Finance

Q&A: how can finance leaders steer companies through uncertainty?

Published

5 months ago

July 2, 2024

Q&A: how can finance leaders steer companies through uncertainty?

A combination of global elections, geo-political tensions and economic uncertainty has created a challenging landscape for finance leaders, who are often looked upon to navigate through tumultuous times.

James Simcox, chief product officer and managing director international at Equals Money, discusses overcoming challenges to international expansion and the importance of hedging risk.

What impact are elections across the globe having on businesses and their international growth plans?

The number one challenge for any business in this environment is uncertainty. I think the election in the UK will bring an element of much-needed stability, which will really benefit the UK economy and businesses. If Labour is elected, they have shown themselves to be pro-business and it will be really important for business leaders to have that reassurance that the current status quo will be maintained.

However, we are facing much more uncertainty on an international level, particularly with how things will play out in the US as well as France. Donald Trump has already signalled that he will seek to devalue the dollar should he come into power, which would certainly be an interesting development as currency has already proved something of a rollercoaster over the last couple of years.

As a result, we’re seeing an increasing number of finance leaders take steps to mitigate risk where they can, particularly around currency movements. When transactions involve different currencies, businesses are exposed to the risk of exchange rates moving against their favour, which can impact the value of international dealings. To deal with this, businesses need to hedge their currency risk by securing exchange rates for future transactions

One of the best tools available to help finance leaders balance their risk is booking forward contracts

With potential changes to policy, how can leaders act with authority and make confident decisions for the future?

In business, you will always need to take a bet in some shape or form as that’s the nature of growing a business and making money. I don’t believe businesses should put off making investment decisions, but instead think about ways to manage risk around those decisions and return profits in a fixed way.

One of the best tools available to help finance leaders balance their risk is booking forward contracts. From a budgeting perspective, having a set price for a number of contracts provides a level of stability for the company and reduces currency risk. Similarly, locking in tax rebates at a fixed price can be hugely important in helping businesses plan for the future.

Leaders can also take steps to manage costs such as spending in local currency. We see many businesses use their corporate credit card in local offices when they’re expanding but this is not an effective way of managing costs. It’s much better to manage operations in the local currency at a better rate using a currency card.

What are the barriers that businesses seeking to expand internationally face and how can they overcome those?

Businesses need to think carefully about the nuances and rules of the jurisdictions they are looking to expand into, including employment laws, the local tax structure and even ways of working. A mistake that businesses often make is believing that they can run an overseas business from the UK but it simply does not work like that. One of the most important things that businesses can do is employ people on the ground who have an understanding of the region.

Finance leaders should also not underestimate the importance of product market fit. As you expand, you need to be aware that a product that works in one market may need to be tailored to suit the needs and wants of customers in another region and this is where market research can prove invaluable.

Not surprisingly, currency can be a huge challenge when expanding internationally. A lot of international businesses still prefer to transact in US dollars rather than their local currency so finance leaders need to think about how they can collect payment in various different currencies.

This is where a multi-currency product, such as the one we offer at Equals Money, can be of fantastic use, providing customers with a single account to receive payments in up to 38 different currencies. Customers also benefit from support and the ability to speak to someone on the phone, which can be much harder to access through traditional banking overseas.

How important is it that finance leaders are seen as an anchor and inspire confidence in others?

It’s great that we are seeing finance evolve from a service function to a business partner and it’s key that finance leaders are involved in conversations about international expansion from the get-go. They need to take the lead on risk mitigation and that means understanding how to transact in different currencies, how to report back to the core business and how to plan across multiple markets and multiple currencies.

There’s a lot of research that needs to be done and this should happen upfront, so finance leaders are well prepared to overcome the different challenges from FX rates to transfer pricing. All too often, we see finance teams involved far too late and this can create panic and uncertainty around certain decisions.

Finance leaders should also pay attention to the political landscape in their local markets by keeping their ear to the ground and understanding what changes could potentially impact the business, such as interest rate movements or changes to local tax policy. There’s a huge value to employing advisers or specialist business consultants in local markets. Similarly, having someone from that region to work within the finance function who understands local accounting rules is key.

