FINANCIAL MANAGEMENT

Treasury Management Services

kpmg.ch

Treasury Management
Public and private sector companies are increasingly exposed to volatile economic and nancing 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 nancial risk processes. This complexity requires indepth and leading practice know-how within nancial 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 rm. Here KPMGs 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 KPMGs 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 efciency 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, nance & treasury processes, organizational transformation, developing effective structures or nancing future growth and acquisitions, KPMGs Treasury experts are prepared to help. In addition, our worldwide network of KPMG International member rms is well positioned to help you apply global risk management leading practices.

Service Offering Overview

KPMGs Treasury Service is an integral part of the Financial Management (FM) consulting practice. Financial Management aims to improve both efciency and effectiveness of the Finance function. We strive to support CFOs 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 signicant cash, nancial risk, liquidity and funding constraints, international operations, or comprehensive cost-cutting initiatives or smaller rms that deem to establish a more professional treasury function under cost-benet aspects. Each service represented below is based on KPMGs 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.

Treasury Strategy & Transformation

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Source: KPMG Consulting, Financial Management

Treasury Strategy & Transformation

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Treasury Strategy & Transformation

Service Offering Treasury centralization and outsourcing Mergers and acquisition Activities
 Evaluate opportunities to outsource or centralize certain 

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Source: KPMG Consulting, Financial Management

As organizations evolve treasury and nance 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 efcient treasury and nance activities. When fully embraced, the Treasury transformation process broadly addresses location, resources, governance & organizational structures, systems, processes and tax relevant aspects.

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treasury functions e.g. funding, operations, accounting, cash management, risk management
 Review alternative locations or vendors providing optimal 

economic, nancial, and tax services

 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 prot 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 ofce), governance protocols, transaction volumes and types, performance and cost metrics, and roles and responsibilities Treasury efciencies
 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

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Service Offering Risk industry benchmark & gap analysis Activities
 The typical benchmarking study is performed using

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KPMGs benchmark experience and diagnostic gap analysis tool and can cover the following nancial risks: fx risk, interest rate risk, commodity & energy risk, credit/ counterparty risk
 While benchmarking activities may be broadly

Source: KPMG Consulting, Financial Management

dened, 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 identication, measurement & assessment
 Risk identication, measurement and assessment

activities leverage KPMGs experience and capabilities in the area of risk type specic modeling and hedging products, as well as knowledge on geography-driven risk aspects
 KPMGs risk assessment broadly covers all strategic,

business, operational and nancial 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 benet costs assessment, a change management prole and integrated components such as business, process, data, technology
 Implementation support, project & change management

as well as benets tracking Commodity & Energy Risk Management

 Identify and report existing commodity, energy, and raw

Chief Financial & Chief Risk Ofcers 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 nancial, regulatory, or strategic impact. 3. Assist in transforming the risk management function to a dened target operating model. In all cases described above, KPMGs efforts are intended to help promote integrated risk management, improved risk transparency, operating performance, governance and applies to all nancial risks, i.e. FX, IR, commodity and energy risk.

material contracts, explicit and implied nancial risks (e.g., optionality), credit risks, and operational exposures and summarize in relevant nancial exposures using industry applied risk methods and tools
Identify and model alternative risk mitigation strategies

(e.g., nancial hedging, insurance, and other) and the associated risks, benets, 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 dene business and functional requirements, assist with vendor RFP , and facilitate vendor demonstrations to select the appropriate future solution.

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Treasury Strategy & Transformation

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Service Offering Intercompany Pricing (loans & guarantees) Activities
 KPMG has developed the KPMG Intercompany Pricing 

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Source: KPMG Consulting, Financial Management

As organizations grow, corporations typically evaluate alternative funding mechanisms for cost efciencies, liquidity, and capital exibility. 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/benet analysis, and a product, counterparty, and market risk assessment.

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tool (IPT) which provides an automated pricing process of intercompany loans and guarantees based on proven market data as well as risk metrics and proles
  The IPT manages and documents intercompany nancing

transactions and processes efciently 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
 Dene relevant enterprise risk, downsizing or nancial 

crisis scenarios and derive impact on liquidity risk and funding strategy and costs
 Impacts are usually analyzed from a business and nancial 

perspective but should also include legal and tax related aspects assessed by respective experts.
 Align internal/external funding strategy and dene 

proactive measures and emergency plans to reduce liquidity risk signicantly Alternative funding analysis
 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 benets including liquidity, 

exibility, 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 ow forecasting capabilities supporting 

sales and nancing activities

 Model forecasted project or business activity cash ows   Dene and roll-out liquidity forecasting approach   Select professional forecasting tools and software or build 

easy-to-use forecasting models based on VBA/Excel

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Service Offering Payments Activities
 Increase the automation level of payment transfers and 

