Published: January 25, 2018
The end of 2017 marks a bittersweet time for me. These are my final Awards as Editor of TMI, but looking back over the past 12 years since I started with TMI, the Corporate Recognition awards have grown from a handful of awards in 2006 as a supplement to the bank and technology awards, to 21, heavily contested and highly respected awards in 2017.
I have said every year that the Awards become more difficult to judge year-on-year, and with the highest ever number and quality of submissions, the 2017 Awards have been extremely challenging. We would like to offer our warmest congratulations to our 2017 award winners, and thank the treasurers, and their banks, vendors and consultants who have provided such excellent submissions. We hope to be able to feature many of these during 2018, and I fully expect to see some of them emerge as award winners in a year’s time.
Adient plc
In 2016, we awarded the Treasury Transformation award to Johnson Controls International (JCI) for the project to spin off the new Adient business and merge with Tyco, setting up new, fully functioning treasury departments. This year, we are delighted to recognise Adient plc directly as Treasury Team of the Year. Managing change is never easy, and major M&A events frequently push treasury teams to their limits, exacerbated by uncertainty about the future and a ticking clock. As Adient and JCI have illustrated, this uncertainty can reveal the very best in individuals and teams, with a focus not only on ‘business as usual’ but delivering the very highest quality of treasury decision-making and operations. In May 2017, an article discussed Adient’s (and JCI’s) global cash pooling strategy, which can be found in TMI edition 252 at goo.gl/FDmQe2.
Group Fawaz A. Alhokair & Co
This year’s treasury transformation award emphasises the pace with which treasury functions in the Middle East are developing and maturing, with some such as Group Fawaz A. Alhokair & Co (‘Alhokair’) becoming at least as sophisticated as their peers in other regions in a very short time. In edition 256 (goo.gl/67vyGQ), Ziad El Khoury, Treasury Director of Alhokair describes the changing business and consumer environment. Although Alhokair was already the number one retailer in the region, the group has transformed its business to become even more competitive and focus more on international growth. Treasury has played a key role in this transformation, becoming increasingly sophisticated in its operations, improving visibility, control and automation, and implementing a modern treasury management system (TMS).
HeidelbergCement
In the same edition (256) which appeared in November (goo.gl/ox8Lz6), David Flory, Head of Group Cash Management at HeidelbergCement, built on his article from 2014 to describe some of the changes and developments that have taken place over the past three years. The number of employees has grown by one third, with a 35% increase in Group revenue across this period, including the acquisition of Italcementi in 2016. However, despite greater scale and complexity in its operations, treasury staffing has grown only fractionally from 14 to 15 treasury professionals. In an environment of both large and small acquisitions and disposals, and an increasingly challenging external environment, treasury centralisation and sophisticated cash pooling has been essential to maximise efficiency, standardise processes and controls and optimise information flows for decision-making.
Honeywell
Séverine Le Blévennec, Director, Treasury - Europe, Middle East & Africa at Honeywell is familiar to many readers, and the achievements of Séverine and her team are a blueprint for many treasury functions globally. This year, TMI recognises Honeywell with the award for Strategic Treasury, reflecting the way that treasury has continued to drive centralisation and efficiency over the years, leveraging best-in-class technology, developing best practices and building excellent internal and external relationships. Few treasuries, particularly those with an active M&A strategy, enjoy 100% daily cash visibility globally with complete reconciliation accuracy, but Honeywell has demonstrated how this aim is achievable. Similarly, few treasuries are as active in exploring and piloting innovative new technologies, investing in bank and vendor relationships and pursuing every opportunity to deliver value to the enterprise. Séverine Le Blévennec’s article appears in edition 254, goo.gl/YDFNQY.
Jabil Circuit Inc.
Like many other treasuries, Jabil was forced to restructure its banking and account structures in Europe as a result of a market exit by their relationship bank. However, while some companies were able only to replicate their cash and liquidity management structures in the available time with a replacement bank, Jabil has leveraged its relationship with BNP Paribas to transform its activities. In addition to implementing a centralised payments factory, for example, Jabil implemented a payments-on-behalf-of (POBO) structure supported with virtual accounts. Similarly, collections now operate on a collections-on-behalf-of (COBO) basis, again with virtual accounts. With the relationship with BNP Paribas now extending across 17 countries, 12 currencies and over 100 accounts, covering comprehensive domestic and cross-border payments and collections, host-to-host connectivity and cash pools in USD and EUR, this award is a testimony to the vision, motivation and expertise of the combined Jabil and BNP Paribas team.
