Cash & Liquidity Management

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Changing Culture and Behaviour to Optimise Working Capital Industry: Consumer Products Royal Unibrew's Group Treasurer outlines how the company have fostered a culture in which every individual is focused on constant improvement and refinement of the company's cash, treasury and working capital management. Featuring comment from PwC's Director of Working Capital.

Industry: Consumer Products

Changing Culture and Behaviour to Optimise Working Capital

by Allan Kristoffersen, Group Treasurer, Royal Unibrew

Royal Unibrew built up its impressive brand portfolio and geographic coverage through a series of acquisitions during the 1990s and 2000s. This resulted in significant debt levels, so treasury’s primary focus was on debt management. More recently, however, cash management has become a higher priority, and there has been a considerable focus on optimising working capital. In this article, Allan Kristoffersen, Group Treasurer, Royal Unibrew, outlines some of his priorities over the past few years, and how he has taken part in fostering a culture in which every individual is focused on constant improvement and refinement of the company’s cash, treasury and working capital management.

Identifying priorities

When I first joined Royal Unibrew, an important priority was to review our cash management processes, and the elements of the financial supply chain that contribute to our working capital requirements. This is inevitably a major undertaking, not least because many of the business functions involved are not directly controlled by treasury. In this we have been greatly assisted by our partner bank, SEB, which we appointed as one of two cash management banks soon after I joined the company. One immediate benefit of appointing SEB was the ability to leverage the bank’s Corporate Financial Value Chain™ approach, which assisted us in analysing our financial activities and business processes systematically, and identifying areas in which we could add the greatest value.

Cash management and integration

We started by reviewing our cash management structures, as this is the area in which treasury typically has the greatest autonomy. This included enhancing our cash concentration and improving access to cash across the group, with the extra benefit of reducing our counterparty exposure. Once this had been completed, we turned to bank integration, in which we received excellent support from SEB, with significant expertise, experience and a strong approach to teamwork. This resulted in more streamlined and automated processes, such as payments and collections, with standardised file formats and richer information flows between SEB’s systems and our internal systems. We broke down the project into different payment types (both in and outflows). This approach minimised our own and our customers’ operational risk, and enabled key resources such as IT to be used more efficiently. Having achieved migration, the same set-up could then be rolled out to other group entities.

Royal Unibrew

The success of the project required SEB and Royal Unibrew to establish a detailed knowledge of each other’s business, including systems, processes and organisational constraints. By engaging in an open dialogue, we were able both to plan our activities in detail, and manage unexpected events which inevitably occur during complex integration projects, assisted significantly by the flexibility and support offered by SEB. There are considerable technical as well as business implications of an integration and automation project. We are fortunate in that our IT personnel are very responsive and task-oriented, but it is always essential to work through each process several times to ensure that people with different backgrounds and skill sets have a common understanding of what is to be achieved.

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