Tags:
  • cash pooling
  • derivatives
  • in-house banks
  • treasury management systems

A vision for change

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Award runner-up Intrado successfully navigated a wide-ranging programme of change, from setting up an in-house bank to managing the transition from public to private company.

by Rebecca Brace

Updated: October 08, 2019

Sometimes small treasury teams can achieve great things. This was certainly the case for US-based communication services provider Intrado (formerly West Corporation). With a clear focus on reducing costs, increasing efficiency and improving effectiveness, the team has successfully managed a wide-ranging 18-month transformation project.

Room for improvement

When Executive Vice President & Treasurer Chris Wikoff joined West Corporation as in 2016, there was plenty of room for improvement. “Treasury lacked any established system, set of tools or framework for managing data, decisions and processes,” Wikoff explains. “We really lacked anything that could bring order and consistency to the task of managing a corporate treasury function for a company with over $2 billion in revenue.”

To address this, Wikoff quickly set in motion a programme to address this shortfall. “One of the first things we did was set a vision and visual framework for what it would look like for corporate treasury to operate as a centre of excellence,” he says. “We started talking as a team about what sort of processes, tools and systems we would need to facilitate that.”

Within six months, the team began sharing the vision with senior management, as well as seeking support from functional areas outside of treasury such as tax, finance and accounting and gaining external validation from a consultancy company. Then, after months of preparation, the team began working on RFPs to find external partners.

Notable achievements

One of the first milestones was the creation of an in-house bank. The resulting structure was used to pool cash in USD, GBP and EUR across 12 countries and 17 entities into header accounts held by the company’s Dutch legal entity. Among the benefits of the solution was the ability to reduce working capital requirements while mobilising cash around the world to support the business, with minimum cash balances in EMEA reduced by 40%.

That was just the start: the company also introduced a new treasury management system provided by Kyriba and integrated the system with the company’s banks in order to automate data capture for almost 200 accounts around the world. The new solution was integrated with an Oracle cloud ERP system which was being rolled out across the group, as well as a project to consolidate the company’s billing systems.

Other components of this far-reaching project included setting up shared service centres in Manila, Philippines and India, which went live for accounts payable in Q4 2018, with further process consolidation in 2019.

Chris Wikoff, Executive Vice President & Treasurer, Intrado
At the same time, the treasury played an instrumental role in supporting the business through the 2017 take-private transaction and transformation under Apollo Global Management LLC – a task which involved restructuring the company’s debt portfolio and interest rate hedging program. “Prior to the take-private transaction by Apollo, we had an interest rate swap programme in place to hedge floating rate debt,” explains Wikoff. “As part of that transaction, we unwound that programme.”

In addition, the post-LBO debt structure still had considerable term loan floating-rate debt to be hedged. “Following the new debt structure and recapitalisation from the transaction, we re-built the hedge portfolio,” Wikoff says, noting that the company worked with several banks on this: “Credit Suisse is the admin agent and lead bank on the term loan, and RBC is the lead on our bonds. We have a revolver that has several participating banks.” Since going private, the treasury has also supported the company through eight acquisitions in different countries.

Reaping the rewards

Following this extensive programme of change, Intrado’s banking relationships have been rationalised from 10 to two (Bank of America Merrill Lynch and Nordea) in the US, Canada and Europe, while the number of bank accounts has been halved in the US and reduced by more than 20% in EMEA. As a result, the treasury has reduced bank fees by over $300,000.

Meanwhile, the adoption of the TMS – combined with the ERP roll-out – has reduced the company’s previous reliance on proprietary bank systems, meaning that treasury staff now spend considerably less time aggregating the global daily cash position. “We’ve been able to focus on more strategic and value-add activities like cash repatriation, cash tax savings initiatives, funding M&A and mitigating revolver draws,” says Wikoff. And the time spent on daily global cash positioning has been reduced from 2-3 hours to 20 minutes, freeing up over 60 hours a month for more value-adding activities.

Managing change

Achieving a change programme of this scale does not come without considerable planning and the ongoing management of many different components. Wikoff says that patience and communication have been key to the treasury’s achievements. “This was not a siloed treasury project – this was highly connected to finance, accounting, accounts receivable, accounts payable and billing,” he says. “So it was important to keep all the moving parts co-ordinated, and enable people to communicate without having a calendar full of meetings.”

The length of the project also meant ‘project fatigue’ had to be overcome at times. “There were periods where we were far from done, but we still had to rest, celebrate and recalibrate,” Wikoff explains. “At certain points we had to have ‘health checks’, that were different from a status update – it was about stepping back and seeing how the team was doing, how well we were managing the project and what other priorities had come at us from elsewhere in the business.”

As well as the financial and efficiency benefits, Wikoff says the project has led to lower attrition within the treasury and a more stable team environment in which people feel successful. “Vision, determination and teamwork were the essential enablers to our strategic change,” he concludes. “Without any one of these, we fail. We did not set out to accomplish a project or two – instead we pursued a journey that changed everything we do, while the company transformed also.”


 

Hear more from Intrado and all our other EuroFinance Award Winners and runners-up at International Treasury Management in Copenhagen