Rebalancing and Reconnecting
Serving the corporate treasury community in the Netherlands for more than 25 years, the Dutch Association of Corporate Treasurers (DACT) has grown its membership by welcoming financial professionals whose career has brought them to the country and responding to societal changes. TMI learns more from two of the DACT’s team – and explores some of their recent projects.
Like its European neighbours, the Netherlands has felt the impact of resurgent inflation, soaring energy prices, and rising interest rates. Nevertheless, the country’s recent economic data compares well against that of several larger economies. Growth was 4.9% in 2021 and only slightly lower last year at 4.5%, while earlier this year inflation had fallen back below 5% – helped by a price cap on electricity and gas – while the UK was reporting double-digit inflation figures.
The economic outlook is slightly less promising, though. In March, Dutch government policy advisers forecast that economic growth would slow to 1.6% this year and 1.4% in 2024. However, the figure for the first three months of 2023 was far worse than anticipated with GDP contracting by -0.7% from the previous quarter as exports fell. Hopes that inflation might be coming under control were also dashed by the April figure, which accelerated to 5.2% from 4.4% in March.
“Traditionally the Netherlands has enjoyed a relatively strong economy and it recovered well from the pandemic,” says Erwin Bastianen, the Vice Chair and a board member of the Dutch Association of Corporate Treasurers (DACT). “But a major concern for Dutch businesses is the potential for a wage and price spiral to develop. Companies have contributed by using resurgent inflation to increase their margins and unions have responded with some aggressive wage demands.” A recent example was the 10% wage increase conceded by Dutch grocery chain Albert Heijn to avert a strike by distribution workers[1]. “So, there are fears that inflation will become disconnected from the main economy as companies could use it to pump up their margins.”
Bastianen adds that the Netherlands also suffers two obstacles to growth shared by many EU countries, a tight labour market with resulting skills shortages and weak business investment. However, the latter has been offset by large increases in government spending. They include an investment of €5bn plus an extra €1.3bn in reserve last year that was earmarked for 28 projects to fund sustainable growth.
Government policy is helped by the fact that Dutch Prime Minister Mark Rutte has been in office since 2010 and had a career with Unilever before entering politics. His adeptness in surviving scandals unscathed and holding together a four-party coalition administration for the past six years has earned him the title “Teflon Mark”. However, the recent success of a farmer-led political party – the BoerBurgerBeweging (BBB) or Farmer-Citizen Movement – threatens to scupper Rutte’s plans to sharply cut the Netherlands’ nitrogen emissions by 2030 to comply with EU targets.
“The BBB’s influence belies its small size, but it has been able to benefit from the current lack of belief and faith in politicians, which has allowed it to make gains,” says Bastianen. “Its success threatens to undermine the coalition’s 2030 target. Part of the coalition is now rebelling against this environmental deadline and to survive it may have to look for support from elsewhere.”
Empowering and connecting
Unlike the economic roller-coaster, one figure that has consistently risen is the DACT’s membership. “We reached 700 at the end of last year but we’ve since had a further increase to 750,” reports Bastianen. DACT has enjoyed steady organic growth since its formation in the autumn of 1996, when three small Dutch treasury associations decided to pool their resources to create a stronger platform. “When I joined in 2017, we were up to more than 500,” he adds. “There has been further good growth since then, except for a slowdown caused by Covid when we were forced to cancel or postpone our events.
“Two years ago, we asked ourselves as a board whether we should be a Dutch treasurers’ association or one that represents all treasurers based in the Netherlands and reflects its large international community. We decided on the latter course, so our communications are now in English as well as Dutch.
“The switch has given the DACT an added impetus and while Dutch continues to be the language used for some of our meetings we use English for main communications, while most of the sessions at our annual meeting, the Treasury Fair, are in English.”
Commendably, the DACT is open about the dominance of men in its membership, with the annual report revealing that male-to-female ratio is almost four to one. “It’s an imbalance that we’re attempting to address,” admits Bastianen. “The switch to English for many of our events is helping. We’re now attracting a sizeable number of new members who are not Dutch, and many of them are both younger and female treasurers.” The DACT has also launched the Women in Treasury network, which “aims to empower women to achieve professional success by providing a safe space to exchange knowledge” and offers a combination of mixed and female-only events.
Other networking groups have been established in response to the pandemic and the resultant shift to working from home, which can make it more difficult to connect with members. “Our annual Treasury Fair event has grown, attracting new faces and new nationalities, but we also want to set up smaller peer groups where members can connect; for example, a group specifically for treasury controllers,” says Bastianen.
The DACT Interim Treasury Platform was also set up in response to the growing number of members who are not tied to a single employer but work as interim treasury specialists. “This actually pre-dated Covid-19 but proved very timely as lockdown created a lot of stress and uncertainty for interim treasurers,” he adds. “Now that we’re emerging from the pandemic, companies want to keep the same flexibility, so the hiring of interim treasurers has resumed.”
