EuroFinance

IATA Pay

IATA Pay, developed by the International Air Transport Association, is a game-changing, global account-to-account payment solution leveraging instant payments and open banking to modernise and optimise payment processes within the airline industry. In response to industry challenges such as high payment acceptance costs (estimated at $20.3 billion annually) and untapped retail potential, IATA Pay offers significant financial and operational benefits. It reduces processing fees by up to 99%, accelerates settlements, virtually eliminates fraud risk, and simplifies airline operations by streamlining settlement, reconciliation, and refund processes. Through its global reach, it also simplifies operations by offering universal reachability through a single provider. 

The solution, currently live in 25 countries and planning further expansion, provides a unique offering in the instant-payment landscape. Furthermore, it allows airlines to maintain full control over the payment data, integration flows, and branding, solidifying its position as a trusted provider and a leader in the airline industry.

Winner: Airtel Africa

Airtel Africa, an integrated telecom provider operating in 14 frontier markets, has a two-pronged approach to growing its business: Telecom and Mobile Money. Despite high potential for growth in both areas, Airtel Africa faces challenges including rising global interest rates, macroeconomic volatility, lack of depth in local financial markets, and foreign exchange (FX) convertibility issues, all of which necessitate strategic solutions to continue to support stronger investments in its vision to transform lives through digital and financial inclusion in the continent. 

To overcome these challenges, Airtel Africa’s treasury team acts as a strategic thought leader, implementing key strategies such as targeted financing solutions in the operating entities with local banks and Development Finance Institutions, optimisation of capital structures within the Group, and innovative liquidity management solutions. These solutions aim to provide long-term financing in fixed interest rates and local currency, mitigate FX risk, replace foreign currency debt with local currency debt, and safeguard against trapped cash situations.

Key benefits of these solutions include enabling business investment, facilitating double-digit growth in Revenue and EBITDA, reducing Holdco Debt, and mitigating substantial FX costs. Airtel Africa emphasises the importance of multiple complementary solutions in volatile environments and highlights its wider role in enabling infrastructure development, digital inclusion, and financial inclusion in emerging markets, thus aligning with six of the 17 UN Sustainable Development Goals. The strategies employed by Airtel Africa are not only beneficial to the business but also have far-reaching impacts on the communities they serve.

Winner: Siemens Gamesa

In the face of a complex system landscape brought about by a simultaneous carve-out and merger, Siemens Gamesa embarked on an ambitious project to construct a new payment. The company faced significant challenges, including the need to unify two disparate systems – a mature, powerful, yet complex Finavigate, and a low-maturity, scattered systems. The goal was to harmonise these systems, automate processes, increase visibility, and ensure compliance and security, all within a tight timeline to avoid breaching the merger contract and incurring penalty fees.

The treasury team at Siemens Gamesa managed to dismantle its fragmented system landscape, establishing an innovative in-house bank that allowed for real-time reporting and automation on an unprecedented scale. The newly implemented system provides 100% cash flow visibility and processes both outflows and inflows automatically using AI algorithms. This new system has significantly reduced complexity across all 235 entities in 85 countries and set a new benchmark for process automation. The project resulted in significant time and cost savings, with the new in-house bank enabling the closure of 800 bank accounts over two years.

Highly commended: SKF Group

SKF Group, Swedish bearing and seal manufacturer, implemented a global payments factory, transitioning from a 100% manual payment process to a fully automated, digitised process for purchase to pay. Before implementing a global payment factory, SKF’s local finance teams executed payments manually across its many entities and countries, leading to significant variations and inefficiencies. While some entities could directly send payment files to banks, this was an exception, revealing a lack of standardised and automated payment procedures across the organisation.

While the implementation project was challenging due to the scale of operations, covering 50 countries, 132 legal entities, and 300 users, the project has been successful, with SKF’s today centralised finance operations teams, now operating a no-touch payment flow with straight-through processing. The new process standardisation has improved productivity and integrated the company’s scattered system landscape, resulting in significant cost savings, including a reduction in bank accounts and a sizable FTE reduction. Additionally, the treasury team now operates with enhanced payment compliance, strongly increased security and work efficiency.

Winner: Unilever

Unilever, one of the world’s largest consumer goods companies, demonstrated remarkable foresight by improving its cash forecasting capabilities in preparation for the rising interest rate environment. Despite its global presence, Unilever standardised key processes throughout the organisation, improving the accuracy and timeliness of data used for forecasting future cash positions.

