To be a champion in any walk of life, you need to have a very particular set of skills. Champions are able to dream of future success while also being focused enough to plan the practical steps that need to be taken to achieve this dream. Champions require the mental fortitude to see through a project to the end, but also the flexibility to change course for the greater good should circumstances change.
These are all attributes that are ably demonstrated by this year’s Treasury Champions. They have all shown the ability to take the long view, demonstrating critical thinking that not only benefits their organisation today, but also lays the groundwork for future success.
A theme that links all of our champions this year is ruthlessness when it comes to eliminating manual processes. For instance, Brady Corporation focused on consolidating its card processing activities. Both Honeywell and Schlumberger used treasury technology replacement projects as a springboard for bringing efficiencies to every area of their workflow. Faurecia overhauled its entire bank communication network, while Dassault Systèmes implemented two ambitious projects simultaneously.
At Procter & Gamble (P&G), the focus is on continuous investment in the ‘wiring and plumbing’. Gilead Sciences demonstrates how automation can bring the scale required to manage vast sums of cash with lean resources. For Sandvik, the task of physically relocating the entire treasury department opened up the opportunity to refine processes, and at AstraZeneca and Hewlett-Packard (HP) the treasury department helps join the dots between the different areas of the business. Together, they tell an inspiring story of what true treasury champions can achieve.
Partner for business success
Patricia Greenfield, head of treasury operations at AstraZeneca, provides an example that many treasurers will be familiar with. “Up until around five years ago, [we] hid our light under a bushel somewhat,” says Greenfield. “We didn’t feel it was our thing to sing our own praises.” All that changed following an internal mission statement that was put together by the company’s then senior VP group finance and CFO, which challenged them to become the best financial function in the pharmaceutical industry.
“How are you going to know that unless you benchmark yourself?” says Greenfield. That was the spark. “We started talking to other treasurers and to the banks, saying that we thought we had a decent story to tell.”
At AstraZeneca, a global biopharmaceutical business, the role of treasury is as a true strategic partner to the business. “Treasurers are business partnering globally, which is where the influential side comes in,” says Greenfield. “If there’s a business problem, we will quite often have an answer to it or a list of directions that we can send people in.”
It is that proximity to all areas of the business that makes treasury a key player, according to Greenfield. “You’re sat in the middle of everything in treasury – you know what is going on, who is doing what, and what the structure looks like. That’s the joy of treasury. It is one of the few roles that you have in a big organisation where you catch sight of everything that is going on in the whole company rather than just focus on one thing.”
Greenfield offers some sound advice. “Have zero tolerance for manual processes. Perhaps most importantly, don’t accept second best as a treasurer. You don’t need to.”
A moving story
Completely relocating an entire treasury department is a big enough project in itself, but running this project provided Anneli Walltott, global head of cash flow management, and Anders Öbom, group treasurer at Sandvik, with more opportunities than problems. “We saw the move to Stockholm as a chance to imagine how we would like our treasury department of the future to operate,” says Walltott.
The global engineering group, formed in 1862, employs 25 staff in its centralised treasury department. Moving location was not as simple as just switching off the computers in one location and turning them on in another.
“We took a snapshot,” says Walltott. “We reviewed and documented every single process that we did, when we did it, and who was responsible for doing it. Then we thought about the future, with workshops and many meetings, and made a picture of what we wanted our treasury department to look like in the future.”
The review process was vital as it gave the team the information they needed not only to move the location of their treasury, but also to bring onboard many enhancements to their operations. “We discovered some 220 items that we could change in our existing processes in order to become more efficient,” says Walltott. “We then split these into three groups, quick, medium and long-term in terms of how easy they were to implement.”
The project ran for a year and a half from conception to completion. Now happily setup in Stockholm, Walltott says that the Sandvik treasury is seeing the benefits of such a thorough project plan: “We have cut out many hours of manual processes from our day. This is now time we can spend adding greater value to the business.”
Leveraging size for a global view
Schlumberger, an oil services company with revenues of US$43.5 million, was looking to integrate the treasury processes of a company that it had acquired in 2010. This company used many more manual processes, which combined with Schlumberger’s payments platform being due for an upgrade, led to a project that reshaped the way that the Schlumberger treasury operated. “We wanted to migrate everything to a new platform and adopt XML messaging to provide better visibility of our cash and also to integrate all trade finance and liquidity solutions into a complete banking solution,” says Joanna Todd, eastern hemisphere treasurer at Schlumberger
“The biggest part of this process has been harmonising our banking relationships, not only at a country level but also to organise them on a regional level in order to leverage our size.” The key to success was the 12 months of work on the RFP. “There were 923 questions in our RFP and many of the banks were telling us it was the biggest RFP they had ever seen,” says Todd. Five banks were finally selected to cover six main regions.
