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Treasury centralization: Charting financial innovations of Avery Dennison and Arup

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In a world where financial intricacy and global operations intersect, the strategic centralization of treasury functions emerges as a critical lever for treasurers aiming to harness efficiency, mitigate risks, and propel growth.

This narrative delves into the journeys of Avery Dennison and Arup, two distinct yet similarly ambitious entities in the realms of material science and engineering consulting, respectively. Each embarked on transformative paths towards treasury centralization, driven by the need to streamline operations, enhance liquidity management, and fortify their global financial frameworks. 

Avery Dennison: Navigating material science with strategic treasury

Founded in 1935, Avery Dennison has grown from a modest manufacturer to a global leader in material science innovation. With operations across more than 50 countries, the company boasts a diverse portfolio that includes self-adhesive materials, labels for consumer goods, wound care products, pressure-sensitive solutions, and retail branding tools. 

A significant part of Avery Dennison’s financial strategy revolves around the strategic centralization of its treasury operations. Led by Ramon Tolk, Senior director of treasury, the company embarked on a transformative journey to centralise treasury activities that were once dispersed across regions. This move was not about consolidating power but enhancing strategic decision-making, risk management, and operational efficiency on a global scale.

The centralization process involved redefining the roles and responsibilities of regional treasury teams, shifting them from isolated operations to a cohesive, integrated global team. This strategic shift allowed the treasury team to manage its cash flow, foreign exchange risk, and financing activities more effectively, providing a holistic view of its financial landscape.

A cornerstone of Avery Dennison’s treasury transformation is its embrace of technology. The company migrated to a new Treasury Management System (TMS), to streamline its treasury operations. This technological upgrade facilitated better cash visibility, risk management, and operational efficiency, enabling the treasury team to make informed decisions swiftly. The integration of a unified TMS across global operations has been pivotal in improving real-time visibility of cash positions, enhancing FX risk management, and optimising liquidity. By leveraging technology, the treasury team can anticipate financial risks and opportunities, ensuring the company’s financial health and operational resilience.

However, the journey towards treasury centralization and technological integration was not without its challenges. The treasury team had to navigate the complexities of aligning diverse regional operations, managing change resistance, and ensuring seamless integration of new technologies. 

“The treasury team’s success in overcoming these challenges was rooted in clear communication, stakeholder engagement, and a strong mandate from executive leadership.” Tolk told delegates at the 2023 EuroFinance International Treasury Management conference

The treasury team plays a key role in driving innovation within the company’s financial operations, exploring new financing structures and implementing sustainable finance practices. This reflects a commitment to aligning the company’s financial strategies with its overall corporate values and sustainability objectives.

As Avery Dennison progresses, its treasury team is dedicated to improving efficiency, managing risks, and fostering innovation. Looking ahead, the team aims to integrate more predictive analytics, artificial intelligence, and blockchain technologies to refine cash forecasting, streamline transactions, and increase transparency. Through ongoing investments in technology and innovation, the treasury team plays a crucial role in guiding the company’s financial strategies and shaping its future.

Engineering financial precision: Arup’s journey to treasury centralization

Arup’s initiative to centralise its treasury operations marks a strategic evolution within the engineering and consulting giant, renowned for its pivotal role in delivering some of the world’s most iconic infrastructure projects. As a firm that shapes the physical landscape through engineering prowess, Arup’s move towards treasury centralization reflects an equally meticulous approach to sculpting its financial landscape, ensuring it remains as innovative in finance as it is in engineering.

At its core, Arup’s centralization endeavour was motivated by the intricate challenges posed by managing a diverse and globally dispersed project portfolio. From constructions like the Sydney Opera House to the Marina Bay Sands, Arup’s engagements span multiple jurisdictions, each with its unique financial regulations and challenges. Centralising treasury functions aimed to streamline cash management, enhance liquidity, and consolidate risk management practices, thereby ensuring a unified approach towards global financial challenges.

The journey toward centralising Arup’s treasury was meticulously planned and executed, involving significant shifts in operational paradigms and an extensive cultural transformation within the organisation. The initiative sought to bring under one umbrella the various cash flows, financing needs, and currency exposures inherent in the company’s global operations. This required not just a change in financial processes but also a concerted effort in change management to align the organisation’s stakeholders with the new centralised model.

A significant hurdle was overcoming the initial resistance from various quarters within the firm, which was accustomed to a decentralised approach to financial management. Through persuasive communication and demonstrating the tangible benefits of a centralised treasury – such as improved cash visibility, streamlined operations, and enhanced negotiating power with financial institutions – Arup was able to gradually build consensus and drive the transformation.

Technology played a pivotal role in the treasury team’s centralization strategy. The adoption of an advanced TMS became the linchpin in achieving the desired levels of visibility and control over global cash flows. This system allowed for real-time monitoring of cash positions across the globe, automated transaction processing, and sophisticated risk management capabilities. Moreover, it facilitated a more strategic approach to financial planning, enabling the treasury team to anticipate financial needs and opportunities with greater accuracy.

Looking ahead, Arup’s centralised treasury is set to evolve further, leveraging data analytics, artificial intelligence, and machine learning to enhance financial forecasting and decision-making. This futuristic approach aims to not only anticipate the financial implications of global business operations but also to actively shape the firm’s financial strategies to support sustainable growth and resilience.