You have arrived, now really go!

By Joseph V. Singh and Michael Avari

It has not been that long since some ‘operational’ announcements have hit the wires.  Truth be known, many of our colleagues have gotten tired of the ‘revenue or earnings management’ announcements.  So the arrival of some meaty, ‘non-headline grabbing’ press release such as BONY Mellon taking over the operational servicing of Bridgewater’s asset base in mid-November 2011 has added some starch in our collars. 

On the one hand, many of us want to hear the trumpeting of signings and earnings that show the financial world is on decent footing.  On the other hand, who among us does not want to see legitimate operational adjustments that take out cost, result in improved servicing levels and, of course, result in increased customer satisfaction?

It is still early stages in the battle to discover the optimal mix of internal and external staff to provide the right balance of strategy and operational support for asset managers.  However, fundamentally, upon understanding that the asset management business is about providing personalized service to large asset bases while ensuring clients share cost benefits from capitalized investments in systems and operational units, our calling is to convey this message to niche asset managers.  We believe that asset managers of all stripes have a right to receive the highest levels of personalized services from their providers, in addition to receiving benefits of scale they may pass on to their individual investor customers.

As independent advisors, we have no financial stake in the settlement, asset servicing and custody of assets, so we are true advocates on behalf of our clients.  As such, we can ensure with certainty that niche asset managers receive the level of ‘top-shelf’ attention and pricing that they rightly deserve for ongoing operational and IT support.

As always, GraceOne can assist asset managers in innovative ways.  Ask us about Business Advisory Services for asset managers.

International Bid and Performance Bonds at Less Cost

It is of interest to small business exporters that they can reduce the collateral requirement for the international bid and performance bonds they are required to issue, by obtaining an Export Working Capital Guaranty Facility from the SBA or a Working Capital Guaranty from the Export-Import Bank of the U.S.  The collateral for these bid and performance bonds can be reduced from 100% to as little as 25%.

Both agencies provide a 90% guaranty bearing the full faith and obligation of the U.S. government.  These guaranties are fully collateralized with inventory and receivables. Inventory, including Work in Process provides an advance rate of 75% whereas qualified export receivables provide an advance rate of 90%.  The guaranties provide lenders the comfort to support a small business’s exports.

To find out more about these useful programs, please contact us. 

Embrace the Cloud, but do not lapse on security and operational risk.

by Joseph V. Singh

I had the pleasure of attending Salesforce’s Cloudforce Conference at the Javits Center on November 30^th.  We keenly follow the developments in the CRM space for our Financial Services clients, as this has been a focus area for the last five years.

For the Cloudforce Conference, it was mentioned that some 10,000 people registered, and from what I could estimate, about 5,000 or 6,000 people attended.  The keynote -- all two hours of it rather informative, was standing-room-only, and, of course, led by Salesforce’s dynamic CEO Marc Benioff.

Overall, the address centered on what was is described as the growing movement to leverage the Cloud to arrive at a state of engagement for a firm, its employees, and its customers, that is known as the ‘social enterprise’.  In an active social enterprise, information from internal production or transaction systems, CRM systems and records from social and business networks such as LinkedIn and Facebook will be used to improve corporate productivity, communication and overall enhance the experience of the firm’s customers.

A good portion of the address described Salesforce’s business collaboration product called Chatter.  Anecdotal cases of firms embracing a ‘social enterprise’ approach were presented by Burberry CEO Angela Ahrendts, Charles Phillips, now CEO of Infor, and another executive from GE Capital.  Overall, this was a tour de force for the Cloud model.

Over the last five years, the business case for moving many enterprise applications to the Cloud has become quite compelling in terms of cost savings, licenses and flexibility with respect to allocating application use incrementally to the number of end users.  Additionally, with numerous integrators that have built applications that sit on the Force.com platform (‘Cloud-Based offerings), there are a fair number of alternatives and accelerators that go against the case for in-house custom application development.  For instance, we have evaluated for our clients CRM offerings that are on the Force.com platform that cover the needs for Hedge Funds and Private Equity Funds in the Alternative Investment space and for Mutual Funds and M&A Boutiques in the Institutional Asset Management space.

Indeed, we are now recommending to our clients that rather than start at what is the basic core functionality of Salesforce (assuming they are intent on a cloud approach), that a coherent CRM strategy ought to lean towards their industry vertical.  Again, citing one of our focus areas, after the better part of half a decade, many niche integrators have done a yeoman’s effort in customizing for the buy-side world standard data sets, industry conventions and building bridges to industry and external third-party and customer data sets.  With an accelerated ramp-up time on the application customization side, the client could spend more time on data-cleansing and validation.

With the improved cycle time for a CRM rollout, and with the availability of ancillary streams of data from within the enterprise and from outside social networks courtesy of Chatter, more production, reference, industry and social information is becoming available than ever.  Granted a product such as Chatter is expected to sit within the secure walls of a firm, however, I wanted to end this note with a slight cautionary slant to keep us on our toes.

Care must be taken with respect to a firm’s application and information security and the management of overall operational risks.  The advent of Cloud-based offerings, while decentralizing the maintenance, sharing and interaction of different parties and information, also has the potential to open a company to unconsidered risk as more people (employees, customers and competitors) are interacting with more information, on a growing list of devices.

As always, GraceOne can assist Banks and Asset Managers in innovative ways.  Ask us about Business Advisory, Operational Readiness, IT Security and ways to lower your costs and implementation risks using our experience.

Trade finance: who needs banks?

by William A. Laraque

Europe is about to eat the American lunch when it comes to international trade competitiveness.  The European maneuver element has once again bypassed our trade fortresses and has enveloped our forces and our government supported assets, and they are positioned to garner a disproportionate share of markets and profits as a result.

A significant allocation of U.S. government resources concentrates on providing export credit insurance to U.S. companies in order to mitigate the risk of non-payment on the part of foreign buyers.  This concentration of resources ignores the fact that much of international trade is no longer conducted in the “classical” manner involving letters of credit.  Enter Supply Chain Finance.

Something like 85% of cross-border trade is now done on open account.  There are several reasons for this, the principal one being that large buyers in developed countries are extending their liquidity to sellers in developing countries.  They do this by paying invoices early, thus adding to the working capital of these sellers to assure a reliable source of products.  This process is to a degree self-sustaining and may not require bank financing.  By common agreement, buyers and sellers can trade on a business-to-business basis.  Reverse factoring, forfaiting, and other means of discounting invoices, all provide alternative financing tools where lenders are required.

This trend is also accelerated by electronic invoices: the electronic presentment and matching of purchase orders to these invoices (for which there is one European standard) and the subsequent payment and settlement by automated matching.  The SWIFT Trade Services Utility and Bank Payment Obligations have greatly facilitated this process.  The entire process is known as supply chain finance (SCF).

As is the case with many innovations, an American pioneered this process with TradeCard in 2000.  European companies like Coface and such banks as HSBC have pioneered the provision of these services.  The upshot is that numerous European companies are about to unleash on U.S. importers and exporters alike, services and software to support trading in these novel ways.

GraceOne can assist importers and exporters finance their trade in these innovative ways.  Ask us about SCF, forfaiting, export credit insurance and other tools.