The entire global implementation has taken around a year and involves two parallel teams. “The first team, including key support from our Malaysian shared services centre, manages the set up and opening of the bank accounts,” says Todd. “This involved around 520 new bank accounts being opened in over 50 countries, a huge project on its own with all the required documentation and KYC [Know Your Customer]. The second team works out of Dubai and India on the technical solution, the XML format and harmonisation, including 20 different payment types.”
With implementation nearly complete, benefits are already tangible. “Our new pricing structure with the banks has already been implemented,” says Todd. “Having such a global RFP means that you benefit from the scale of the project.”
Consolidating card processing
A quest for standardised processes led the treasury department at Brady Corporation – an internationally diversified manufacturer – to invest in a new global merchant acquiring platform.
“We had found that our international locations had been processing credit card payments through disparate systems and had different processes for handling global merchant activity,” says Ben Krajcir, assistant treasurer. “We wanted to standardise the process of accepting credit card payments with one provider that would process the transactions for us.”
The Brady treasury team worked with the AR process leader to identify all of the units internationally that accept credit cards and then summarised their current processes and any specific needs they had for a merchant processing solution.
“This information helped us go out for RFP to each of our banks, credit card providers and some other processors,” says Krajcir. “We wanted to find out what services they had, in which countries they offered the solution, what their user interface looked like and what their product offered.”
Once the provider that best met the needs of the company had been identified, Krajcir and his team were able to negotiate the fees and rates for their activity and roll out the new platform. “The bulk of the implementation took us four months and it has been a successful project for us,” says Krajcir. “We are able to save around US$750,000 per year in fees by leveraging the total volume of all our platforms. Additionally, we were able to reduce some headcount in our shared service office.”
The vision to do more
When faced with a treasury management system (TMS) that was no longer being supported by the vendor, Honeywell seized this as an opportunity to assess all of their treasury processes and create a vision of what their ideal TMS would do. “Value added analysis is key for treasury, we were keen that process should be as lean as possible,” says Séverine Le Blévennec, director treasury Europe, Middle East & Africa.
Operating in four key industry sectors – aerospace, automation and control solutions, performance materials and technologies, and transportation systems – and with sales of US$37.7 billion in 2012, making the right technology decision was vital. “We reviewed all our present processes and determined a project charter for each treasury process to create our ideal workflow” explains Le Blévennec. “We then cross-checked this information with what the vendors were promising. For every process where they would say ‘we can do this’, we pushed them to explain exactly how they would be able to do what they were promising.”
With in-house bank transactions tripling in five years, but the number of treasury staff remaining at the same level, this approach was critical to achieving the productivity savings that the Honeywell treasury was looking for.
“We are now about 75% through our implementation and already have 10 new interfaces bringing additional data directly into the central TMS,” says Le Blévennec. “In addition, we have removed 41 manual steps from our treasury operations, automated 32 reports that used to be manual and added 27 additional control points. And we’re not finished yet!”
The treasury team at Faurecia faced a challenge in achieving true cash visibility and ensuring the security of its payments with over 320 sites, including 40 R&D facilities, in 34 countries. “We have many different bank communications systems,” says Baudouin Courau, VP financing & treasury, Faurecia. “Many of these are administered locally. We don’t have visibility over these.”
To bring more security and efficiency to the payments processes in the group, Courau and his team embarked on a major bank communication transformation project. “We decided to roll out a single bank communication platform that is bank agnostic,” says Courau. “This programme completely fits our target of having all finance managed by country, with nearly all transactions taking place in the shared service centres with one single system.”
The system will allow seamless two-way communication, for sending all payments out to banks and for receiving all bank account statements back. “We began the deployment in France, Spain and Portugal,” says Courau. “Most of the rest of the eurozone is being rolled out in the second half of 2013. After this we will start deploying the system everywhere else, knowing that in some countries it will be much more difficult than in others.”
As well as enabling true global cash visibility, there are other benefits to the project. “It will reduce the number of banks that we are working with and better balance the credit exposure and revenue that the bank gets from the ancillary side business, such as cash management,” explains Courau. “This is usually all low risk and only fees.
John Colleemallay, senior director of group treasury & financing at software company Dassault Systèmes was striving for greater efficiency across treasury processes. To that end, he worked on two major projects – cash pooling and Swift implementation – simultaneously to transform the company’s cash management.