The Technology category was one of the most hotly contested, and we decided to offer the award to two quite different organisations that demonstrated equivalent levels of innovation and achievement in technology adoption.
A. Schulman
As Nicolas Tusseau, Group In-House Banking Manager at A. Schulman explored in the November edition (256 - goo.gl/dR9DKT) the company embarked on a global treasury transformation in 2014, including rationalising from 30 to three banks, implementing cash pooling and in-house banking, and replacing the existing TMS with Kyriba. The benefits have been substantial, including reducing bank charges, lowering borrowing costs and achieving some tax efficiencies. Treasury has closed 84 bank accounts through rationalisation, and decreased its electronic banking systems from 28 to three, with savings calculated at $2.5m per annum. In addition, by implementing cash pooling together with an in-house bank and multilateral netting process using Kyriba, treasury has reduced the number of physical transfers between entities and replaced them with intercompany flows, leading to savings of $500m of intercompany payments per year, and the banking costs associated with them. The shared service centre has also generated efficiencies equivalent to 1-1.5 full time employees as a result of the project.
Merck
Merck’s treasury team was jointly awarded the Treasury Technology award for their project to replace a discontinued treasury management system that was deeply embedded into the organisation across cash management, accounting, payment factory, in-house banking and bank connectivity. Added to this, the project coincided with substantial M&A, a global ERP rollout and the implementation of SEPA. Together with FIS (payments, treasury and risk), TIPCO (reporting) and FINASTRA (bank connectivity), and supported by consultancies SLG and Leadvice Reply, Merck implemented an ambitious Project EVOlution across more than 400 entities in 60 countries, with 80 ERP interfaces and over 200 work packages. The success of the project is testimony to the commitment, discipline, inspiration and expertise of the Merck team and all the vendors and consultancies involved in the project.
Clearsettle
Remaining with the theme of treasury technology, global cross-border payments processing and settlements company Clearsettle has been recognised for its automation project in collaboration with Treasury Xpress. Clearsettle processes more than 11 million transactions each year across more than 50 payment instruments and 16 currencies. Given the nature of its business, treasury faced complex FX and liquidity challenges, which Clearsettle and Treasury Xpress addressed with an automated ‘smart’ FX and liability solution. This facilitates automated FX decision-making and transaction execution based on pre-defined FX trading rules and thresholds. As an emerging fintech, Clearsettle has ambitious business plans. Its new treasury technology environment and automated processes will be key to facilitating these plans and directing resources at frontline activities.
Chassis Brakes International
A number of articles and award nominations emphasised the value of SWIFT for multi-bank connectivity. As many of these illustrated, SWIFT implementation is now a straightforward, convenient and cost-effective process, with demonstrable value to the organisation. In May (goo.gl/Cahda3), Hélène Brunou, Group Treasury Director at Chassis Brakes International described the experiences of implementing SWIFT Alliance Lite2, which is an integral element of Exalog’s Allmybanks for treasury management and bank communications. Chassis Brakes International now has 113 users actively engaging with Allmybanks and SWIFT across 20 entities, sending around 5,000 payments a month and reporting on 56 bank accounts, with comprehensive visibility and control over global cash. While SWIFT connectivity is often associated with the largest multinationals, this project illustrated the value of SWIFT for a wide spectrum of organisations of all sizes.
Nordson
Precision technology company Nordson has worked with Hanse Orga to implement a sophisticated technology infrastructure to resolve the issue that KPIs (key performance indicators) could not readily be reported and used to improve decision making and risk mitigation. Having implemented the new capabilities and integrated Hanse Orga’s FinanceSuite with SAP, the company now has significantly enhanced visibility and control over current and future liquidity and financial risk, automated processes and far greater confidence in the quality, timeliness and completeness of data on which decisions are made.