How can finance leaders ensure they are effectively using technology and payment platforms to drive better decision-making?

Data is key but it can be a challenge gathering the right information if you’re using multiple different providers across various different jurisdictions. Where you can, you should try and use a uniform technology payment stack across the entire business.

Of course, it’s not always possible to access that kind of service and in those instances, finance leaders need to think carefully about how they’ll integrate their accounting data into the business. Is there a standardised standard you can use to pull information from different systems and partners? Cross-border services can be really helpful, with lots of providers now offering the ability to transact from one place across lots of different markets.

It is also worth considering how cards can be used as a payment method. As long as the card provider supports payment in the currency you want, cards can be used to carry out domestic payments where banking may not support those. Interestingly, we are all quite happy to adopt new payment methods in our personal lives, but there’s much more reticence among businesses.

For businesses to thrive in international markets, I think we will need to see finance leaders embrace new ways of thinking and new methods of payment.

Find out more about how Equals Money can help simplify your finance processes and support international growth here

Finance

Citizens Financial Group to Participate at the Goldman Sachs U.S. Financial Services Conference

Published

18 minutes ago

December 2, 2024

Press Room

Citizens Financial Group to Participate at the Goldman Sachs U.S. Financial Services Conference

PROVIDENCE, R.I., December 02, 2024–(BUSINESS WIRE)–Citizens Financial Group, Inc. (NYSE: CFG) announced today that Chairman and Chief Executive Officer Bruce Van Saun will participate at the Goldman Sachs U.S. Financial Services Conference on Tuesday, December 10, 2024 at 10:00 am ET.

The live webcast will be available at http://investor.citizensbank.com under Events & Presentations.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $219.7 billion in assets as of September 30, 2024. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a full-service customer contact center and the convenience of approximately 3,100 ATMs and approximately 1,000 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at www.citizensbank.com or visit us on Twitter, LinkedIn or Facebook.

CFG-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20241202171739/en/

Contacts

Media: Peter Lucht — 781.655.2289
Investors: Kristin Silberberg — 203.900.6854

Finance

Financial Education Can Empower Young People in Kazakhstan – The Astana Times

Published

9 hours ago

December 2, 2024

Press Room

Financial Education Can Empower Young People in Kazakhstan – The Astana Times

Editor’s note: The Astana Times continues a section featuring articles by our readers. As a platform that values diverse perspectives and meaningful conversations, we believe that this new section will provide space for readers to share their thoughts and insights on various topics that matter to them and the AT audience.

Think about joining the work force right out of university, only to realize that you have no clue how to handle your salary, pay rent, or even save for the future. This is the reality that many young people in Kazakhstan face today. Without even basic financial knowledge, individuals are forced to make difficult decisions on their own and frequently end up making mistakes that have long-term consequences.

Aigerim Kosbayeva.

Overall, financial illiteracy has emerged as a long-term threat to the stability of the nation’s economy as well as the economic prospects of its citizens, and it deserves serious attention.

Most young people in Kazakhstan lack elementary skills of managing small amounts of cash, saving or handling credit. Although the curriculum of education comprises many subject areas, it lacks a focus on imparting important life experiences. As a result, young people enter adulthood without basic skills on how to manage debt or budget for future expenses. Financial instability among a sizable section of the populace has an adverse effect on economic growth and stability in addition to personal struggles.

The first strategic actions taken in personal finance, such as borrowing money or using credit cards, often set young people on either good or bad financial paths. For instance, a significant portion of the youth in Kazakhstan applies for loans either for personal use or informal financial loans without understanding the implications of such actions. This can result in deep debt, to the extent that they cannot finance other activities such as starting a business or buying a home.

To address this issue, financial literacy should be incorporated into the curriculum at all levels of education. Young people should be taught about issues concerning budgeting, saving and investing at an early stage so that they are well-prepared to manage these processes throughout their lives. Useful knowledge about effective budgeting, objectives for everyday expenses, saving, and other practices can help build a solid foundation that avoids excessive use of credit and other risky financial decisions.

