00:00:00:13 - 00:00:35:09
Unknown
Can treasury management systems help treasurers effectively manage financial risks? What is the importance of having super-accurate cash flow forecasts? And can Europe-based fintech companies successfully tackle the gigantic North American market? Welcome to CurrencyCast. My name is Agustin Mackinlay. I'm the Senior Financial Writer at Kantox and your host. In this special episode, we have the pleasure to welcome the two Tonis, Antonio Berga, co-CEO and founder of Embat
00:00:35:11 - 00:01:05:03
Unknown
and Antonio Rami, Chief Growth Officer and co-founder of Kantox. Now, this is an amazing story. Both are born in the same city. They went to the same school as children. They attended the same university and they got their first job at the same company, namely Deloitte. If that wasn't enough, they went on to found successful companies in the Treasury tech space.
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Unknown
So a warm welcome to you, to both of you and thank you for joining us today in CurrencyCast. Let's get started by introducing yourselves to the audience. Toni, maybe you go first. Sure. So well, thanks very much for bringing me today. As you said, my name is Toni Berga, Co-CEO of Embat. And as you rightly said, I was born in Mallorca 35 years ago, so 38 years ago already.
00:01:35:24 - 00:01:57:18
Unknown
And I think the only thing that I would say is: the only thing that I knew when I was a child was actually that I wanted to dedicate my life to finance. It took me a while, actually, to actually decide that I wanted to set up my own business—way more than Toni, actually. But I think the only, the only thing that I knew was actually this: that I wanted to give my life to finance in any way, or shape.
00:01:57:18 - 00:02:21:13
Unknown
Right. And even before setting up the business, I was an Executive Director at JP Morgan. I spent there close to 11 years doing investment banking and corporate banking as well. And before that, as you said, working in Deloitte, doing corporate finance, and before that, many other things. But I think I'll pause here. So, I can skip the first part of the story because it’s the same as Toni's.
00:02:21:15 - 00:02:46:08
Unknown
I worked for a couple of years at Deloitte and in the consulting side, I didn't have my life as clear to be dedicated to finance as Toni. But I found the consulting world and then I figured it was going to be more exciting to start a business. There was little to lose in a sense. And that's how Kantox started, much more with a consulting mindset.
00:02:46:08 - 00:03:12:20
Unknown
But in the space of finance, where we felt there was something to be done—especially around the crisis of 2009—that got us started with Kantox. We started to speak to companies about how they were doing their international business. There was a lot of talk about internationalization back in the day, and we figured how they were not managing FX really well. And we took a very consultative approach once again,
00:03:12:22 - 00:03:31:20
Unknown
and thought about saying, well, why don't you want to deal with currencies when you are actually passing a problem to your value chain? You're either passing the problem to your clients because you only want to sell to them in euros –We were based in Europe – You only want to buy in euros and we figured how, we say, look, the reasons are twofold.
00:03:31:22 - 00:03:58:15
Unknown
One is the huge cost that the banks were applying to the FX, but most importantly, it was FX risk management. And of course, we tried to provide solutions around decreasing that cost of transactions—we still do that. But we really found a jackpot, where we spent most of the life of Kantox developing solutions so corporates would understand their corporate FX risk better, and we could automate that process to turn it into a competitive advantage.
00:03:58:17 - 00:04:28:16
Unknown
Now, the irony—Toni, explained how he started working for a bank—is that we were bought by a bank, and he's on the startup side of things. So, who knows if I will then develop my career in banking while he does his startup? Time will tell. He will be back, hopefully someday, to talk about it. I mean, it's funny—we were discussing it before—and I would also say that treasury management is actually niche. It is a product that not everyone requires.
00:04:28:20 - 00:04:54:20
Unknown
I think Toni disagrees with this, but I think it really depends as well on the complexity of the business or the size of the business. So you go after companies out in the lower segment of companies. I would say managing Treasury would be a nice to have while the higher you go, the more I would say necessary it is actually to manage treasury in a sort of professional way.
00:04:54:22 - 00:05:19:16
Unknown
So, I would still claim that treasury management is actually quite niche, even though I completely agree that FX management is even more niche. Right. Because I remember, actually, back in the days when I was setting up the business, I was ping-ponging a lot of ideas with Toni, and you told me from day one that, naturally, you would go up and up towards the more—let's say—sexy segment of companies,
00:05:19:21 - 00:05:42:18
Unknown
specifically because of the needs of our customers. So, the higher you go, obviously, the more visible it is that they require treasury management. I think what we can agree on is that finance is probably the department with more subinvestment in tools compared to others in the in corporate life.
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Unknown
Right. If you compare it to sales, they always have the latest flashy technologies, or it's easier to invest in something that is—or looks—closer to the core business, right? To invest in that, in technology, it’s natural. But the ERP is going to be much more centric. But again, there is more tendency in corporates to invest in the newest technology for the salespeople than really to invest in what looks like a support function, like finance.
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Unknown
So, that's why I believe we need—But do you think it's that or because of the margin of error that you have in finance?
The trending topic now is AI. So AI—don't get me wrong—but if you fuck up in sales from an AI perspective because you used a tool, nothing happens, right? But try fucking up with AI in finance.
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Unknown
Or you do a payment that is completely wrong just because of AI. So, I think the adoption of these technologies takes longer because of that. But there's a false sense of security by doing things manually. I have someone that I trust in there, but if they're doing it with an Excel file and having to check every single line, then you’re going to lose a lot of attention to outliers.
00:06:52:16 - 00:07:18:10
Unknown
Yeah. So, the likelihood of a mistake is a lot higher. I fully agree with that. Well, I think nor the—as we call it in Kantox—our currency risk management solution, it's for sure not a system where you concentrate the single source of truth, right? Or where you store the data. I think nor with the TMS is it the case, right?
00:07:18:12 - 00:07:36:22
Unknown
There are additional solutions to be a best-of-breed for an activity. We were talking—I was talking—about the subinvestment in the finance area. Both the TMS work and the currency management job. If there is not a tool already, it's because there's an Excel file doing it on the side. That's because the current system is not doing it.
00:07:36:24 - 00:08:01:05
Unknown
But when we come in—both the TMS and the currency management system—we connect to existing sources of information. We connect to the ERPs or sometimes even to the TMS if there is one. So, I think this is where the complementarity comes in and also proof that ERPs, many times, are not enough, right? Or again, whenever you see an Excel file, it's because something is not working as it should.
00:08:01:07 - 00:08:33:04
Unknown
Yeah, I fully agree with that. And I think, back to one of the claims that we have, is actually that you are an API-native solution. The ability for us to be connected to every single different platform that the client is using is actually super powerful. As you already said, you have databases that might fit in the ERP, and you get a lot of data coming from the ERP, but then what you might require as a company is actually taking the best solution for a specific use case that you require. That might be, you know—let's call it TMS, let's call it Kantox—as well as an FX management solution.
00:08:33:06 - 00:09:03:09
Unknown
But I think, more and more, the emergence of APIs will allow for the fact that there's sort of a, quote-unquote, "easy to implement," and then you can cherry-pick whatever is best in every single vertical. I would say, before, IT systems were much more rigid, and there was a lot less interoperability. Now, with a range of APIs and, I would say, increased talent in all corporates' IT, it allows them to say, "Oh, it's easy to connect this to that with the standard API technology," right?
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Unknown
And then these teams, many times, I'm sure for you, is the same as us. They don't require a third party to be integrating our systems. Right. That is because there is already existing I.T. talent which says, Look, I understand these APIs. I can make that connection. That's going to take me six, eight weeks to get it live.
00:09:20:20 - 00:09:54:00
Unknown
No. Yeah. This goes back again to what we were discussing before—on building a business case. So, justifying to the customer that building or implementing Kantox with Embat, at some point, makes sense from a return-on-investment perspective. So, it's not just about navigating Excel files, but rather deciding at some point whether the pain they suffer justifies the investment of taking something that is actually complementary to the ERP. How does it work, the Kantox In-House FX one, just for me to understand?
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Unknown
So, as I said, it's [Kantox In-House FX] is quite a recent launch, but it is actually, I would say, quite a rollout project already—time goes fast. From that perspective, what we try to say is we see a lot of exposure, FX exposure hidden in subsidiaries, whether it's because these subsidiaries are buying from third-party suppliers or third-party clients and there is cross-FX. But sometimes, it's merely the intercompany activity that is creating the exposure on the subsidiary side.
00:10:23:12 - 00:10:52:16
Unknown
Yeah, well, regardless of the setup—as a central treasurer or as a group treasurer—our firm belief is that the central treasury should have visibility on what the exposure is and how it is impacting them. I always tell treasurers, "Look, it doesn't matter whether you hedge or you don't hedge. You, as a group treasurer, you always need to identify and measure. It's fine to have a policy of not hedging, but you need to always measure what the potential impact is and what the impact has been in the past.
00:10:52:18 - 00:11:28:12
Unknown
So, what we developed was the possibility to roll out Kantox, for example, in all the subsidiaries, creating visibility for the central treasury to understand and measure these impacts. Then, if they want, be able to set up rules where these subsidiaries are requesting hedges with commonly agreed—or actually imposed—FX policies. Now, instead of executing these trades with local banks, where you typically have worse prices and worse spreads, then they would be done against the central treasury, that would concentrate the exposure and then trade centrally with the banks. That’s actually super cool.
00:11:28:14 - 00:11:58:11
Unknown
And that reminds me, actually, of our model, which is called In-House Banking. So, basically, what we do is—I don't know if you're familiar with this concept of in-house banking—it’s effectively taking one of the legal entities among the group and having that company play the role of being the bank of the whole group. So, basically, it’s the one liaising with banks, getting all the credit exposure, and managing all the loans or facilities—whatever that may be. They handle it at the control level and then decide how to finance the whole project. It’s logical because, in the end, in these
00:11:58:11 - 00:12:20:01
Unknown
subsidiaries, you typically have less talent in this area, as smaller organisations have to deal with more things. Yeah. And there are also economies of scale from dealing with these centrally. So, if you're able to get that visibility, we come back to tools and you know automated processes that can help drive the business. And then, for sure, there are natural efficiencies that are generated there.
00:12:20:01 - 00:12:40:21
Unknown
I'm sure for you, maybe one subsidiary is long in cash and another is short in cash. And by implementing a system like yours, you're able to not need external financing. Yeah, yeah, yeah. And what's the trend, based on your experience, in terms of centralization and decentralization? I think, more and more—at least from what we've seen—companies are centralizing the whole finance function.
00:12:40:23 - 00:13:06:18
Unknown
So, basically, having someone, let's say, headquartered in Spain, with the whole team sitting in Spain and overseeing the whole of the organization from the headquarters. And then, as we said before, being the corporate hub in terms of FX and treasury. I think this sometimes these are trends, right, of centralization, decentralization.
00:13:06:20 - 00:13:39:05
Unknown
I would say the important thing here is communication because there is undoubtedly a lot of local knowledge in these subsidiaries and the particularities of that business. What centralization should not mean is completely, like, you know, stealing functions or trying to manage everyone the same way. Different countries sometimes work differently. The implementations of different types of tools—right from TMS—need to facilitate the dialogue if we talk about FX risk management.
00:13:39:05 - 00:13:57:23
Unknown
So, look, if we both see the same thing, if we both see the same exposures, then it's easier to have a call and say, "What do you think is the best way to manage?" Well, we think it's this way or that way. Then, of course, central criteria tends to lead, right? That's what we can call centralization. But that shouldn't prevent that dialogue from happening.
00:13:57:23 - 00:14:18:12
Unknown
I'll say, "Okay, we're going to set up the rules like this because this way we dedicate more to your particularities," and that is fine as long as there's communication and the local entity doesn't feel left out. They are still going to play a key role in defining the rules and how they need to work. Yeah, makes sense.
00:14:18:14 - 00:14:42:24
Unknown
Well, I'm sure you have a lot of talks regarding authorizations and powers, also for payments. I mean, not even to execute an FX transaction, but actually to send a 100 million payment. Who's authorized to approve these, and how critical is it sometimes to make those payments, right? Again, we go back to the basics of user controls, user permissions, and audit trail logs. And back to my earlier point,
00:14:42:24 - 00:15:03:14
Unknown
If there is communication—well, maybe that trade, I don't know exactly the case, but maybe it wasn't authorized, yet he was right to take it, right? So, was there a right information system where both the central and local entities were looking at the same thing? Did they have a common agreement on how the FX transaction should happen at that company?
00:15:03:16 - 00:15:34:04
Unknown
Because if they were—though I don't know the specifics—managing separate Excel files with different underlying data, that is when conflict is going to be created. I'm sure it’s very similar in payments. And then, yeah, I think, I mean, the same rationale behind that. In our case, as you rightly said, we see more and more of what we call a "like-for-like" policy—making sure that, irrespective of who is orchestrating the payment, you always have someone else reviewing or at least overseeing what is happening.
00:15:34:09 - 00:15:56:15
Unknown
And we see more and more of, like a lot of corporates as well, moving towards centralizing all the approval process, not only the ERP but also the TMS or potentially in Kantox either for FX rates. But I think it's as you rightly say, I think it's a common trend across the industry.
00:15:56:17 - 00:16:15:19
Unknown
From my side, what I can say is I couldn't agree more that it is a trending topic—cash flow forecasting. I think, to me, the issue is, one, that every single business is different. And one thing, by the way, is cash flow forecasting for the short term, and another is financial planning. So, at least from a TMS perspective, the way we think of cash flow forecasting is for the short term.
00:16:15:21 - 00:16:44:21
Unknown
So, making sure that we give you the tools and visibility to make your own decisions for, let's say, the 30, 60, or 90 days forward. And then, I think a completely different topic is financial planning—so where we plan to land three to five years down the road.
We have at least, and as well, from a product perspective, my opinion is that every single business is different, and they want to build it in a way that differs from one case to another every single day.
00:16:44:21 - 00:17:05:23
Unknown
And I’m thinking of just one example—one of our customers is Cabify. So, how can you actually forecast? The question is not about cash flow forecasting; it's actually demand forecasting. How do they plan to build on a daily basis? How much, or how many people, are going to take cabs themselves?
00:17:05:23 - 00:17:24:20
Unknown
So, it’s super tricky to build the short-term forecast for a business specifically. And then, when you talk about B2B, the visibility is completely different because maybe 80% of the data you have is already in the ERP because of the terms and conditions that they have with the customer, right? When you think of B2B, B2C, it differs a lot from one business to another.
00:17:24:22 - 00:17:42:22
Unknown
So, that's why, to us, it's always an ask from our customers. The question is—and this is one of the questions I put to all of our customers—do we have the data anywhere, or is it just in your head how much you're going to be making in the next 30 days? But if you don't have it in the ERP or in Excel files
00:17:42:24 - 00:18:11:23
Unknown
So, for us, either we do magic, or it's super difficult for us to actually help them build cash flow forecasting. I'm going to steal your wording there on cash flow forecasting and financial planning—I really like that concept. Maybe we need to use it a bit. But when we bring it to the world of currencies, it’s one of the things that creates instability, both in cash flow forecasting and in financial planning, is actually when there are cross-currency operations.
00:18:12:00 - 00:18:32:19
Unknown
Right? Because if you want to do cash flow forecasting to calculate what is the euro-based company and you need to calculate your levels of debt that you need in euros. Well, if you have revenues in foreign currencies, then that is going to be naturally destabilized. Even if you have good cash flow forecasting and say, “Well, I'm going to receive these many dollars and these many Mexican pesos”.
00:18:32:21 - 00:18:51:19
Unknown
But actually, if you if you need to bring that liquidity back to euros, that is going to be an unstable, you know, flow of euros when it is the nominated foreign currency. That is the importance of having an FX management policy to actually reduce that volatility and make that cash flow–short term cash flow–certainty more accurate.
00:18:51:21 - 00:19:10:04
Unknown
And the same applies to the long term. But one of the things where I would say I'm outside of consensus—and perhaps it's just the wording—is the financial planning accuracy of how much your flows will be in foreign currencies that you will need to convert back to euros. Just as an example, maybe you don't need it to be that accurate.
00:19:10:08 - 00:19:30:02
Unknown
Because maybe what you need to do is create a certain level of stability instead of having 100% of the exposure and wondering where the right moment will be. You know, when these cash flows materialize over time, maybe you want to start reducing some of that volatility by taking partial hedges, for example.
00:19:30:08 - 00:19:49:19
Unknown
That always depends, as I fully agree with you, that depends on the underlying business model, how they’ve been pricing etc. etc.. And I'll give the example of Cabify. But my point is, there you don't need a 100% accuracy if what you're doing is hedging 20%. Well, as long as that flow is not 80% wrong, you are, let's say, on the safe side.
00:19:49:21 - 00:20:09:05
Unknown
And just because I picked an example and they are not yet a customer of ours, maybe they hear us. But you talked about the demand forecasting. When I travel to the U.S. or to Mexico and I order my Cabify, I am still angry of saying, look, “Why, I have a card in euros, right?”–That card is in euros–.
00:20:09:11 - 00:20:27:14
Unknown
Why do they insist on charging me in Mexican pesos? Because I'm taking a car in Mexico. Well, actually, for me, it would be, as a customer, a better experience to see the fare in euros and pay in euros. But actually what will be damaging for them, It's a guess, I don’t know that exactly, but is the cash flow forecasting.
00:20:27:16 - 00:20:58:14
Unknown
Because suddenly, they have incomes in one currency and payables in another. Going back to the short-term cash flow, they're going to have that FX risk, resulting in instability. And maybe, if they don't manage that exposure, they need to pay the drivers and find they don't have enough euros. Yeah. So again, that is hopefully a nice way to tie in the importance of short-term cash forecasting with FX risk management and how to make it a complete cycle—having a very accurate short-term and also reducing uncertainty in financial planning.
00:20:58:20 - 00:21:23:12
Unknown
Yeah, I couldn't agree more actually, but in the issue that we have because you were speaking about a certain percentage of coverage, in our case, what they want is that or what they look for is actually accuracy at the last euro. Specifically in the short term. But that means, bringing it back to the FX territory, that means higher hedge ratios, maybe 100% on the cash flow,
00:21:23:12 - 00:21:44:04
Unknown
short-term cash flow. Yeah, right. But lower ratios on the future, which can be completely linked to the way they do pricing, for example. And that is something that of course, we try to support and we try to adapt, we try to understand every model and again, always revert back those the results of the FX risk management activities to the TMS, so the TMS can do the cash flow planning.
00:21:44:05 - 00:22:03:09
Unknown
Yeah. Accurate to this end. Yeah. But back to the point, then you require to have customers that care for the long run, actually. So if not, they have no single visibility whatsoever in terms of how much money they're going to make in dollars. And for you, there's no play at all. Right? Well, look how you say, look
00:22:03:09 - 00:22:25:09
Unknown
we try to remove uncertainty. When we talk normally, about TMSs, we retrieve a lot of the balance sheet exposure—what is very certain, right? Normally, and I know you do, for example, some customers say, "Look, I have a very strong signal that cash is going to be needed because I put a purchase order. I still don't have the accounts payable," right?
00:22:25:13 - 00:22:41:01
Unknown
That maybe I am 80% certain that a cash flow is going to happen. So maybe you want to say, look, I want to hedge 80% of my purchase orders and then when the accounts payable come, I want to move from 80 to 100%. Yeah. And that's exactly the type of things we provide.
00:22:41:01 - 00:23:16:11
Unknown
And we again, increase and create better visibility on those financial planning. Yeah, makes sense. I always say that companies go bust if they don't manage the cash well, but they can fuck it up doing accounting. But nothing would happen. Right? But if you fuck it up with managing cash, then you can go bust, right? But I think every single piece of data, that might be P&L, might be balance sheet, maybe cash flow gives you certain data as to how you manage your business.
00:23:16:11 - 00:23:38:14
Unknown
Right? So cash obviously I think is bottom line eventually and tells you how healthy your business is. But I think if you look at P&L, EBITDA, I'm actually quite supportive of EBITDA myself. So if you look at different lines of a P&L, it gives you a lot of data as to how to manage your business. So you might be burning cash because you are not good at managing, for example, contribution margin.
00:23:38:16 - 00:24:00:12
Unknown
So I think for me, obviously everything goes into cash or the balance sheet exposure, but you need to go into the details of every single thing, in my opinion, every single P&L item for you to understand how your business is operating. Right. But eventually, obviously, and given that we are cashflow managers, really, we always claim that cash is king and cash is super important to run the business.
00:24:00:14 - 00:24:19:20
Unknown
But I think along the lines, P&L, balance sheet, cash, we give you a lot of data. I mean, if you, if I read you well, what you're saying is saying, look, you need to have a healthy business and then maybe you can be short of cash because you're investing. Right? But in the end, the fundamental economics of that company needs to work.
00:24:19:22 - 00:24:47:23
Unknown
They need to have more revenue than cost. And yeah, we can go through a phase where we are, we are investing into the business and we are finding different ways of financing that growth. But the fundamentals need to be right. One of my criticisms, that's why you have me on the record on that is because sometimes when companies especially grow, they become more siloed and then the Treasury Department gets their goal of saying, look, we don't want FX gains and losses.
00:24:48:00 - 00:25:10:24
Unknown
When FX gains & losses are a pure accounting result, as EBITDA can be sometimes—look, we want to maximize EBITDA. Well, that's fantastic. But then if the cash is not there, it means something bad is going on with the business. And a healthy business, a good business, is one that works well from first principles. Then we will need to find the right balance of financing and, you know, management of the cash cycle.
00:25:11:01 - 00:25:34:03
Unknown
But my point is, I think all businesses deserve an explanation to the shareholders of saying, look, that is how FX risk impacts us, right? This is how we change our pricing based on a FX risk movements. And some businesses can do it more than others. Yeah, that is my point on understanding the underlying dynamics and setting the right measurement.
00:25:34:03 - 00:25:55:19
Unknown
I go back to my point of measuring exposures and then those stakeholders will decide we are comfortable with this level of risk or we want to reduce it, and that will derive into an FX risk management policy. But if the only goal is to say, look, we want the accounting metric to be nice, well, I don't forecast a great future for that company.
00:25:55:21 - 00:26:19:02
Unknown
What I would say is, is that, as you rightly said, Treasuries are becoming more strategic and same as I think the finance team as a whole. We always talk about the CFO actually or the Treasurer becoming sort of the Chief Value Officer in a way that is sort of would say transversal across the whole organization, sort of impacting every single business decision.
00:26:19:04 - 00:26:51:00
Unknown
And I think technology, thanks to Kantox, thanks to our business, thanks to many others as well, doing technology in this space, I think it’s helping as well to put Treasury at the core of the company. So I think many years ago you think of the Treasurer, you know, you will think of someone like, great, right? No one wanted to take actually the role of a treasurer or someone, like, dealing with FX, but more and more because I think technology enables like having like a better role, a better day-to-day, having insights, having real-time information.
00:26:51:00 - 00:27:11:06
Unknown
I think all of it is sort of creating a sexy, I'll say, role, now Treasury and is giving you like the data and the insights to actually be impactful in the business. But I would say many years ago because of lack of data, because of lack of real-time data, because of lack of access to data, you would be in a silo, right?
00:27:11:06 - 00:27:34:19
Unknown
You just sort of make it your own like collections and payouts, but you will be sort of in like, in a completely isolated function –support function– yeah, you wouldn't be at all strategic, back in the day. I think in the end you said how you became in love early in your days with finance, right? And I've, I've learned that later in my career.
00:27:34:21 - 00:27:58:17
Unknown
But it just gives you such a privileged way of, you know, dissecting a business, of understanding your business. I felt I've always liked, you know, different like different types of businesses and understanding how they were run. And I think the financial side of things is what has given me this toolkit of very quickly understanding where the key point, where the bottlenecks are and so on, and so forth. and exactly what you say like that
00:27:58:19 - 00:28:20:16
Unknown
for me, being considering Treasury, and Finance sometimes, even to that extent and more of a support function is what is being changed by the investment in tools. I'm told, like look now, I have more time to assess and take decisions based on this data rather than to actually, you know, needing to spend time doing the tool and making sure it's completely right every step of the way.
00:28:20:18 - 00:28:44:03
Unknown
And for example, if I bring it to my terrain of FX, one of the biggest complaints aside of the lack of visibility, you will see it on the reports, is lack of understanding by management. Well, I think that's a lame excuse, to be honest. It is the role of the Treasurer to educate that management and to say, look, I have been sitting down with commercial teams that sometimes is like a you know, you're calling a beast or something like this.
00:28:44:03 - 00:29:09:21
Unknown
It's like, yes, finance needs to sit with commercial. They need to be friends. They need to go for lunch together. It sounds silly, but in many companies it doesn't happen and maybe the CFO does, but not the Treasurer. I think going down from their bubble tower, as François Masquellier calls it, it is super useful and is what when again, once again, it’s what all these technologies are allowing you to transform the function to be much more closer to the core.
00:29:09:23 - 00:29:32:11
Unknown
I always give an example of saying, Look, we have a lot of treasurers who go to their purchase department and say, “Look, have you asked the price of this product from this supplier in euros and dollars? Have you compared it?”. Sometimes we find amazing differences like 7% difference in a price for the same product from the same supplier in just two different currencies.
00:29:32:13 - 00:29:56:15
Unknown
Imagine the value the Treasury can unlock if they say, Look, now we are able to manage exposure well, well, I'm going to tell my purchase department not to buy in euros because that was not giving me an exposure, but actually go for the cheapest currency. So it's just a simple thing, but it is a complete and lack of value and how the Treasury can be joining that more strategic table that they were not.
00:29:56:19 - 00:30:22:03
Unknown
And do think this depends on on the size of the business? So I guess obviously the more complexity, the more it makes sense to actually build processes, sort of build internal processes to actually…My experience is the bigger the company, the more people there is in these finance department right now. So, when you go to smaller companies, maybe you have a between two or three people that do everything.
00:30:22:03 - 00:30:40:23
Unknown
So, it's a bit easier to be closer to the strategic. And I think it shouldn't happen that because you become bigger, you are not sitting there. You should. It doesn't matter the level you are, you should always be understanding where is the direction the company, what is the interests of the company. And this is going to help professionals also grow in their career
00:30:40:23 - 00:31:10:03
Unknown
if they have that. The US is a huge market. There was always the doubt, or that the US only understands about US dollars, and we've seen that the hard way. Or maybe we had some missed opportunities in some years, that we didn't pay the necessary attention. It is a huge market. We are seeing companies are like very, you know, very adamant to be managing those functions raised from a timing perspective.
00:31:10:03 - 00:31:29:05
Unknown
Of course, as you say, it was the strength of the dollar is helping them realize how important managing not only the balance sheet exposure, but also the financial planning and the upcoming years is going to be very key. So, we are happy with that, entering into into a huge market, looking forward to visit a lot of companies and treasurers.
00:31:29:07 - 00:31:55:11
Unknown
And I must also highlight the hiring we did from Andrew Gage, who has a tremendous experience in the FX risk management world, and we're very much looking forward to to continue our journey there, also jointly with with BNP Paribas, with a fantastic partner on to our development there. just one last comment on the on the corporates and how important that is.
00:31:55:11 - 00:32:31:07
Unknown
We are seeing how there, I think these headwinds that you were mentioning are not only again from the balance sheet perspective of their earnings per share in the current presenting of the results, but is also on saying look, how is my demand going to be affected in the upcoming years with that dollar strength, right? So having a FX risk management policy that is looking at the financial planning of the upcoming years, we believe is also going to be more and more critical and we are more than happy to have these discussions with them. Cool.
00:32:31:11 - 00:33:01:16
Unknown
I mean, in our case, as you guys said, we just acquired this business called Necto. Funny enough, I well, I was telling Toni that we acquired the business, but effectively we require the technology. So, basically just a sort of anecdote that this company is based in the US, they also have a presence in Singapore through a few employees but effectively we acquired the best in the sort of the technology process so we didn't acquire actually presence of foreign, but in the US.
00:33:01:16 - 00:33:23:23
Unknown
So, for us it feels like a very, I would say, big decision that it would come hopefully at some point further down the road. I don't think it’s anytime soon that we're going to tackle the US market. I think as you rightly said, you really need to go, or my perception of things is, you really need to go with, I wouldn't call it deep pockets, but I think you really to go with enough muscle to actually navigate that massive market,
00:33:23:23 - 00:33:41:11
Unknown
right? So the US is not, you know, like coming to Spain, it is literally is like the whole of Europe, right? So I think at the same time, it is good. But back in my days at JP Morgan we were always debating internally as to you know like a random American guy would come to Spain and would be like, “Guys, let's launch the business in Europe”.
