The ‘Strategy for Success in a Global Treasury Project’ session was introduced by Rene Schuurman, director, global product management for connectivity services at Citi, who described the industry drivers for treasury’s transformation as the need to keep abreast of rapidly changing market conditions; thinking strategically of opportunities to transform treasury; implementing robust control processes and reassessing banking relationships.
By contrast, conditions a decade ago were relatively easy, when compared with today’s “laser-like focus on getting projects done and ensuring there are no cost over-runs”. As never before, it is vital for corporates to understand what is happening to their money and this means accessing the information that can provide the basis for making the right decisions. One of the main themes is reducing the number of banking relationships. Schuurman said that many of Citi’s corporate clients will typically have 50 or 60 banking relationships worldwide, which are set to become more costly in the future. Coca-Cola has around 150 in all.
The beverages group is two years into its 2020 Vision project, which has a roadmap setting out various corporate goals that it aims to accomplish by the end of the decade. Treasury’s task has also increased by the deal in early 2010 that saw it acquire the North American operations of its main bottler, Coca-Cola Enterprises, which further increased the complexity of its banking structure and created additional risk.
Coca-Cola manages much of its cash from head office, but still needs a number of pooling structures with maximum efficiencies. Petrey said that those created by SWIFT connectivity was something that really caught the attention of Coca-Cola’s leadership, and will assist in treasury’s target of attaining 80% visibility of cash by April 2013. “We’re still coming to terms with all the ways that we can leverage all the benefits of SWIFT,” she added.
The group’s own global treasury project was influenced by the fact that although the group had adopted an SAP model more than 10 years ago it did not have a great deal of technology or a full solution that met with all of its needs. As a result, it decided to start afresh rather than attempt to add on to the existing system.
Petrey’s advice for ensuring success in such an undertaking: “I can’t stress the importance of regularly talking to the banks and also to your vendors. And the scale of such a project means that you can’t expect to do everything at once, so develop a transformational roadmap.
“Talk to as many people as you can as some will have experiences that are very pertinent to your project. Insist on an A-team with a good fit of personality, so that you have a cohesive group that can work together. Be forthcoming with your vendors and if something isn’t working, then bring the issue up.”
A mid-morning session, ‘SEPA 2014 Compliance – The Time to Act is Now’ examined the impact on eurozone countries of the 1 February 2014 deadline for implementation of the single euro payments area (SEPA). Ably hosted by Martin Runow, North America head of cash management corporates, global transaction banking at Deutsche Bank, and Michel Verholen, global directory, treasury for Greif, the Belgium-based industrial packaging group, it was structured as a roundtable but developed rather more into a SEPA advice clinic. Delegates raised various issues on the impact and implementation of the new regime and the hosts were able to clear up a number of uncertainties.
Verholen said that Greif has grown steadily through acquisition over recent years and first started thinking about the company’s own SEPA implementation as early as 2006, starting the process the following year. As Runow observed, the concept of SEPA to standardise pricing, rules and regulations goes back many years and has much to commend it. However, it lacked traction in its early years and only the imposition of a deadline by the European Commission (EC) has made the concept a reality.
A show of hands from delegates on those whose companies have yet to start work on preparing for SEPA suggests that the rapidly-approaching deadline is only slowly beginning to make an impact. Lack of resources and lack of a sense of urgency appear to be the main reasons for the lack of activity. Some banks have demonstrated willingness to carry out SEPA conversions for their corporate clients said Verholen, but the European Commission has made it clear that it’s not a service that companies should expect their banks to provide for them.
The essential features of a SEPA implementation project are adoption of the SEPA XML format – the binding format for the exchange of all SEPA transactions (although some banks may be willing to accept other formats from customers under certain conditions) and the only two account identifiers that will be permitted for SEPA transactions, the International Bank Account Number (IBAN) and Bank Identifier Code (BIC). In addition, Runow recommended that treasury departments should carefully review how their accounts were set up, their cash pooling structures and how their company was conducting business in Europe. “Not only should you examine what you are doing country to country, but also consider the possibility of adding something new that you’ve wanted to do all along.”
Runow said that Deutsche Bank has been hiring additional staff to assist companies in meeting the February 2014 deadline, but warned that “we won’t be able to help everyone who has left it to the last minute. If your company has substantial operations then you really need to have started work yesterday.”
And for those that have made at least some progress “it doesn’t hurt to push your payroll vendors and check whether they too are SEPA-compliant. Also check with your banks – are they ready, and are there things that they should be doing to ensure your company is ready?” he added.
BP’s Global Ambitions
Afternoon sessions included a presentation by Yann-Alexandre Brulé, structured finance manager for BP International and Luana Slenk, treasury services manager for BP America. Entitled ‘The Benefits of a Global Approach to L/C Management’ it outlined how the oil and gas giant has standardised its letter of credit (L/C) management activities in the past few years, replacing a fragmented regional approach with a global solution.
Brulé said that the objectives of a global, real-time approach were to improve management of all types of risk, standardise multiple processes through facility creation and instrument issuance, and achieve cost savings.
The main achievements of the project have been:
- De-risking of BP’s portfolio through creation of an L/C toolbox and bank diversification.
- A centralised model for setting and monitoring L/C facilities.
- Providing real-time utilisation through the use of technology.
- The standardisation of terms and conditions across the portfolio.
- A stronger negotiating position for the group.
Not that the project is yet completed. The next steps include achieving enhanced reporting capabilities and standardising operational processes across the banks.
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