Establishing such programs is not enough; we require qualified teachers who can effectively explain these concepts to achieve the desired results. Currently, there is a lack of qualified teachers in Kazakhstan at schools and universities who can competently and confidently teach the principles of financial literacy. Additionally, involving professionals from the finance sector to conduct workshops or seminars could help bring both theory and practice to life.

Furthermore, Kazakhstan can learn from examples of other countries. Singapore, for instance, integrates financial education into its school system, resulting in a financially literate generation. Similarly, schools in Finland emphasize mastering good financial skills at an early age, ensuring students grow up with sound financial knowledge.

However, some may argue against introducing yet another subject to the curriculum, citing the already heavy demands on students and the scarcity of funding for schools. Others might argue that teaching children how to use, save, invest, and manage money should be the responsibility of parents. Financial literacy is not just another addition to the formal education system; it is a part of personal life experience that significantly impacts every aspect of an individual’s future.

One of the tools that could enhance financial literacy includes financial applications and online classes. Such platforms would democratize knowledge and ensure that young people can learn various aspects of personal finance at their own pace.

Investing in personal financial capability is not only an investment in the population but also in the future of Kazakhstan. By ensuring people understand finances, we can foster increased commonwealth, greater investment and more informed decision-making, which will contribute to national growth.

It is crucial for Kazakhstan to promote financial literacy as part of formal education, organize special workshops for teachers, and encourage families to engage with financial topics together with their children. In doing so, we can ensure that our younger generation creates better and safer lives for themselves and contributes to building a stronger nation.

The author is Aigerim Kosbayeva, a graduate student of the Nazarbayev University Graduate School of Public Policy.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of The Astana Times.

Finance

Stock market’s record run sets stage for December gains, pros say

Published

21 hours ago

December 1, 2024

Press Room

Stock market’s record run sets stage for December gains, pros say

The market’s record year may have more room to run, with sentiment buoyed by recent outperformance and historical trends.

Stocks have notched all-time highs following President-elect Donald Trump’s victory earlier this month, as Wall Street remains optimistic over the incoming administration’s economic agenda despite looming tariff risks.

“Tariff threats may trigger near-term market volatility, but the fundamental backdrop remains supportive,” UBS Global Wealth Management’s Mark Haefele wrote in a note to clients on Wednesday.

This year, the S&P 500 (^GSPC) has notched more than 50 all-time closing highs, while the Dow Jones Industrial Average (^DJI) and Nasdaq 100 (^NDX) are not far behind.

Looking ahead, strategists suggest the market’s bull year could end on a positive note.

“At this point, you can’t deny that everything looks positive,” Michele Schneider, chief strategist for MargetGuage.com told me on Yahoo Finance’s Morning Brief, adding that investors should “stay with the momentum and stay with the trend.”

Using history as a guide, the odds are for that trend to be on the upswing. According to CFRA’s Sam Stovall, December is the S&P 500’s most consistent month of gains, with the greatest frequency of advances (batting average). It also has the lowest volatility — nearly 40% below the average for the other months since World War II.

During the month, the S&P MidCap 400 and SmallCap 600 indexes have outperformed other areas of the market, followed closely by the Utilities (XLU), Industrials (XLI), Materials (XLB), and Financials (XLF) sectors.

What sets this year apart is the election adding to the bullish sentiment. December historically ranks as the S&P 500’s second-best month of the year during election years, with an average return of 1.3% since 1950, according to analysis from Carson Group’s Ryan Detrick.

His analysis also found that strong year-to-date performance often increases the chances that investors will chase the market into year-end. Of the past 10 times the S&P entered December up more than 20%, the month of December recorded an average gain of 2.4%.

Looking further ahead, the potential for a Santa Claus rally — which is when stocks climb higher in the final five trading days of the year plus the first two trading days of the New Year — could further boost returns.

Stock Trader’s Almanac editor in chief Jeff Hirsch, who explains that Thanksgiving kicks off a run of solid bullish seasonal patterns for the market, recently wrote that he has “combined these seasonal occurrences into a single trade: Buy the Tuesday before Thanksgiving and hold until the 2nd trading day of the New Year. Since 1950, S&P 500 has been up 79.73% of the time from the Tuesday before Thanksgiving to the 2nd trading day of the year with an average gain of 2.58%.”