The SWIFT Way to Build a Treasury Function from Scratch
By Ben Poole, Columnist, TMI
Establishing a dedicated treasury function from the ground up requires a great deal of hard work, strategic thinking and, in the case of Fareva, vital connectivity links to be built in a short space of time. Here, Thomas Papier, Fareva’s Group Treasurer, explains how he teamed up with BNP Paribas to put in place the essential cash management plumbing for his new treasury function, alongside leading-edge cash centralisation and optimisation projects.
Family-owned group Fareva is a major CDMO (Contract Development and Manufacturing Organisation) in the areas of cosmetics, pharmaceuticals and make-up, as well as industrials and homecare. In the space of 30 years, the company has grown exponentially to become a global group with circa 39 sites across 12 countries, posting turnover of €1.81bn in 2019 and with more than 12,000 employees worldwide.
Thomas Papier, Group Treasurer, joined Fareva around five years ago. “When I came on board, there wasn’t a treasury department as such. We now have a treasury team operating from the corporate headquarters in Luxembourg, and it’s been such an amazing journey to get to this point. It was great to start with a blank sheet of paper and be able to choose best practice workflows and systems from the outset.”
Connecting the dots
From the start, Fareva had BNP Paribas on board as one of their global banking partners,so it made sense to appoint
BNP Paribas as one of the company’s four main cash management banks. After all, with just one other full-time employee in the treasury department, BNP Paribas’ assistance with building out the ideal cash management structure for Fareva, as well as putting in place the correct plumbing between systems and entities, would be more than welcome.
To this end, a key goal that Papier has been working on with BNP Paribas is to roll out a treasury management system (TMS) that includes SWIFTNet connectivity, across all of the countries where the company operates. “We knew that BNP Paribas would be able to assist us in this, since we have a very strong relationship with them in France and numerous other geographies,” explains Papier.
One of those key territories is the US. Fareva has two sites across the Atlantic: a pharmaceutical and cosmetics/beauty factory in Richmond, Virginia, and a cosmetics facility in Morton Grove, near Chicago, Illinois. The company’s total sales in the US market stood at around $250m in 2019, representing 13% of group sales globally. “And that figure is growing annually,” Papier notes.
The fact that BNP Paribas has a US subsidiary, Bank of the West, was a benefit to Fareva when it came to the global scope of its SWIFTNet connectivity requirements. Corine Spier, Senior Cash Management Sales, BNP Paribas, explains: “Fareva wanted to have a best practice set-up – and rightly so. This meant that they were looking for just one connection to SWIFTNet. By working closely together with our colleagues at Bank of the West, we have been able to deliver this seamless SWIFTNet connectivity for Fareva, without any constraints.”
Papier agrees, elaborating on the ins and outs of the arrangement: “The US leg of the project took a few months because we needed to work concurrently with Bank of the West in the US and BNP Paribas in Paris, who were managing the SWIFTNet hub. At the same time, we were also working on our TMS implementation with IT and a TMS consultant – so there were a lot of moving parts to align.”
With so many different parties involved in this project, one could be forgiven for thinking that the finer details might slip through the cracks, but this was certainly not the case on Papier’s watch. “We overcame the challenge of multiple stakeholders by ensuring that there was good communication and full transparency at every step of the project,” he says. Indeed, Bernadette Durantin, Head of Cash Management Sales – French Corporates, BNP Paribas, adds that “regular calls and check-ins ensured that everything ran smoothly, with BNP Paribas colleagues working hand in hand with our Bank of the West counterparts, and synching up with the client in real time”.
As a result, with the help of BNP Paribas, Fareva has so far implemented the TMS with SWIFTNet connectivity in ten countries – and has just completed the set-up in Brazil. “This project is still ongoing, and its forward momentum will be continued until the roll-out has reached all of Fareva’s operational territories,” confirms Durantin.
Centralising treasury operations
Elsewhere, Fareva’s lean treasury team has been extremely busy with a number of other optimisation initiatives, which together are helping to centralise the company’s cash management. According to Papier: “The ultimate goal is to centralise all treasury activities at head office.”
To this end, Fareva has “implemented an enhanced cash pooling structure, whereby we are centralising our cash through our main cash management bank and therefore through a BNP Paribas branch in Luxembourg.” He continues: “There is a specific cash pool for euros, and for other currencies such as the US dollar. BNP Paribas’ footprint, service, and cash management expertise has been invaluable in setting this up so smoothly.”
In addition, the company is working on a handful of supply chain-related projects. Papier explains: “We have implemented several factoring / receivables financing solutions in the US, UK, France, Germany and Italy. The aim here is to have much greater visibility and control over our cash flows – and we are delighted with the results thus far.”
Another important project that Fareva and BNP Paribas are working on together tackles the issue of cheques in the US. Spiers notes: “We are currently running a pilot for cheque-printing services that essentially facilitates cheque payments through SWIFTNet in the US for Fareva. The beauty of this set-up is that Papier’s treasury team can comply with local market practice in the US but still enjoy the centralised processes it has in its other markets.”