Treasury Management & Corporate Finance

Content of the program

The curriculum consists of 6 modules. Treasury (Financial) Risk Management (module 1) and International Cash Management (module 3) are traditional treasury disciplines. Corporate finance is lectured in module 2 and 4. The embedding of the treasury and corporate finance functoin in the corporate organization is lectured in module 5. An overview of relevant aspects in financial law and fiscal law is given in model 6.

Each module ends with a written exam. Other assessments may occur during the module. Modules are organized in such a way sufficient preparation time for the assignments exam is available.

Below topics addressed in the 6 modules are described by keywords and short overviews.

Module 1: Treasury (Financial) Risk Management

  • Commodity risk
  • Interest & FX risk
  • Pricing derivatives
  • Pension risk & insurance risk
  • plus necessary mathematics (level Options Futures and other Derivatives by Hull)

Central theme in this module is the set of financial instruments used by the corporate treasurer for risk management, in particular currency risks, interest rate risks and commodity risks. For a good understanding of the functioning of financial instruments, theoretical insight into the valuation of these instruments is necessary. The book by John Hull "Options, Futures and Other Derivatives" is the reference. Much attention is paid to the valuation of these instruments with mathematical models (including binomial models, Black & Scholes model, Monte Carlo simulations and volatility modeling). Also, innovations in financial instruments will be addressed: credit derivatives, energy derivatives, weather derivatives and emission derivatives.

In addition to the technical aspects of financial instruments, the hedging strategy of a company is also discussed within case studies: to what extent should which risks be hedged at which costs? How is risk appetite determined, in what way is risk appetite connected to company’s strategy and companies financial situation and how is this converted into a hedging strategy? Top professionals in corporate treasury will share their views with the participants.

In order to be able to succeed this course, a certain degree of mathematics knowledge is required. Optional for those who need it, extra attention is paid to probability, differentiation / integration, Taylor series, optimization techniques, regression analyzes and time series analyzes. This involves practicing with spreadsheet models (Excel Solver), among other things.

Module 2: Corporate Financial Management

  • Accounting & reporting particularly relevant for treasury and corporate finance professionals 
  • Financial statement analysis (linking finance with corporate strategy) 
  • Corporate valuation 
  • Credit risk and equity risk pricing models

This module combines accounting, financial statement analysis (strategy), corporate valuation and corporate finance. After a brief introduction to the annual report and the accounting standards (IFRS and FASB), a lot of attention is paid to financial statement analysis which is key to understanding  business models and corporate strategy performance. Insight in the business is essential for corporate valuation, which in turn underpins corporate finance decisions.

A reference in Corporate Valuation is McKinsey's book "Valuation, measuring and managing the value of corporations". Starting with the valuation principles outlined in this book an overview of the current state of the art in Corporate Valuation is given. In practice corporate valuation is often based on professional "standards" which match the limited theory formation as closely as possible. Both theoretical knowledge and awareness on practical conventions are needed to be able to make judgements in corporate valuation practice.

In most companies, the treasurer is involved in providing accounting related information for the financial statements. The treasurer anticipates the consequences for the profit and loss account when financial instruments are used. Accounting rules for the processing of (derivative) financial instruments such as forward currency contracts and interest rate swaps are detailed and complex. The complexity is in the valuation and result (including hedge accounting, IFRS 9) and the extensive and technical disclosures required in the financial statements for the use of financial instruments (IAS 39 and IFRS 7, fair value, amortized cost, effective interest, impairments). This section also deals with the accounting for pensions (IAS 19), deferred tax (IAS 12) leasing (IAS 17) and derecognition for factoring and securitizations.

Module 3: International Cash Management

  • Cash flow forecasting 
  • Cash management, payments & clearing 
  • Liquidity management
  • Working capital management 
  • ST funding & trade finance 
  • Treasury sytems, cash management systems (technology and security

This module offers an extensive and detailed overview of the field of international cash management and emphasizes the state of the art practice.

