oder Gewährleistungsgarantien, im Außenhandel gibt es Zoll- und Zahlungsgarantien und vieles mehr. Im eigenen Konzern kommen Patronatserklärungen ins Spiel, wenn z.B. die Mutter für die Tochtergesellschaft eine Haftung übernimmt.
Florian Buksmann, Head of Treasury Operations and Projects, Telefónica Deutschland
Inhalt
Provisionen beeinflussen die Unternehmensliquidität
Geld fließt bei diesen Kreditleihen in der Regel nur in Form von Provisionen als Entgelt für die Haftungsübernahme. Ein gewisser Prozentsatz der Haftungssumme fließt als Preis nach verschiedenen Berechnungsmodellen an den Haftungsgeber, meist ein Kreditinstitut, eine Kreditversicherung oder eben die Konzernmutter.
Je nach Volumen der Avale (wie die Bürgschaften und Garantien begrifflich gerne zusammengefasst werden) können die Cashflows der Avalprovisionen die Gesamtliquidität des Unternehmens beeinflussen und sollten deshalb bei der Planung und Steuerung der Zahlungsfähigkeit vom Finanzmanagement beachtet werden
Aval-Linien sind zu überwachen
Häufig wird die Möglichkeit der Aval-Inanspruchnahme durch die Vereinbarung von Kreditlinien eingeräumt, von denen ein bestimmter Teil für die Herauslegung von Avalen genutzt werden kann. Bei diesen Mehrzweck- oder Global-Kreditlinien beeinflussen sich die jeweiligen Kreditarten gegenseitig, so dass die z.B. die Kontokorrentlinie sinkt, wenn zusätzliche Avale in Anspruch genommen werden.
Die Beobachtung der Kreditlinien, der Aval Laufzeiten und der jeweiligen Aval Ausnutzung pro Haftungsgeber gehören zu den wichtigen Aufgaben der Risk Manager, die für das Haftungsgeschäft im Unternehmen zuständig sind. Zur Dokumentation fügen Sie den Finanzgeschäften alle nötigen Informationen bei, z.B. durch konkrete Datenerfassung im TMS, das Anhängen von Dokumenten und die Zuordnung zu Portfolios, die Auswertungen nach beliebigen Kriterien zulassen. Dabei können neben gegebenen auch erhaltene Bürgschaften in die Betrachtung einbezogen werden.
Die Verwaltung der Bürgschaften und Garantien in Tabellenkalkulationen ist einfach und praktisch, sie bietet aber keinerlei Revisionssicherheit.
Digitalisierung des Avalmanagements
War der Beantragungsprozess für Avale bisher mit viel Papierkram und zeitaufwändigen Justierungen bis zur Ausstellung der Urkunde verbunden, so gibt es heute Möglichkeiten, den Prozess zu beschleunigen und sogar vollständig zu digitalisieren. Mehr dazu finden Sie hier
Trinity TMS-Funktionen im Überblick
- Anlage und Verwaltung von Bürgschaften, Garantien und Patronatserklärungen
- Individuelle Geschäftsdefinitionen, z.B. für Bietungs- Anzahlungs-, Zollgarantien
- Verknüpfung mit Grundgeschäften
- Provisionsberechnung
- Fälligkeitslisten
- Anhängen von Dokumenten
- Portfoliozuordnung
- Beantragung/Änderung von Avalen über
- EBICS mit vorhandenen Electronic Banking Systemen (Banken/SWIFT)
- API zur Guarantee Vault Platform der DVS* (Banken/Versicherungen)
Nutzen
Maximale Transparenz
- Übersichtliche Abbildung aller gegebenen und erhaltenen Haftungsverhältnisse
- Zuordnung zu Projekten oder Investitionen, Bürgen, Begünstigte etc.
- Vielfältige Auswertungen nach Geschäftsarten, Garanten, Laufzeiten, Fälligkeiten, Zwecken
- Dokumentation durch Anhängen von/Verweis auf Dateien
- Tägliche Ermittlung der Eventualverbindlichkeiten aus dem Aval Geschäft
- Volle Integration in Liquiditätsplanung, Linienmanagement und Cash Forecast
Zeit- und Kosteneinsparungen
- Übersichtliche Abbildung aller gegebenen und erhaltenen Haftungsverhältnisse
- Zuordnung zu Projekten oder Investitionen, Bürgen, Begünstigte etc.
- Vielfältige Auswertungen nach Geschäftsarten, Garanten, Laufzeiten, Fälligkeiten, Zwecken
- Dokumentation durch Anhängen von/Verweis auf Dateien
- Tägliche Ermittlung der Eventualverbindlichkeiten aus dem Aval Geschäft
- Volle Integration in Liquiditätsplanung, Linienmanagement und Cash Forecast
Prozessoptimierung und Revisionssicherheit:
- Automatisierte Kontrolle der Aval Provisionen durch den Kontoauszugsabgleich
- Straight Through Processing der Planung über die Beantragung bis zur Buchung bzw. Ausbuchung
- Nutzung einer modernen REST-API zur Eröffnung/Änderung digitaler Avale
- Erweiterung der digitalen Prozesse auf Kreditinstitute und Versicherungen
- Einbezug ausländischer Banken via SWIFT-Netzwerk über Electronic Banking möglich
- End-to-end Prozessverfolgung, Audit-Trail und Vier-Augen-Prinzip
Best Practice/Blogs
As planning and safeguarding liquidity are among the most important responsibilities of a company’s finance department, Trinity has published a number of best-practice articles on this topic:
