pub 20131113 treasury management services en

FINANCIAL MANAGEMENT

Treasury Management

Services

kpmg.ch

Public and private sector companies are increasingly exposed to volatile economic and financing conditions, rapidly evolving market drivers, and increasingly complex regulatory and accounting environments. Many companies are committed to responding to these challenges by building an effective and integrated operating model around treasury and financial risk processes. This complexity requires in-depth and leading practice know-how within financial risk and cash management but also system capabilities to ensure high-performance as a treasury function, straight-through-processing in the operational core processes and complying with all governance requirements at the same time.

Operational workload, project work, short resources, manual processes and missing tools or IT systems prevent treasurers from developing adequate strategies and approaches that bring real value for the firm.

Here KPMG’s Financial Management practice can help with its Treasury expertise and specialists with extensive industry experience to meet the demands of our clients. Moreover, our experts are not only educated in “consulting” but generally have gained also lots of experience “on the ground” in renowned organizations. Therefore, we also know when it is time to be pragmatic and to implement lean solutions for quick wins.

Our services are supported by KPMG’s leading industry practices knowledge and established methodologies, tailored to client size, complexity and management objectives. These services can help move your organization towards greater transparency, improved operations and efficiency in all core processes, enhanced exposure management and a broader enterprise wide view of risk management.

Whether your most pressing issue involves improving core risk, finance & treasury processes, organizational transformation, developing effective structures or financing future growth and acquisitions, KPMG’s Treasury experts are prepared to help.

In addition, our worldwide network of KPMG International member firms is well positioned to help you apply global risk management leading practices.

Treasury Management

Service Offering Overview

KPMG’s Treasury Service is an integral part of the Financial Management (FM) consulting practice. Financial Management aims to improve both efficiency and effectiveness of the Finance function. We strive to support CFO’s in bettering their service to the organization. For this purpose, we have built our service portfolio around four pillars:

1. Accounting 2. Controlling 3. Treasury 4. Transformation

Our Treasury services are designed to help corporate and public sector CFOs, Treasurers, Controllers, Risk Managers, and Tax Directors achieve strategic, tactical and operational goals. The Treasury service applies to companies of all sizes and complexities. This could be either complex and well developed organizations with significant cash, financial risk, liquidity and funding constraints, international operations, or comprehensive cost-cutting initiatives or smaller firms that deem to establish a more professional treasury function under cost-benefit aspects.

Each service represented below is based on KPMG’s Risk & Finance methodology and industry accepted leading practices. KPMG recognizes each company is unique, and as such, each service is tailored to address distinct client size, complexity, development stage, and business objectives.

While each service may be delivered as a stand alone initiative, combined activities may lead to transformational endeavors.

KPMG Treasury Services

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Treasury Governance &

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Tax Efficient Treasury

Treasury Strategy &

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Financing & Forecasting

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Financial Risk Management

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Efficiency Source: KPMG Consulting, Financial Management

Treasury Strategy & Transformation

As organizations evolve treasury and finance functions typically move from a decentralized structure to a coordinated and strategic value center. This evolution is particularly relevant as organizations embrace global markets and evaluate the need for consolidated and cost efficient treasury and finance activities.When fully embraced, the Treasury transformation process broadly addresses location, resources, governance & organizational structures, systems, processes and tax relevant aspects.

Source: KPMG Consulting, Financial Management



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Service Offering Activities

Treasury centralization and outsourcing

Evaluate opportunities to outsource or centralize certain treasury functions e.g. funding, operations, accounting, cash management, risk management

Review alternative locations or vendors providing optimal economic, financial, and tax services

Mergers and acquisition

Provide pre-transaction due diligence support addressing valuations, risk estimates, and subject matter knowledge

Provide integration planning, project management oversight, or tactical implementation support (e.g., systems, processes, controls, and risk management)

Funds transfer pricing

Identify potential transfer pricing protocols, baseline revenue and cost assumptions, and general allocation protocols

Evaluate pros and cons associated with treasury as a transfer pricing profit center and recommend related business, functional, and governance requirements

Treasury infrastructure

Survey industry participants to determine treasury infrastructure, systems, and compensation structures

Survey industry participants to determine treasury resource levels (front, middle, back office), governance protocols, transaction volumes and types, performance and cost metrics, and roles and responsibilities

Treasuryefficiencies

Evaluate opportunities to streamline treasury functions or processes through technology and automation

Evaluate opportunities to segregate, streamline, or enhance treasury responsibilities including accounting, tax, and risk management


Chief Financial & Chief Risk Officers face challenges to adapt their existing risk management strategy and governance structure to a changed environment where crisis become more frequent and potentially more severe. Furthermore, organizations need to maintain compliance with external regulation and with internal policies or keeping pace with industry practice. KPMG provides tailored and a broad ranging support addressing key aspects of your risk management organization. KPMG services typically fall into three categories. 1. Assist management to evaluate risk management structures, activities, infrastructure, and controls against regulatory requirements, industry or peer practices. 2. Assist management to identify, measure, and report key risks in terms of financial, regulatory, or strategic impact. 3. Assist in transforming the risk management function to a defined target operating model.

In all cases described above, KPMG’s efforts are intended to help promote integrated risk management, improved risk transparency, operating performance, governance and applies to all financial risks, i.e. FX, IR, commodity and energy risk.




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Risk industry benchmark & gap analysis

The typical benchmarking study is performed using KPMG’s benchmark experience and diagnostic gap analysis tool and can cover the following financial risks: fx risk, interest rate risk, commodity & energy risk, credit/counterparty risk

While benchmarking activities may be broadly defined, general areas addressed by risk management professionals include: Risk scope/inventory & strategies, risk measurement, assessment & reporting, risk appetite & limit systems, governance & integration of risk into the business, key risk indicator metrics & reporting, infrastructure & applications, critical processes & controls

Risk identification, measurement & assessment

Risk identification, measurement and assessment activities leverage KPMG’s experience and capabilities in the area of risk type specific modeling and hedging products, as well as knowledge on geography-driven risk aspects

KPMG’s risk assessment broadly covers all strategic, business, operational and financial risks and may involve a qualitative or quantitative risk approach

Risk management transformation

Determine the vision, objectives and strategy of the risk management transformation journey

Rapid current state assessment and future state design of the risk management function integrated into the business and supporting corporate strategy

Development of a target operating model design and roadmap that includes a benefit – costs assessment, a change management profile and integrated components such as business, process, data, technology

Implementation support, project & change management as well as benefits tracking

Commodity & Energy Risk Management

Identify and report existing commodity, energy, and raw material contracts, explicit and implied financial risks (e.g., optionality), credit risks, and operational exposures and summarize in relevant financial exposures using industry applied risk methods and tools

Identify and model alternative risk mitigation strategies (e.g., financial hedging, insurance, and other) and the associated risks, benefits, and costs

Identify infrastructure requirements supporting a comprehensive commodity risk management program and recommend risk oversight committees, operational roles, responsibilities, and controls

Assist management to identify potential commodity risk management systems, analytics and define business and functional requirements, assist with vendor RFP, and facilitate vendor demonstrations to select the appropriate future solution.


As organizations grow, corporations typically evaluate alternative funding mechanisms for cost efficiencies, liquidity, and capital flexibility. At the same time global markets volatility impacts both investor appetite for public debt and availability of bilateral funding, calling for a strategic analysis of funding alternatives at corporate treasury level. Regardless of the choice, management analysis typically involves a comprehensive cash and liquidity requirements study, funding alternative cost/benefit analysis, and a product, counterparty, and market risk assessment.




