Cash & Liquidity Management

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Dancing to the Local Beat AkzoNobel's Head of Treasury Latam describes some of the challenges and progress so far in achieving visibility and control over cash in the region.

Dancing to the Local Beat

 

by Yosymar Vasquez, Head of Treasury Latam, AkzoNobel

Following Jarno Timmerman’s article in edition 235 of TMI, in which he described AkzoNobel’s approach to treasury centralisation in Asia Pacific, we turn to Latin America (‘Latam’). With business operations in eleven countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guatemala, Panama, Peru, Uruguay, Venezuela), Latam is an important region for the Group. In this article, Head of Treasury Latam Yosymar Vasquez describes some of the challenges and progress so far in achieving visibility and control over cash in the region.

Key Points

  • AkzoNobel has a global treasury structure based in the Netherlands and with regional treasury hubs in other major regions
  • The author describes the operations of the Latam treasury centre based in Sao Paulo, which has around 30 bank relationships
  • The Latam treasury has embarked on a major project aimed at optimising visibility and control over cash, involving both in-country cash pooling and concentrating cash regionally, where possible
  • The project has started in Brazil and is being extended to Argentina and other countries, with the aim of completion by the end of 2016

Treasury structure

We have a global treasury structure at AkzoNobel, with a group treasury team based in the Netherlands with regional treasury hubs in other major regions. In our Latam treasury centre, located in Sao Paolo, we are responsible for implementing global policies whilst also sharing our local, ‘on the ground’ expertise with group treasury, therefore providing a bridge between AkzoNobel locally and globally. We look after all treasury services in the region, but payments, collections and credit are handled through our financial shared service centre (SSC) or by local finance teams. Consequently, we are able to take a more strategic role, such as streamlining processes, managing bank relationships, and understanding new opportunities as both the business, and the market and regulatory environment in which we operate, continue to evolve. We use SAP as our treasury technology platform, and we have designed our infrastructure to be bank independent as far as possible.

Bank relationships

We work with our global banking partners concentrating collections, payments and payroll wherever possible, but there is no single global bank that provides universal coverage across the region. Consequently, we also appoint local banks that offer a strong local footprint and depth of capability in each country for activities such as collections, and tax payments. This local presence and expertise is vital given the regulatory complexity and speed of change in each country, and the diversity of payment systems.

As a result, we currently maintain around 30 bank relationships in Latam. Many countries have multiple clearing systems, and there is no regional uniformity in the use of formats. Furthermore, the use of cash and manual payment methods is widespread. These issues all present obstacles to efficiency and automation, so we rely on both our local and global banks, as well as our expert treasury team in the region, to optimise our financial and operational efficiency, whilst complying with internal policies and external regulations. 

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