Cash & Liquidity Management
Published  6 MIN READ
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Cash Management Transformation at Orsay

by Arnaud Barth, Group Treasurer, Orsay GmbH, with Thomas Eisenhuth, Vice President, Corporate Cash Management, Societe Generale, Frankfurt

Since its first incorporation 35 years ago, international fashion retailer Orsay has become a leader in its field, with a strong brand image and a powerful network of 580 stores in 22 countries across western and eastern Europe. Headquartered in Willstätt, Germany, the company also has a regional headquarters in Wroclaw, Poland, where purchasing is handled, and sourcing locations in Shanghai and Hong Kong. The company’s rapid growth had resulted in some fragmentation in its financial processes. Under the leadership of Arnaud Barth, Group Treasurer, Orsay sought to transform its treasury operations to achieve greater efficiency in the short term, and to position the company for future growth. In this article, Arnaud Barth describes some of his experiences in delivering on these objectives.

Project background

I joined Orsay in 2009 with a view to delivering three key initiatives: FX hedging coverage, cash flow forecasting and cash management. It quickly became clear that these elements were closely related, all based on reliable banking partners, efficient technology and skilled resources. At that stage, every legal entity was responsible for its own cash and FX exposure management, including relationships with partner banks. We recognised that this was not an optimal arrangement, as we lacked economies of scale, such as in payments processing, and could not leverage standardised technology. For example, every business unit had to develop interfaces to its bank(s) in different formats, which replicated costs, reduced control and expended valuable resources. This business and technology infrastructure created particular challenges during a high growth period for the company with significant geographic expansion.

Launching the project

We therefore launched a project with a variety of goals. Firstly, we aimed to enhance the central view of cash across the business. Secondly, we needed to optimise our cash position, and take greater advantage of the cash surpluses in the business. Thirdly, we wanted to maximise our use of technical and human resources across the business. As a first step, we performed a global analysis of our needs, and issued a request for proposal (RFP) to a selection of core banking partners. We then submitted our proposals to the board at the end of the first quarter, 2010.We had various criteria for selecting a bank: firstly, the bank had to be willing to share Orsay’s risk by offering credit; secondly, we wanted not only a service provider, but a bank that could partner us across all aspects of our banking business. Consequently, our banks had to provide the range of services we required, in the relevant countries, but also to demonstrate their interest in enhancing our business in the long term.Based on our analysis of potential banks, we selected four banks, with Societe Generale as our primary banking partner.