Holcim’s treasury transformation in Latin America
Treasurers at Holcim, a global leader in innovative and sustainable building solutions, share how they restructured treasury in LATAM to support the growth pillars of the Group strategy.
In November 2021, Switzerland based innovative and sustainable building solutions giant, Holcim, launched its Group strategy for 2025 to accelerate growth, expand solutions and products, lead in sustainability and innovation and deliver superior performance.
In order to support these growth pillars, the Latin America treasury team underwent a transformation within its operations by shifting the treasury function to a Centre of Excellence (CoE) to leverage expertise and know how, realise synergies with the regional BSCs (process and IT) and gain agility in corporate governance alignment while supporting growth activities in each market.
“We desire that the treasury needs to be bold and completely aligned with operational and commercial teams, in terms of insurance and solutions” said Carmelo Mendoza, Latam Head of Treasury at Holcim at the EuroFinance Treasury Management International in September.
The treasury team aspires to be a strategic business partner for different segments within the Group to support the growth of a range of customers, from small and independent companies to large-scale construction behemoths. While the team is adept at managing debt and liquidity of the company, it aimed to implement B2B and B2C financing solutions in order to support the growth of the top line and reduce the risk of bad debts.
However, this was a challenging task as multiple SME customers were already struggling to timely repay debt due to the pandemic. By partnering with non-traditional funds, banks and Fintechs, the treasury team was able to provide tailor made solutions to different commercial segments as per their client needs. Within eighteen months, the treasury team was able to develop and roll out multiple financing solutions in different countries for different segments, thereby having a direct impact on the top line of the business and shortening the cash conversion cycle (CCC) of the company as these customers made payments earlier than before.
Sustainability is at the core of Holcim’s strategy. With its goal of achieving net-zero emissions by 2050, it is critical for the treasury team to provide liquidity earmarked for sustainable goals as well as funds at a reasonable cost to suppliers supporting sustainability targets.
After negotiating with banks and non-traditional third-party financial institutions, the treasury team was able to launch a green confirming line in the region which allows suppliers to reduce their financing cost.
“We are working with non-traditional fuels in order to reduce our CO2 footprint but we as a treasury, what we are doing better is trying to renegotiate all the financial and potential products for customers, suppliers and also for ourselves.” said Ana Maria Paz, Latam Head of Treasury at Holcim.
At the same time, the team is also negotiating better interest rates to transform its traditional oil based transport system into a sustainable one, for which it has already put in place green leasing lining in Latin America.
The treasury team is facing a multitude of challenges in the LATAM region, including low bankarization of customers and low penetration of global banks, thereby heavily relying on local banks which may not offer the full array of digital solutions.
Thus, it is necessary for the team to simplify the banking landscape at the country level by engaging with a primary relationship bank with most of the services including payments, payroll, credit cards and then additional banks for collection. By doing this, the treasury team aims to reduce one-fifth of its current bank accounts, translating into a significant reduction in bank fees.
At the same time, the treasury team is implementing new technological financial solutions in order to improve customer experience, but also improving the security level of all transactions. While, on the commerce side, the team is creating a better digital payment environment for B2C and B2B customers, including solutions like QR codes and payment links.
Before initiating the transformation process, Holcim had a Treasurer in each Country in Latin America, which meant that similar processes were being performed differently across the region and making Treasury governance more challenging.
During the restructuring, an important change was to move from a local treasury team in each Country reporting to the local CFO to a regional treasury team with a broad vision reporting to the LATAM CFO. In this process, the local CFOs and regional team redefined roles and their profiles, optimised the organisation, improved processes and achieved higher alignment from a regional and global perspective.
The efforts of the treasury team have not only reduced costs, generated process efficiency and helped progress towards sustainability targets, thereby contributing towards the Group achieving its strategic targets for 2025.
Holcim won the EuroFinance Treasury Excellence award in the mastering strategic change category and its treasury team also spoke at the EuroFinance International Treasury Management Vienna conference in September 2022.