Dassault Systèmes
Dassault Systèmes is very familiar to readers of TMI, and the company has a constant focus on cash and treasury automation and optimisation. This year, we were delighted to recognise Dassault Systèmes’ project to restructure its credit and collections activities with the help of FIS and its GetPaid solution, a global project across multiple locations. Dassault Systèmes expected a return on investment within 19 months, but achieved this within one year, reducing days sales outstanding (DSO) by 4.4 days (equivalent to €4.5m), reducing past-dues by 38% and generating FTE savings of 15%. One hundred percent of active customers have a Dassault score, with a high quality approach to automated credit limit allocations and timely reviews.
Aramark
Customer service expert Aramark operates across 19 countries, and one of its largest businesses is the Uniform Services Group (AUS). AUS started to implement its shared service centre (SSC) over three years ago to centralise and standardise its finance activities that were previously distributed across >90 offices and manufacturing facilities. Although the centralisation project was successful, the SSC team was still hampered by inefficient technology and processes. Consequently, AUS embarked on an ambitious project to implement FIS’s GetPaid solution within tight timescales to harness the benefits of a centralised SSC. As a result, it has lowered DSO, resulting in $5.94m additional free cash flow, a 66% increase in productivity and exceeded its cash collections goal by $7.2m. Bad debt has been reduced by $3.6m year-on-year, and 91+ days aging slashed to 1.7%, well below the industry ‘best in class’ benchmark of 2%. Collection actions have been automated, disputes are managed promptly and collectors and managers have full visibility over key tasks and metrics.
Vedanta Resources plc
Vedanta Resources, one of the world’s largest diversified resources company, undertook a comprehensive liquidity management programme in 2017 to transform its credit profile though deleveraging, extending average debt maturity and reducing the blended cost of borrowing. Vedanta engaged a number of banks globally to launch a variety of new issuances. In January 2017, a USD 1bn bond issue with a 5.5 year tenor had a final order book of $2.3bn over 200 high quality Asian, American and European accounts, an oversubscription of 2.3 times. With two major bond issuances, a new syndicated facility and bilateral loan facilities, Vedanta has significantly extended its average debt maturity whilst reducing the cost of borrowing. On execution of these transactions, Vedanta’s credit rating was upgraded, testimony to the strategy, timing and execution by Vedanta’s management team and its partner banks.
Willis Towers Watson plc
In May 2017, Willis Towers Watson plc (WTW) priced its second USD bond transaction since the merger in early 2016. The 7-year senior unsecured notes offering was $650m in size with a 3.6% coupon, refinancing existing bank borrowings. Following careful planning by WTW and its banks, Barclays and J.P. Morgan and lead bank Bank of America Merrill Lynch, investor response was enthusiastic, with $4.5bn demand at its peak, with an electronic roadshow replacing the traditional roadshow. WTW was also able to tighten pricing by around 30 bps. Following the transaction, which was raised from $500m to take advantage of favourable market conditions and investor appetite, WTW is well-positioned for future financing activities.
General Electric
General Electric (GE) initiated a CFO-sponsored cash transformation programme in 2016 to implement strong governance, efficient processes and innovative technology to improve controls, optimise processes and enhance the internal customer experience. With the support of PwC, GE worked towards a target state and identified key areas of improvement, including rationalising banking structures, rationalising payment processes, improving cash allocation rates and improving current and future cash visibility. The outcome of this process is GE’s new digital cash framework, which utilises big data to drive continued change, accountability and efficiency.
Using personalised dashboards and cash applications, GE can now define specific metric-driven goals and a standardised approach to achieving them. Together with a new SSC model, GE has been able to shift to cashless processing through digital cash threading, creating a unique end-to-end process. GE has minimised liquidity buffers, reduced banking partners by >50%, consolidated over 70% of bank proprietary systems and reduced internal payment platforms by >40%. Ninety percent of payments are now processed through the central infrastructure, and automatic cash allocation has increased by >70%. Using data analytics, over 1,000 accounts have been identified for closure, while security and access to funds transfer has been greatly enhanced. With digital disbursements and robotics to standardise invoicing, GE is firmly positioned as a digital cash leader, with processes, controls and automation that are likely to form a blueprint for other corporations for years to come.
Van Oord
Netherlands–headquartered marine engineering and offshore energy company Van Oord was seeking to build an innovative and efficient liquidity management solution to support its Asia Pacific operations. With the help of partner bank HSBC, Van Oord consolidated surplus cash into a multi-currency notional pool domiciled in Singapore, and implemented automated two-way cash sweeping arrangements across a number of countries. This includes an innovative holiday week capability to avoid in-country accounts running overdrafts during bank holidays for the header account. The result is that Van Oord has consolidated liquidity in Asia Pacific in its preferred currency and repatriate these funds to the Netherlands within one business day.