It starts with the international banking infrastructure. This includes the principles of international payments, the most common payment systems and the role of correspondent banking. Examples of topics covered are check clearing, SWIFT, ACH, CHIPS, Fedwire, SEPA, EBA, EURO1 and TARGET. This module also deals with the information technology structure that connects corporates with the banking payment systems. Latest developments are discussed, including blockchain technology and crypto currencies.

Netting and cash pooling techniques are also dealt with (multilateral netting, netting cycle, leading and legging, notional pooling, cash concentration). Attention is paid to legal and fiscal aspects of international cash management (including withholding tax).

The disciplines working capital management, liquidity management and ST financing are integrated and essential in the daily practice of treasury professionals. As theory building in this field is rather limited, a large number of practical cases/solutions are worked out in this module.

This year 2018, for example, guest lectures have been given on the implementation of supply chain finance, module chain technology and security issues in treasury management systems.

Module 4: Capital Markets and Funding

  • Financial markets and institutions 
  • Macro economics 
  • Debt capital markets 
  • Bank lending / relationship 
  • Project finance 
  • M&A and equity capital markets

This module is about the interaction between corporates and their corporate capital market.

Developments in corporate capital markets are key input for corporate finance decisions. Pricing of corporate capital strongly relates to globalization and the international integration of capital markets. Recent developments in capital markets are addressed: for example, the exceptionally low level of interest rates, regulation and the role of monetary authorities in capital markets.

A corporate treasurer needs a good understanding of macro-economic developments. economic growth, production and unemployment are linked to inflation, interest rates and exchange rates which in turn determine the pricing of (treasury) financial instruments.

The module switches in between macro perspectives and -micro perspectives on corporate capital markets. Financing decisions on a corporate level deals in essence  with the matching of company's business assets to a range of corporate finance alternatives offered by the corporate capital market. Apart from standard forms of corporate financing (equity and bank financing, asset-based financing, cash-based financing, hybrid financing and project finance are addressed. Interesting current developments in corporate capital markets include for example alternatives to bank financing, the development of private placement market in Europe and the public issuance of bonds in Europe. Developments in corporate equity markets are particularly visible in the M&A market.

Module 5: Treasury Organization

  • Treasury function in the corporate governance 
  • Embedding treasury function in the organization 
  • Risk management systems
  • Treasury control systems / treasury information systems 
  • Controllership 
  • Compliance

The role of the treasurer and the treasury department varies across corporates. Central versus decentralized, adviser or agent, cost center versus profit center are considerations in the organizational design of the treasury and corporate finance function.  Several organizational models for the treasury role within the company are discussed in this module (including outsourcing). Important in this context is the link between the corporate treasurer and corporate controller.

Once choices for the organizational model have been made, the internal control of the treasury function comes into play. Important internal control concepts are outlined in this module (COSO model, segregation of duties, necessity compliance with Sarbanes-Oxley legislation). Appealing practical examples illustrate the concepts. In addition to administrative-organizational aspects, information technology is also explicitly discussed (IT controls and measures to prevent fraud).

The role of the treasurer shifts to a critically investigative, advisory and accompanying role. In short, the treasurer gets a more active role towards the management of the company. This postgraduate program enables to fulfill this role.

Module 6: Financial and Fiscal Law & Regulation

  • Financial law & regulations 
  • Fiscal law & regulations

This module outlines relevant aspects of the fiscal and legal environment for the corporate treasurer, in the context of increasing regulations and continuously increasing internationalization in business.

It starts with contract law and the legal aspects of financial contracts (including securitization, derivatives, ISDA contract and loan agreements). Practical examples highlight the importance of technical details. Subsequently, legal aspects in the market corporate finance are addressed: capital protection at NV and BV, group financing and the regulatory aspects of the capital market and the use of inside information. Since the corporate treasurer will most likely also have to deal with English law, a brief overview of English corporate law is given. 

Lastly the module deals with fiscal law. Fiscal profit determination of groups, transfer pricing and the tax withholding taxes on (international) money flows are extensively discussed. Considerable attention is given to specific tax aspects of group financing and a large number of financing instruments, including derivatives.