“For cash pooling, we were initially looking for better management of cash and better investments of our cash,” says Colleemallay. “We harmonised our banking relationships worldwide to just two main banks per region and then set up an overarching cash pooling structure, linking our regional pools in Europe, the US and Asia.”
“At the same time, our aim was to communicate with our banks via the Swift network,” says Colleemallay. “The idea behind this was to communicate with all our banks using one TMS and to cut out all of the various different online bank platforms.” To carry out these two projects in parallel required additional resources, and Colleemallay had a dedicated project team to work on it.
By reducing core banking relationships and implementing cash pooling, treasury can easily monitor all cash flows via a single tool. “If my CEO comes to me and says that we are making a major acquisition in the next few days for a huge amount of money, it is not a problem,” says Colleemallay. “I know where all the cash is and that it is easily accessible.”
Successfully scaling the heights
How does a company manage market capitalisation in excess of US$70 billion with just 17 treasury staff? This conundrum was tackled at Gilead Sciences, a research based biopharmaceutical company. “We look to automation as a key mechanism to scale,” explains Brad Vollmer, Gilead’s treasurer. “We try to keep processes and structures elegant but simple.”
It was exactly this thinking that led the Gilead treasury team to implement a major project to automate number of processes within treasury by installing infrastructure. “We purposely avoided calling the project a treasury workstation implementation,” says Vollmer. “The project was not about successfully implementing a piece of technology. Instead, the main goal was to automate treasury processes. To accomplish this, we had to implement a number of technologies and link them together.”
Due to the scope of the project, a cross functional team was formed consisting of people from accounting, internal audit, IT, the shared service centre, and treasury team. The company also hired professional project managers to oversee the work. “At the same time, we could choose the technology we felt would work best at Gilead and that fit our model,” says Vollmer. “We then took a very hands-on but nimble approach to implementing the solution. The team focused on execution and delivery and was relentless about avoiding scope creep.”
The result of this attention to detail has been that Gilead now has an end-to-end solution that enables finance to scale its growing business as it adds new entities. It also dramatically reduced the manual processing of data due to the high level of straight-through processing. “The team spends significantly less time processing transactions and now spends more time analysing data,” says Vollmer. “We are moving up the value chain.”
Responsive risk management
Risk management has been a top priority for many treasurers in the wake of the global financial crisis.Hewlett-Packard (HP), a global technology company with annual revenue of over US$120 billion and more than one billion customers in more than 170 countries around the world, is no exception. The treasury has worked to update its investment management and counterparty risk policy.
“We needed to recognise that the world has changed,” says John Gleason, VP & assistant treasurer at HP. “We identified that we needed a more flexible operating model that reflected what was going on in the banking environment and also internally with respect to our needs for bank counterparty credit.”
The HP treasury evaluated its existing counterparty risk policy and also carried out benchmarking with a number of banks and other corporates. “We wanted to know what concerns other treasurers and other boards of directors have around counterparty risk and the appetite in the current market environment for different types of risk,” says Gleason. “Then it was a case of quantifying this information and developing a policy based on this research.”
That updated policy received board approval in the second quarter of 2012. “Now that we have a policy that we are all comfortable with, we are moving into fine-tuning our execution and implementation model,” says Gleason. “We are working on how we can get the best return results.”
Procter & Gamble
Invest for success
When your company has been successfully operating since 1837, you must know a thing or two about planning ahead and changing with the times. That is certainly the case for Procter & Gamble (P&G), the Fortune 500 consumer products company with sales of US$83.7 billion in the 2012 financial year.
Supporting the business is a very centralised treasury department with 45 staff around the world. “We are not a profit centre, that is not our job,” explains John Byma, director global treasury at P&G. “We deliver good added value to the organisation.”
Byma says that a critical way for treasury to be able to add value to the business is to routinely invest in processes and systems. “We have never gone wrong when we have invested in getting the data and building the infrastructure. Every time we do this, we drive efficiency and capability. By investing in the ‘wiring and plumbing’, we reap the benefits for years to come.”
This investment has seen the treasury team work on a series of additional activities over the past couple of years, including onboarding with Swift, dealing with the implementation of Dodd-Frank in the United States, and fully documenting their TMS capabilities.
“We went back to the TMS vendor and fully documented on both sides how the system is used, its capabilities and anything that is unique to us,” says Byma. “There are now 200 pages of documentation that people in the company or at the vendor can refer to for any question that may come up in the future. It keeps that knowledge in-house.”
Byma concludes that ongoing investment in treasury is essential: “If your treasury does not do this, you had better start. If it has been a while since you did a project like this, the time is right to revisit it.”