Cash & Liquidity Management

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Rationalising the Transaction Banking Infrastructure In this interview with AkzoNobel, we complete the series in which we have explored various aspects of the treasury transformation project that has been inspired and guided by Group Treasurer, Peter van Rood. In this edition, Peter van Rood and Gerrit Willem Gramser describe how they have rationalised their transaction banking infrastructure and set the framework for enhancing the company’s financial efficiency.

Rationalising the Transaction Banking Infrastructure

Interview #5 with Peter van Rood, Group Treasurer, and Gerrit Willem Gramser, Business Treasury, AkzoNobel

In this interview with AkzoNobel, we complete the series in which we have explored various aspects of the treasury transformation project that has been inspired and guided by Group Treasurer, Peter van Rood. In this edition, Peter van Rood and Gerrit Willem Gramser describe how they have rationalised their transaction banking infrastructure and set the framework for enhancing the company’s financial efficiency.

How was cash management organised at AkzoNobel before your treasury transformation project in 2007?

Historically, AkzoNobel’s management and governance model has been largely decentralised. In addition, the company has been active in acquisition and dispersal or assets. This combination of a decentralised business culture and active portfolio management resulted in a largely unplanned bank account infrastructure, with little central design or optimisation. Consequently, by 2007 we had around 130 cash management banks in 84 countries, with over 2,000 bank accounts and around 20 cash pools, with more than one per country in some cases, even in open economies where cash can be readily centralised.

What was the catalyst for reviewing and revising this infrastructure?

There were two key factors that inspired us to rationalise our cash management infrastructure. Firstly, when we initiated the treasury transformation project in 2007, we recognised that the transaction banking infrastructure would be one of the basic building blocks of a successful strategy. Secondly, the ICI acquisition in 2008 brought a large number of new bank accounts and bank relatonships into the group.

What did you identify as your key cash management objectives?

We had three key objectives:

Firstly, to increase the visibility of our cash;

Secondly, to improve our control over our cash; and

Thirdly, to enhance the efficiency of our cash management infrastructure.

We aimed to realise these objectives through a regional approach; as AkzoNobel has a significant retail element to its business, with small outlets selling products, we needed our banks to have a strong local presence in the countries in which we operate. While a global bank may have the capacity and technology, we needed also banks that were close to the local communities in which we operate, and could manage local payment instruments, including manual payments. Our intention was therefore to rationalise our cash management banks to a regional partner in each key market, which would increase the professionalism of execution, enable greater visibility and control over our cash, and be more cost-effective, as we would be in a position to negotiate better pricing based on volumes offered. We would also need an overlay structure to pool cash to the centre and improve our liquidity management.

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