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Intercompany Pricing (loans & guarantees)

KPMG has developed the KPMG Intercompany Pricing tool (IPT) which provides an automated pricing process of intercompany loans and guarantees based on proven market data as well as risk metrics and profiles

The IPT manages and documents intercompany financing transactions and processes efficiently and ensures tax compliance in terms of transfer pricing documentation

We offer the IPT either by supplying the tailored tool with full functionality to the client for own usage or as an outsourcing service by providing individual risk spreads per organization on a regular basis

Scenario analysis

Define relevant enterprise risk, downsizing or financial crisis scenarios and derive impact on liquidity risk and funding strategy and costs

Impacts are usually analyzed from a business and financial perspective but should also include legal and tax related aspects assessed by respective experts.

Align internal/external funding strategy and define proactive measures and emergency plans to reduce liquidity risk significantly

Alternative fundinganalysis

Identify and evaluate alternative funding strategies (e.g., credit lines, commercial papers, notes, bonds, letter of credit, securitizations, intercompany lending, factoring, etc.)

Evaluate funding constraints including local market liquidity, regulations, and tax

Measure potential funding costs including banking, investment, and registration fees, interest exposure, tax impact, and infrastructure and resource requirements

Evaluate funding alternative benefits including liquidity, flexibility, cost, and duration matching as well as derivatives as a mechanism to achieve desired cost of funds

Liquidity forecasting

Assess local and international liquidity needs and cash availability

Evaluate cash flow forecasting capabilities supporting sales and financing activities

Model forecasted project or business activity cash flows Define and roll-out liquidity forecasting approach Select professional forecasting tools and software or build easy-to-use forecasting models based on VBA/Excel

Treasury Operations

Treasury operations include activities associated with cash management, in-house banking, payment & collection factories, corporate finance, financial risk and transaction management. In larger organizations, the definition is often expanded to include pension fund management, risk management & insurance, investor/creditor relations, transfer pricing, and risk-based performance measurement. While these services generally do not always receive the strategic attention they deserve, most companies agree, failed or insufficient treasury capabilities can significantly bear liquidity & reputational risk, constrain operations and increase business costs.

KPMG recognizes the need for strategic treasury advice, robust, efficient, and realistic core treasury functions as well as effective risk management. As such, KPMG created services to assist companies looking to add or enhance core treasury functions, capabilities, and systems support.




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Payments Increase the automation level of payment transfers and support the IT system selection process

Advise on outsourcing potentials and support the vendor selection process for payment service vendors

Assists in the design and implementation phase to install technology driven payment factory solutions (e.g. transfer only, on behalf payments, global integrated platform via SWIFT)

Target Operating Model (TOM)

Review or design the Treasury target operating model in terms of strategy, structure, operations, policies system support and resource allocation and quantify the TOM with a distinct business case

Recommend shared service or centralized functions (e.g. in- vs. outsourcing) and support in its design and/or global roll-out. In addition, support in the selection and implementation of adequate system support

Banking Strategy & Bank Account Management

Define/Review global banking strategy in compliance with financing and capital markets strategy as well as service requirements and stakeholder or investor interests

Optimize and consolidate house bank and bank account portfolio to generate economies of scale, reduce costs and counterparty risk

Introduce electronic bank statement import and automate the reconciliation process with adequate IT support

Cash Management & Pooling

Develop/Review national and global cash pooling structures and process and assist in the selection of banking partners and support in the effective roll-out

Set up or optimize cash allocation/disposition process Design intercompany netting approaches and systems to reduce intercompany cash transfers and bank charges

Straight-through-processing

Review and document front-to-back process in terms of automation, costs and controls according to leading practices and compliance and support its roll-out

Manage the selection and design process of required IT systems

Investment management

Recommend or benchmark investment polices and procedures against industry practices

Identify and assess risk and reward profiles associated with instruments and counterparties

Treasury Systems & IT Infrastructure

Treasury management faces increasing demand for efficiency, flexibility and compliance with both corporate governance guidelines and external regulations. Implementation of customized state-of-the-art TMS and IT infrastructure solutions is deemed critical for standardization, automation and centralization of large scale and repetitive Treasury processes.