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support the IT system selection process

 Advise on outsourcing potentials and support the vendor 

Source: KPMG Consulting, Financial Management

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
 Dene/Review global banking strategy in compliance with 

nancing 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 

Treasury operations include activities associated with cash management, in-house banking, payment & collection factories, corporate nance, nancial risk and transaction management. In larger organizations, the denition 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 insufcient treasury capabilities can signicantly bear liquidity & reputational risk, constrain operations and increase business costs. KPMG recognizes the need for strategic treasury advice, robust, efcient, 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.

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 Straightthroughprocessing

 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 proles associated with 

instruments and counterparties

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Treasury Strategy & Transformation

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Treasury Systems & IT Infrastructure

Service Offering 1. System selection Activities
 Gather key criteria by conducting a design workshop with 

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Treasury management faces increasing demand for efciency, exibility 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 nal product. KPMG has developed a structured and proven approach to help our clients in selecting and implementing a modern state-ofthe-art TMS in order to achieve a leading practice level and to substitute handwork through brainwork wherever possible.

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all key stakeholders (Treasury, IT, Accounting) based on KPMGs 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, dene of the vendor shortlist based on KPMGs treasury market expertise
 Evaluate systems and vendor responses by KPMGs 

treasury and system experts based on KPMGs 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 nal 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 specics

 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).
 KPMG performs independent system reviews in terms 

4. System reviews/audits

of efciency 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.

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Service Offering Inventory Forecast to fulll Activities
 Analyze sales forecast processes including production 

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schedules, product congurations, production BOM/ routing, ship orders, etc.

  Evaluate production and material execution plans for 

Source: KPMG Consulting, Financial Management

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 conrm 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 (protability analysis, customer segmentation, etc.) Payables Purchase to pay Benchmarking
 Analyze company expenditure and spending patterns   Evaluate standard procurement life cycle methodologies 

including working cash vs. discount modeling, invoice synchronization, and vendor payments management
 Calculate and compare key working capital management 

metrics (e.g. DSO, ADO) against industry and peer data

  Develop recommendations and implementation plans to 

Corporate and public sector treasuries generate signicant cost savings and efciencies through streamlined or improved cash and working capital management processes. Working capital management is typically dened as an organizations ability to maximize cash ow 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 signicant capital expenditures, real estate, and xed asset holdings.

improve cash and working cash management processes

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Treasury Strategy & Transformation

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Service Offering Software and tools Activities
 With the KPMG Intercompany Pricing Tool (IPT) we 

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Tax requirements associated with many treasury and nance activities are complex, unique to local and international geographies, and susceptible to change. Without sufcient up front consideration for, and deep knowledge of, relevant tax considerations, a routine or seemingly advantageous transaction can create signicant nancial risk and compliance costs. As part of KPMGs cross-functional advisory approach, KPMGs 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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provide an automated and tax compliant process to price intercompany loans and guarantees including full transfer pricing documentation
 KPMGs Tax practice offers the Tax-One System to make 

taxation transparent and efcient 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 efcient 

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 nancial impact (GAAP and tax) Ruling and opinion support Tax analysis and research
 Prepare and submit tax positions to solicit a local ruling    Provide a tax opinion based on KPMG analysis    Research and report global tax law updates and signicant  

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-dened tax strategies

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Service Offering Policies & governance frameworks Activities Activities
 Review or write Treasury policies covering all relevant 

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strategic, operational and regulatory treasury aspects

  Review/Design treasury process description and controls

Source: KPMG Consulting, Financial Management

based on leading practices and regulatory requirements (e.g. internal control system, SOX)
 Design compliance concepts for treasury, asset 

management or nancing 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 efcient and lean audit process Treasury Accounting

 Assist management to identify and review new accounting 

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.

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 and technology 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 denition

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For more information regarding KPMGs Treasury and Financial Management Consulting Service, please contact: KPMG AG Badenerstrasse 172 P .O. Box 1872 CH-8026 Zurich Markus Richter Director, Financial Management T: +41 58 249 36 81 E: markusrichter@kpmg.com Marcus Hofsttter Senior Manager, Financial Management T: +41 58 249 40 64 E: mhofstaetter@kpmg.com Markus Portmann Director, Tax Corporate T: +41 58 249 40 93 E: mportmann@kpmg.com

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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 rms afliated 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.