Bitcoin has been a financial curiosity since its rise to prominence in 2009. However, it’s become clear that the real technological advance is not the cryptocurrency itself, but the blockchain technology that underpins it. Innovators, entrepreneurs, and academics explored the potential usefulness of blockchain technology, leading to predictions that it would revolutionise entire industries with its increases in efficiency and security. However, almost eight years later, blockchain is still primarily relegated to innovation labs and conceptual models.
What happened to the technology that was hailed as an archival panacea? How has the financial industry started working with it, and what are the plans for the future?
Dynamic discounting may not exactly be the new kid on the working capital block but recently there has been a significant uptick in the adoption of this simple but effective payment method.
And considering that dynamic discounting can improve a buyer’s relationship with their suppliers, increase overall supply chain strength, and deliver benefits to a cash-rich buyer’s bottom line in a low interest rate environment, it is not hard to see why.
Get that working capital to work
Nordea’s recently conducted a research report on Working Capital Management in the Nordics, released in December 2016, and based on data from 184 public companies across the region. The report showed that the median Nordic business has a third more net working capital (NWC) locked up than their European equivalent. By improving to best in class, the businesses we assessed could release value equivalent to 11% of their market cap — a total of €65 billion.
Managing working capital should be a clear priority for all organisations. Many businesses have a strong cash position – and effective cash management can help support these businesses to achieving better profitability and working capital position. Regardless of their objectives, with dynamic discounting, businesses can take advantage of their excess cash and gain a better return on invested capital. Dynamic discounting also supports the cash flow of the suppliers.
With dynamic discounting, buyers benefit from increased flexibility to choose how and when to pay their medium- and small-sized suppliers, with earlier-than-due-date payments resulting in a discount on the original invoice. So, in effect, the earlier the buyer pays the supplier, the greater the discount as the discount is determined "dynamically" in relation to the amount of days remaining until the initial due date. Suppliers, for their part, get paid earlier, which can improve their short-term liquidity position and even allow them in turn to pay their suppliers early or invest more in their business.
Late this summer, the ICC released their annual report on the regional and global trends in trade and trade finance. The report is based on expert opinion and the results of a major survey. It provides insight and analysis into issues such as the trade finance gap, access to finance, export finance and supply chain finance – and how digitisation and new technologies like blockchain and FinTech are reshaping the industry.
The 2017 report saw several central themes emerge and others mature. Trends such as a growing emphasis on sustainability in trade and the trade finance gap came into sharp focus, while the move towards digitalisation again grabbed the attention.
On the back of the report, Nordea spoke to several senior ICC figures to get their take on the report’s findings and how they see the major trends developing in the coming years.
AutoFX is a rule-based solution that automates your FX handling. By putting it into autopilot mode, AutoFX will free you from manually monitoring your currency account balances and FX transactions.
AutoFX is a fully automated FX risk and Liquidity Management solution, developed in collaboration with a high-profile Nordea customer in an effort to help modern treasury functions automate their daily routines and risk management.
Using your own custom configuration, AutoFX automatically tops up your balances when negative, or reduces them when positive. So instead of monitoring your bank accounts daily and moving liquidity around, you can put AutoFX into autopilot mode and let it manage your foreign currency exposure according to your requirements and rules. Transactions can be easily viewed in real time when convenient for you.
Global Finance granted AutoFX an Innovators Award for Product Innovation within Transaction Services, recognising the benefits it brings to treasury departments.
For more information
Please contact your Nordea Cash Management Advisor or FX Sales Manager, or go to nordea.com/autofx
Watch the AutoFX video
What do Robert Mueller, former Director of the FBI, John Chambers, former CEO of Cisco, and Misha Glenny, a British cybersecurity journalist, have in common? They all agree that there are two types of companies today: those who have been hacked, and those who will be again. Though it may sound like an innocent platitude, consider that a company need not even realise that its security has been compromised to fit into one of these categories.
Corporate cybersecurity is more important than ever, with 54% of cybersecurity professionals predicting an increase in cyberattacks over the next 12 months.1 Cybercrime is evolving at an unprecedented pace, and many companies are struggling to develop and maintain effective security standards. The greatest security challenge faced by companies is the detection of advanced, unknown or emerging threats. On average, it currently takes a company 40 days to notice that attackers have infiltrated their networks.
As cybercrime advances, corporates of all sizes must take proactive steps to help prevent, detect, and resolve security breaches. “Cybercrime has become more sophisticated as perpetrators have realised that there is profit to be gained,” says Anton Tkachov Chief Security Architect, Financial Systems Cybersecurity, PwC. “In the 1970s, for example, computer viruses were just a prank; today, ransomware is a very lucrative market. Cybercriminals have realised the potential gain and started to operate as mature businesses with large investment and R&D budgets.”
In light of these developments, companies are showing a renewed interest in cybersecurity, and security professionals understand that corporates must take proactive steps to remain ahead of emerging security threats. “It’s a very asymmetric war,” says Alvaro Garrido, Group CIO and head of Group IT at Nordea. “We need to be right 100% of the time, and they need to be right just one time.”
1. Cybersecurity Trends Report, 2017. http://www.cybersecurity-insiders.com/portfolio/cybersecurity-trends-report/
It has been three years since Nordea first started bringing the latest insights, customer case studies and expert opinions straight to your mailbox. We have really enjoyed covering the latest trends in treasury and finance departments – from our Future of Payments report, to our in-depth look at how to set treasury KPIs and our global trade Risk Map.
The new Insights website is designed to give you an even better user experience, making it easier to find more articles and expert opinions on the topics that matter most to you. We hope you enjoy the easier navigation and the ability to sort articles by topic, date or type.
If you have any input to the new design or would like to suggest topics related to treasury, trade finance, cash management and payments that you would like to see covered in the future, do not hesitate to drop us a note.
Scandinavia has long been a hive of disruptive technology and has developed a strong innovative startup culture and a history of early consumer adoption. Much in the manner that Skype impacted the telecom industry or Spotify forced the music industry to reassess its modus operandi, we are seeing a similar level of rapid change in the transactions and payments industry.
Metso were tendering for a new contract with Al Tasnim Cement Products in Oman, who were looking for a competitive financing solution for a complete crushing and screening installation for one of their plants. Learn how export financing helped them seal the deal - and how it could work for you.
Read our case study with Metso and gain peer-to-peer understanding of how to use export financing to your benefit and that of your business partners.
China’s Belt and Road initiative (or One Belt, One Road) has recently received a lot of international attention. In this Q&A, we examine this vast project, why many EU countries have been sceptical and how Nordic countries could benefit.
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