Abundance of vendor offering, with differences in system functionalities and lack of alignment of business and system requirements, render the TMS selection process long and complex. Hence, Treasury IT projects imply high cost, time and quality risk in terms of delivery and expectations towards the final product.

KPMG has developed a structured and proven approach to help our clients in selecting and implementing a modern state-of-the-art TMS in order to achieve a leading practice level and to substitute “handwork” through “brainwork” wherever possible.




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1. System selection

Gather key criteria by conducting a design workshop with all key stakeholders (Treasury, IT, Accounting) based on KPMG’s proven and standardized key criteria catalogue of the KPMG System Selection Tool

Manage the RfP process and prepare the RfP documents based on the workshop results including business requirements, timelines and additional technical as well as vendor-related aspects. In addition, define of the vendor shortlist based on KPMG’s treasury market expertise

Evaluate systems and vendor responses by KPMG‘s treasury and system experts based on KPMG’s System Selection Tool and the KPMG scoring model in an automated manner and summarize the results including pricing information in a Management presentation

Conduct vendor pitching workshops for short-listed vendors and integrate results into the overall evaluation

Summarize evaluation results in a Management presentation for final system decision

2. System design

Design processes, reporting and accounting functionalities of the new system environment by considering capabilities and limitations of the system; e.g. static/dynamic data management, transaction management, cash management, interfaces, risk management & controlling, reports

Include overall business requirements collected at the start of the selection process

Develop a leading practice solution design as a basis and tailor to the clients’ specifics

Summarize all requirements in detailed business concept documents as an implementation basis for the system vendor

3. Quality assurance & PMO

Within the implementation phase KPMG acts either as a project manager on behalf of the client (active role) or assures and reviews quality within the implementation, testing and go live of the new system infrastructure as an independent advisor (supervisory role).

4. System reviews / audits

KPMG performs independent system reviews in terms of efficiency in order enhance level of straight through processing or governance and compliance, e.g. internal control system, data security, backup and recovery, incident & contingency management.

Working Capital Management

Corporate and public sector treasuries generate significant cost savings and efficiencies through streamlined or improved cash and working capital management processes. Working capital management is typically defined as an organization’s ability to maximize cash flow through the complete transaction life cycle – beginning with a forecast and continuing through cash settlement. The working capital management process is particularly relevant to companies with sizeable accounts receivables, payables and inventories. Other contributing factors include significant capital expenditures, real estate, and fixed asset holdings.




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Inventory“Forecast to fulfill”

Analyze sales forecast processes including production schedules, product configurations, production BOM/routing, ship orders, etc.

Evaluate production and material execution plans for scheduled and executed orders

Review and recommend product quality protocols, transaction inventory tracking, and general controls

Receivables“Order to cash”

Evaluate opportunities to manage or generate cash value from credit and collections, contracts, customer relationship management invoicing and billing

Evaluate standardized and global proposal, pricing, and quotation policies to confirm consistent and timely revenue recognition and improve cash performance

Evaluate reporting capabilities to deliver enterprise-wide visibility and consistency throughout the order to cash process (profitability analysis, customer segmentation, etc.)

Payables“Purchase to pay”

Analyze company expenditure and spending patterns Evaluate standard procurement life cycle methodologies including working cash vs. discount modeling, invoice synchronization, and vendor payments management

Benchmarking Calculate and compare key working capital management metrics (e.g. DSO, ADO) against industry and peer data

Develop recommendations and implementation plans to improve cash and working cash management processes


Tax requirements associated with many treasury and finance activities are complex, unique to local and international geographies, and susceptible to change. Without sufficient up front consideration for, and deep knowledge of, relevant tax considerations, a routine or seemingly advantageous transaction can create significant financial risk and compliance costs. As part of KPMG’s cross-functional advisory approach, KPMG’s global Tax practice provides focused tax services to the treasury function and is fully integrated into the overall treasury service offering.




