Cash & Liquidity Management
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Achieving Operational and Financial Efficiency in Treasury

by Anneli Walltott, Global Head of Cash Flow Management, Sandvik

Global industrial group Sandvik has undergone significant change in its treasury function over recent years, with major improvements to its financial and operational efficiency. From a centralised funding and currency management centre with relatively little profile within the group, treasury has embarked on a journey to take centralisation to another level, becoming a highly efficient department with automated processes that acts as a trusted business partner for the group. This article outlines some of the recent initiatives that treasury has undertaken to achieve this.

Treasury organisation

In 2011, with new senior management in place, Sandvik embarked on a strategic transformation process to centralise, streamline and optimise group functions, in order to serve the needs of the group as effectively as possible. Treasury had already achieved a certain degree of centralisation, but this renewed management focus acted as a driver for further improvements.

Our treasury department comprises 24 treasury professionals at our headquarters in Stockholm. This year, three regional treasurers with responsibility for the Americas, Asia Pacific and EMEA have been engaged. Regional treasurers provide an interface between group companies and treasury to align local and group objectives, and manage bank relationships in the respective region. In addition to the core treasury team, one member of the finance team in each country takes responsibility for ensuring that cash and treasury management activities comply with local regulations.

Addressing centralisation challenges

Centralisation is a major challenge for a company such as Sandvik that has operations in more than 130 countries. Rationalising banking relationships is a valuable means of centralising cash, but is often easier in theory than in practice. Currently we have around 120 banks, of which 16 are our core banks. We work with our core banks for cash management wherever possible, but not all of these banks provide extensive cash management services, or in the regions that we require, so we often need to work with an alternative bank. There may also be regulatory obligations to work with specific local banks in certain regions.