The pandemic also prevented the 2020 Treasury Fair, the DACT’s annual event for around 600 treasurers and other financial professionals, from taking place. Traditionally, it had been held in November but plans to resume the event in 2021 also had to be abandoned when the autumn saw a further wave of Covid cases.
“By then it was evident that the autumn and winter months were the worst for outbreaks so the Fair originally scheduled was postponed four months to March 2022,” says Bastianen. “By then the government had relaxed restrictions and we decided to transfer to a March date permanently. This year’s was particularly successful and a sell-out.”
ESG under the spotlight
“The format of the Treasury Fair changed a few years back – when it basically offered workshops presented by a corporate – to broaden its appeal,” confirms Jeroen Custers, Head of Treasury for parking garages operator Q-Park. The event now provides a mix of plenary sessions and smaller presentations, typically for audiences of between 60 and 100 people.
This year’s fair offered a masterclass from international economist and former Dutch MP and Secretary of State Professor Rick van der Ploeg and added an opening lecture for which the keynote speaker was Laura van Geest, Chairperson of the Dutch Authority for the Financial Markets (AFM). She outlined the regulator’s top priorities in developing a sustainable financial system and transparent financial markets.
“This year’s main topics were ESG requirements and sustainability,” says Custers. “Until quite recently, we as treasurers knew that both issues were out there but they didn’t have that much of an impact on us directly.
“All that has changed. Now we’re closely questioned by the ratings agencies and by stakeholders on the company’s ESG strategy. We need to clearly show what steps are taken and to outline our plans – again, clearly – in the annual report, so it requires a lot of attention.”
Custers identifies supply chain disruption and the spike in energy prices as two other issues that have moved up the agenda over the past couple of years. “Many are hoping that the worst is now behind us, but there is always the potential for a new major disruptive event. The stand-off in the US over raising the debt ceiling limit and signs of vulnerability in the banking sector are both worrying. My company, Q-Park, is private-equity owned and we’ve had a lot of questions about our bank exposures since the collapse of Silicon Valley Bank.”
Treasurers see the value of automation in taking care of the more mundane, repetitive tasks. New technologies promise to open up more time for tasks that can demonstrate treasury’s expertise.
A treasury barometer
In addition to his work for Q-Park, Custers is also a member of the editor panel for the DACT Treasury Barometer. Initially developed in 2014 by Enigma Consulting, part of Projective Group, and Rabobank as an independent survey for and by treasurers, the Barometer was adopted by the DACT and annually presents the latest trends and developments in the corporate treasury landscape. The DACT’s technical committee now develops the survey subjects and content together with the editor panel, while Enigma and Rabobank conduct the research.
“DACT adopted the Barometer as we recognised its usefulness as a vehicle to inform treasurers what their peers are thinking about. The board comes together to discuss what is top of mind and identify three, four or five main topics,” adds Bastianen. “This year’s themes were the rise in artificial intelligence, governance and resilience in the face of resurgent inflation, escalating energy costs, and supply chain challenges.
“We compile a list of questions, ensuring that they are not overly complex, to identify what is top of mind among our community. And we supplement this by approaching individuals who we believe can offer specific insights to add a deep dive on the topic.” Another highlight of the 2023 Treasury Fair was a presentation of this year’s Barometer by Tim de Knegt, Strategic Finance & Treasury Manager for the Port of Rotterdam (and also a blogger for TMI).
Custers, who joined the Barometer’s editor team four years ago, adds that in the mid-to-late 2010s TMSs and implementation were top of the agenda. “The focus has now moved to robotisation, automation and APIs,” he says. “Treasurers see the value of automation in taking care of the more mundane, repetitive tasks. New technologies promise to open up more time for tasks that can demonstrate treasury’s expertise.”
Digital innovations such as ChatGPT are more likely to add value than destroy jobs, Custers adds. “Banks’ service models have changed. Where there was once a dedicated support team, these steadily shrunk as chatbots were introduced and ChatGPT could continue that trend.”
Bouncing back
Custers is also optimistic about the future. “I’ve been with Q-Park for five years and treasury has gained a seat in the boardroom and a presence in meetings with investors and equity holders.
“Q-Park is an off-street infrastructure owner and operator that was acquired in 2017 by private equity group KKR. It originally operated in 10 countries, but the operations in Sweden, Norway and Finland were sold off in 2019 as they had a different business model,” he recalls.
And rather like the Dutch economy, the company has bounced back after the damage wreaked by the pandemic. At its worst in 2020, earnings collapsed to just 5% of normal but are now back at pre-Covid levels.
Has the change to working from home caused by pandemic lockdowns been longer lasting? “I hear various stories from colleagues,” says Custers. “We all worked from home during the first wave and then gradually returned to the office. I’m now there four days a week but the finance team is relatively small at 10 people and discussions are usually between an even smaller number. So, it’s good to meet in person once again, rather than via Zoom.”