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Software and tools

With the KPMG Intercompany Pricing Tool (IPT) we provide an automated and tax compliant process to price intercompany loans and guarantees including full transfer pricing documentation

KPMG’s Tax practice offers the Tax-One System to make taxation transparent and efficient within your organization and standardize processes and tools in the whole group; i.e. tax calculation and planning, risk management, transfer pricing, risk management, contract management and reporting

Our treasury consulting specialists support efficient implementation of those tools and ensure the integration of treasury related aspects

Tax planning and analysis

Review international transactions for opportunities to reduce tax liabilities

Assess existing or proposed cash management and funding strategies for negative tax implications, and recommend improvements as applicable

Review proposed transaction for anticipated tax risks, treatment, and financial impact (GAAP and tax)

Ruling and opinion support

Prepare and submit tax positions to solicit a local ruling Provide a tax opinion based on KPMG analysis

Tax analysis and research

Research and report global tax law updates and significant rulings

Analyze potential tax impact analysis and remediation strategies considering new or evolving tax legislation

Tax implementation

Identify local and international tax guidance, rulings, and treaties

Identify programs, policies, and tools to implement management-defined tax strategies

Treasury Governance & Compliance

Treasury organizations are complex and deal with highly sensitive information and transactions. Hence, high standards in terms of treasury governance and compliance are essential and emphasize the need for comprehensive policy frameworks and adequate compliance concepts that consider regular and independent reviews/audits performed by experienced treasury specialists.

While derivatives serve a major and increasing role in company risk management practices, new and evolving regulations require strict adherence to local and international accounting standards. Considering these risks and growing external scrutiny, leading companies seek external assistance with accounting research and guidance, local and international accounting support, or accounting documentation and governance.




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Policies & gov-ernance frame-worksActivities

Review or write Treasury policies covering all relevant strategic, operational and regulatory treasury aspects

Review/Design treasury process description and controls based on leading practices and regulatory requirements (e.g. internal control system, SOX)

Design compliance concepts for treasury, asset management or financing units

Treasury Audit/Review Activities:

Perform treasury reviews as part of the internal audit support (co-sourcing) through renowned treasury experts in terms of governance and compliance but also other relevant treasury aspects

KPMG can either perform internal treasury audits of the whole treasury function or just focused on certain areas

Therefore, KPMG has developed standardized audit programs to ensure an efficient and lean audit process

Treasury Accounting

Assist management to identify and review new accounting pronouncement guidance and implications (e.g. IFRS, IPSAS, US-GAAP)

Assist management to perform impact analysis and evaluate optional implementation activities, as applicable

Assist management to identify business and functional requirements, perform current state gap analysis, and prioritize implementation recommendations (e.g. IFRS 39, IFRS 7, IFRS 9, SFAS 133, SFAS 157, SFAS 159)

Recommend derivative accounting controls and governance practices

Recommend an internal audit program to continuously monitor derivative accounting activities and compliance with internal policies

Risk documentation

Identify and recommend documentation requirements commensurate with local and international accounting guidance

Assist management to document accounting procedures, assumptions, critical data, and user/department accountabilities

Risk modeling andtechnology support

Identify methods applied by industry participants to measure hedge effectiveness (e.g., dollar offset, regression, etc.)

Support derivative accounting system selection and business and functional requirements definition

SECTORS AND THEMES

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2013 KPMG Holding AG/SA, a Swiss corporation, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. Printed in Switzerland. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

For more information regarding KPMG’s Treasury and Financial Management Consulting Service, please contact:

KPMG AG Badenerstrasse 172P.O. Box 1872CH-8026 Zurich

Markus RichterDirector, Financial ManagementT: +41 58 249 36 81 E: [email protected]

Marcus HofstätterSenior Manager, Financial ManagementT: +41 58 249 40 64 E: [email protected]

Markus PortmannDirector, Tax CorporateT: +41 58 249 40 93 E: [email protected]

kpmg.ch

pub 20131113 treasury management services en

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