“As a treasurer I have to explain to my corporation and to my colleague Doug Adams, on the supply finance side, why cash forecasting is so vital,” explains Karen Van den Driessche, director of treasury, Europe, Middle-east and Africa (EMEA), at Avnet. “It’s not that he doesn’t understand it, of course, it is just that on the operational side of the business working capital is what is really important to Doug.”
From what was previously a passive relationship with no value-add, Adams, the European supplier finance director at Avnet, now says that he enjoys a much more productive relationship with the firm’s treasurer. “It’s not that I had a bad treasury relationship before Karen joined in February 2011, but rather that we talk more now and she challenges us – to report our cash positions better, to think more long-term, and to present our case for finance more fully,” says Adams. “The infrastructure is now there for us to communicate better. The operational side of the business and treasury now talk much more constructively than they have in the past; to the benefit of both of us.”
As an example Adams cites a daily balance sheet hedging programme in US dollars (USD), introduced by the in-house bank (IHB) that treasury runs in EMEA to help deal with the dollar’s recent volatility. As Van den Driessche explains, moving from a weekly to a daily programme is unusual and it consists of many forward swaps worth approximately EUR15bn (US$19bn) annually over a three-month tenure, with no options, but the project brought the partners together. “It’s not a treasury or a supply issue, but a business issue,” she says.
From Adams’ point of view, understanding that improving ‘house-keeping’ in terms of timely account updates and reports will help the treasury and, ultimately, himself, has improved attention to detail. “The foreign exchange (FX) programme can be much more targeted and treasury can forecast our overall cash position much better with better reporting, which is useful considering the economic situation at the moment.”
In what is a notoriously acquisitive sector, with mergers and acquisitions (M&A) common in the tech world, and ‘callable’ cash sometimes needed, it also helps to instantly know your position. “I had 15 deals to push through last year,” says Van den Driessche when attempting to illustrate the importance of good cash management. With the EMEA operations, which she controls with four employees, being relatively cash rich but debt elsewhere in the company Van den Driessche admits accurate cash management is essential.
The fact that the two functions of the business – supply and treasury – use two different enterprise resource planning (ERP) systems complicates matters further, forcing constant reconciliations between the business and the treasury. All the more reason, however, for the two colleagues to talk together frequently. “Even if we don’t agree – for instance, say Doug thinks we are sitting on too much cash that he believes he can use more fruitfully – then we can always work together to find a mutually agreeable solution,” says Van den Driessche, “or at least a common understanding.”
Company Overview: Avnet
Avnet is a Fortune 500 electronics company, with annual revenues of US$26.1bn, which employs almost 17,000 people around the world. It operates a technology solutions (TS) division that supplies computing products and services and an electronics marketing (EM) unit that supplies components, supply chain and design services to electronic original equipment manufacturers (EOEMs).
The firm runs a fairly centralised operation with 12 treasury-related staff in total. The treasury headquarters in Phoenix, Arizona, US, is staffed by three people, while a further five treasury staff are based in Brussels, Belgium, running the European, Middle-east and African (EMEA) offices and an in-house bank (IHB) under Van den Driessche’s control. The Brussels office also acts a bridgehead to three more people who are based out in Asia, providing treasury services to the region, although change is afoot here.
The EMEA team is currently driving forward the company’s Asian expansion and the establishment of regional treasury centres (RTCs), replacing the less centralised arrangement at the moment whereby the three existing Asian-based treasury staff co-ordinate local teams. “This is a very rewarding project for me at the moment,” says Van den Driessche, “and it is great that the Phoenix HQ is letting EMEA drive it.”
Asia has become such a hub for the manufacturer of electronics parts that being allowed to provide guidance and drive the group’s treasury centralisation project there, while ensuring a smooth interaction between design teams in the West and assembly teams in the East, is a compliment to Van den Driessche’s experience.
A treasury professional for 20 years, who started out at Monsanto, InBev and Coca Cola Enterprises before attaining her present position in February 2011, Van den Driessche currently controls 365 bank accounts in EMEA for Avnet and is responsible for 145 legal entity identifiers (LEIs); 70 of which are holding entities, with the rest being operational entities. She handles 21 different currencies in EMEA across 31 banks in 22 different countries and, naturally, wants to close down as many of those European bank accounts as she can in order to improve efficiency and simplify procedures, using SWIFT and other means.
As she reflects on the work she has already undertaken to overhaul Avnet’s treasury operations and improve cash management reporting, Van den Driessche outlines what she plans to do as the second year of her employment with the company comes to its end. “I’d like to move towards a payment-on-behalf-of (POBO) structure and a payments factory ultimately,” she says, “but first things first, we need a new treasury management system (TMS).”
Avnet currently has a TMS in EMEA but it is old and the firm still relies on Excel-based spreadsheets in the US and Asia. “We need a global TMS quickly and this is a major project for me at the moment,” says Van den Driessche. “There hasn’t been a request for proposal (RFP) yet as I still need to get boardroom approval and we’re in the very, very early stages. We’ll get there though, and I’m hopeful of having a global TMS in place by 2014, especially as we don’t need a ‘Rolls Royce’ solution that can handle derivatives or the like; just a ‘simple’ implementation and integration.”
Van den Driessche is experienced enough to know that introducing such a global TMS is never ‘simple’ – hence her own quotation marks – but she also has the confidence and the knowledge to know that it can be done from her previous firms, where she saw such implementations. She jokes that she only moved away InBev and Coca Cola “because I wanted to move away from liquids”, but really the pull of establishing her own set-up was the draw towards becoming Avnet’s EMEA director of treasury.
“I’ve worked across tax, legal and treasury-related functions over my career and mainly for a succession of women bosses, who have given me the ability and time to see the connections between all of them,” she says. “I’ve been given the freedom and independence to run projects and learn, taking lessons from each of my previous bosses, and I try to give the same freedom with responsibilities to my own staff now.”
It’s the organisation that is important and the people within it, not technology alone, compliance projects or the like, believes Van den Driessche. “You always need to be able to adapt to changes,” she says. “There has not been a single big change that I can point to over the last 20 years that has revolutionised the job – rather a series of technological and business changes have changed treasury since I started out as the 1990s dawned. The need to adapt is what stands out.”