British American Tobacco plc
British American Tobacco (BAT) has been engaged in a multi-year, multi-disciplinary project to create a target operating model across the organisation. As Philip Stewart, Head of Cash and Banking at BAT outlined in his article in May 2017 (goo.gl/9cCLk1), treasury has undertaken a comprehensive global treasury centralisation and in-house banking project in partnership with Deutsche Bank, including on behalf of (OBO) techniques using the bank’s virtual account and virtual IBAN solutions. Following a rapid project, BAT has reduced its banking relationships from 20 – 30 globally to one in Europe and 2-3 in Asia. Treasury has achieved high levels of straight-through processing for outgoing payments and straight-through reconciliation of incoming flows. Furthermore, by creating an adaptable OBO model that already encompasses diversity across markets, it has the flexibility to expand the reach of its in-house bank to new markets in the future. BAT has calculated external cost savings in excess of £2m per annum as a result of this project, in addition to significant internal efficiencies.
OTB SpA
Fashion leader OTB, parent company of major brands such as Diesel, Maison Margiela, Marni, Paula Cademartori and Viktor & Rolf, is a pioneer not only in its core business, but also in cash management. In co-operation with partner bank UniCredit, OTB has implemented an innovative virtual account solution to optimise collections management efficiency, one of the first corporations in Italy to do so. In September, Gianluca Marcolongo, SSC Treasury Manager, OTB SpA explored the project in more detail at goo.gl/qh3x4i. Now, using virtual accounts, OTB has a specific virtual account for each legal entity, which is far clearer for customers, and avoids the need for them to specify the beneficiary name. OTB has automated the reconciliation of incoming flows and ledger posting to the respective entity almost entirely.
Kiwi.com
Innovative travel search and booking engine Kiwi.com has grown rapidly since its establishment in 2012, necessitating a full review of its finance operations to manage the current and anticipated pace of growth. A key challenge was managing global payments and collections, and a smooth payment experience through the platform was critical to client satisfaction. Kiwi.com appointed Citi to review, and together develop a multi-faceted solution to meet current and future needs. This is based on CitiFX Instant FX, a multi-currency pricing solution that provides streaming and guaranteed FX rates, enabling Kiwi.com to provide local currency pricing to customers whilst managing FX risk effectively and streamlining payment. At the same time, use of virtual card accounts allows Kiwi.com to lock in margins and increase efficiency and control over supplier payments. As the number of digital businesses grows, many of which operate internationally, the value of efficient payment and collection solutions with integrated FX risk capabilities, will continue to increase.
SpiceJet
Indian low-cost airline provider SpiceJet has emerged as a key industry player. As the company pursues its strategic growth ambitions, taking advantage of Unified Payments Interface (UPI) has been a major initiative to become a cashless operation with the support of partner bank HSBC. UPI is an instant real-time payment system introduced by National Payments Corporation of India to provide the Indian economy with efficient, cashless transaction processing and combine a variety of payment capabilities across banks through a single mobile framework. By transacting through UPI, customers can make payments conveniently using a virtual payment address which is linked to their bank account, avoiding the need to remember and rekey bank credentials. SpiceJet was the first corporation in India to implement HSBC’s web API integration to facilitate this project, and is now benefiting from real-time access to funds for better liquidity management, improved control over collections and significant cost savings. SpiceJet customers benefit from convenient, secure payment including two factor authentication and virtual payment addresses, leading to an enhanced customer experience.
François Masquelier
There are few treasurers whose insights, expertise and commitment to progressing the treasury profession have had such a profound and far-reaching impact. I know that many readers immediately flick straight to an article that François has written when they see it on the contents page, and we are enormously grateful for the time and inspiration that he dedicates to TMI. François is arguably the treasurer of our generation. It has been a great privilege to work with him over the years. I sincerely hope for the opportunity to collaborate with him in the future.
Once again, congratulations to all our award winners. For those who haven’t already made a New Year’s resolution, why not make an award submission for 2018? You’ll find more information on the TMI website later in the year. Definitely beats a dry January…
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