00:33:41:13 - 00:33:58:24
Unknown
We will always like saying, guys, this is not like the USA, that you put like someone randomly niching and you go cover the whole of the U.S. So, covering Europe is actually quite challenging as opposed to the US, that you really need to people on the ground in Spain, Italy, France, Germany, you really to get there, to get to know the culture,
00:33:58:24 - 00:34:21:21
Unknown
right? And I think back again to the topic, the U.S., I think it's a massive opportunity. But as we discussed before, it's a massive market. So, I think it's costly, it’s expensive, it's a bold move. So whatever you want to do, you really need to do it with enough muscle to to actually really go all in,
00:34:21:21 - 00:34:56:15
Unknown
If you want to do it. No. So yeah, I mean, time will say, but for now I think we we have more than enough covering the whole of Europe. We will try to pass you our best advice on this adventure. We have a strong partner as I said, with, with BNP to do that deployment. But I fully, fully agree with you but at the same time very excited because we are seeing a very dynamic ecosystem of companies with fast decision makers and, you know, people that if they see a problem and you can hand them a solution, they are very dynamic and that is, you know, to be very appreciated for companies like ours.
00:34:56:15 - 00:35:12:20
Unknown
And I guess by natural, I mean the US, all of the companies they are very global, right? So I mean, from an FX perspective, I guess it makes total sense, right? So I mean, obviously they manage to grow in the whole of the US with the USD, but, but anytime they need to go somewhere else, obviously they require FX, right so. I’ll let you know in the next episode.
00:35:12:22 - 00:35:41:05
Unknown
Let’s pick up again this topic that you mentioned on being a generalist because we only discuss with customers on this topic specifically. Because everyone speaks, and I think treasury as a whole now has became a sort of sexy topic, right? Like I think across all the companies, back getting to the point that you made Agus on cash is king but in Treasury, like everyone speaks about Treasury but Treasury is like a actually a quite broad concept, right?
00:35:41:09 - 00:36:04:09
Unknown
Treasury at least for us, we do banking connectivity and this falls within Treasury, but there might be like customers just looking for cash position and this is a little treasury, right? But orchestrating payments is Treasury at the same time, right? Or you want to have cash flow forecasting, falls within Treasury again, within the umbrella of Treasury. But again, it's like a very niche specific topic, right?
00:36:04:09 - 00:36:31:01
Unknown
Like a cash flow forecasting, financial planning, execution of payment, FX. But but I think maybe my point is very generalist, but eventually every single customer is different and every one of them they require like something specifically within Treasury. So everyone talks about Treasury, but they might be just looking for FX management or FX optimization or some others might be looking just for actually connecting banks and getting cash and cash position in real-time.
00:36:31:03 - 00:37:04:21
Unknown
So I would, I would only add this again because, you know, because we always discuss about this –Toni and myself– about this concept of being niche or not. And but yeah, I think it's a yeah. On my side I guess I'll touch into a similar topic. But my point is we see a lot of policies, procedures, ways of doing things that have been designed from the perspective of the resources the company has at the moment and those resources being people and Excel files.
00:37:04:23 - 00:37:23:23
Unknown
But I would task those treasurers to employ a little bit of their time on thinking, well, you know, think big thing. If you would have all the resources of the world, what would be the ideal process to go and do these task? Write any of the ones you mentioned from payments to FX risk management or liquidity planning, whatever it is.
00:37:23:23 - 00:37:47:13
Unknown
Right? And then there is a lot of untapped opportunity in the space of Treasury that I believe why this space is sexy. On saying, well, is there any, is not the tool for the sake of the tool, right? But is automation, is digitalization of this process enabling me to be doing more with the same resources? Yeah, right.
00:37:47:15 - 00:38:08:07
Unknown
And that is that the key or the twist that hasn't been there for so many years in Treasury? Because I think digitalization has had a faster path in other places of the corporate and it’s the time of Treasury. it’s time for the treasurers to be the, you know, the protagonists and, you know, become that a strategic treasury we were talking about.