Due to Unilever’s scale and growth, cash flow forecasting was highly challenging. Some countries produced detailed forecasts with labour-intensive manual inputs, while others produced none. The treasury team aimed to centralise forecasting by leveraging its universal data lake, integrating additional data sources from its Treasury Management System (TMS) and banking platforms, and automating forecasting processes.

This new system greatly improved Unilever’s cash flow forecasting. The treasury team could extend its forecasting horizon from a few weeks to three months, with improved accuracy from 50% to 80% in most categories. Consequently, the treasury team could make more informed decisions on investments and liquidity management, expecting to benefit by €1.5 million a year when fully implemented across all geographies. It also reduced manual forecasting tasks, improving the efficiency of the global treasury team. Unilever’s experience teaches that technological solutions can dramatically improve cash flow visibility and responsiveness to changes in the business environment. 

Winner: Bristol Myers Squibb

2022 was marked by a volatile macro-economic environment due to rising interest rates, inflation and geopolitical instability. The New Jersey-based drugmaker, Bristol Myers Squibb’s (BMS) Treasury team turned challenges into opportunities and successfully generated profits and positive cash flows. In addition, a significant challenge also came from its acquisition of Celgene Corporation in 2019, which led to the complex integration of two Enterprise Resource Planning (ERP) systems and doubled the number of legal entities, significantly increasing risks, particularly the balance sheet and cash flow foreign exchange (FX) risk.

Faced with these complexities and increased financial risk from currency volatility and rising cost of debt, BMS made various strategic moves that included a $6B debt restructuring, acceleration of the 2023 cash flow hedging program, implementation of a cross-currency swap strategy for six currencies and automation of processes.

The $6B debt restructuring strategically reduced pressure on the company’s liquidity position and freed- up cash flow to allow for additional investments in business development transactions, existing pipeline, and new product launches during the loss of exclusivity (LOE) period of BMS’s key brands while also generating interest savings. The acceleration of the 2023 cash flow hedging program mitigated currency risks and P&L volatility and the implementation of a cross-currency swap strategy for six currencies further reduced interest expenses for 2022 and 2023. The treasury team also implemented an FX third-party tool which facilitated the aggregation of FX exposure data from two ERP systems and hundreds of legal entities. It led to seamless handling of transactions, from identifying exposures to executing and recording trades.

This success was driven by the BMS Treasury team’s bold and timely decision-making, commitment to automation and robust leadership support. BMS’s innovative financial strategies would help position the company to invest in new product launches, clinical trials and acquisitions and licensing deals, bolstering their mission to discover, develop and deliver innovative medicines that help patients prevail over serious diseases.

Highly commended: Primetals Technologies

The engineering and plant construction behemoth, Primetals Technologies successfully implemented its in-house bank strategy, offering various benefits including bank independence, interest optimization, intercompany clearing, and centralised foreign exchange (FX) trading. Initially, the treasury team faced significant challenges, including starting from scratch with a single employee, no structure, guidelines, or systems in place, and a tight deadline.

In response, they chose to implement a centralised treasury management system (TMS). This system facilitated group-wide cash management, reduced bank account volume and payment formats, and improved intercompany financing and FX trading. As a result, the treasury team gained complete visibility over its cash, intercompany concentration, and FX activity, enhancing its agility and liquidity planning.

The TMS also allowed the company to close over 100 bank accounts, limiting its core banks to just three, and establish a payment factory setup that resulted in seven-figure interest gains. Looking forward, the treasury team plans to leverage AI for fraud prevention, aiming to cover over 200,000 payments annually. This implementation demonstrates the treasury team’s ability to leverage technology for improved liquidity planning, thus enhancing its capacity to respond to global economic challenges.

Just as businesses are looking at radical change to keep themselves relevant, so too must treasury. Disruption is a given. But how to create a coherent strategy of how to remodel? How to evaluate in advance the myriad risks that new business and treasury models are likely to entail? Winners of this award have innovated to drive treasury efficiency, control risk and create value for the wider business.

Treasury technology is rapidly advancing and proliferating into every aspect and function of treasury, often making recent tech obsolete or less useful. This award recognises a treasury team that has collaborated with a partner in implementing new and innovative technology that has successfully transformed their treasury function.

Treasury has become a driver in joining up disparate systems and making their data available for real-time analysis. This award recognises their role in reducing complexity and increasing visibility and insight, connecting treasury to the business in a way that has not been possible until now.

The coronavirus pandemic has caused a global economic shock, and aside from the human toll has played havoc with treasury forecasts and hedging strategies. This award recognises astute risk management actions by treasury that protected staff and enabled their companies to survive.