Centralisation and Innovation at Hoyer Group

Published: August 16, 2010

Björn Gerhard, Corporate Center Finance, Hoyer Group

Hoyer Group’s corporate headquarters provides several central business support functions, such as Human Resources, IT, Finance, Treasury, Audit etc. Historically, Treasury has been very decentralised, with strong local management in each country who performed the necessary banking and cash management activities. However, in 2001-2, we appointed an external consultant who recommended that we centralise our treasury and cash management activities, with a view to achieving greater efficiency, visibility and economies of scale.

Banking rationalisation

As part of our centralisation project, we sought to simplify our bank relationships to improve our ability to negotiate and achieve greater control over our cash. Our ambition had been to appoint a single, global banking partner, but we found that none was in a position to support our needs in all of our 87 countries. Consequently, we decided to work with banks according to their specialisms, which we validated through a rigorous request for proposal process. As a result of this process, we have reduced our financing partners considerably, from 40 local banks to 15 global banking partners that are appointed centrally. We have one cash management bank for each regional ‘cluster’ that we have established, including the Nordics and the UK, where we work with SEB, Western Europe (BNP Paribas Fortis), Eastern Europe (Unicredit), Outside Europe (RBS) and Germany (Deutsche Bank and Unicredit). In addition, we have retained additional specialist banks to perform specific tasks. In the Nordics and UK, we had used another bank before embarking on this process, but we were attracted to SEB’s reputation, financial stability, customer service and competitive pricing.

We were attracted to SEB's reputation, financial stability, customer service and competitive pricing.

Leveraging bank relationships

By managing bank relationships centrally, we have been able to establish consistent commercial conditions, such as the same margin on current accounts. While this is more difficult in some regions than others, such as in central and eastern Europe where the markets are more volatile, we have been able to standardise successfully in other regions. The ‘cluster’ arrangement also enables us to achieve central visibility across the business, with cash pools in each country or region as appropriate. In the UK, we sweep funds from both SEB and RBS into a header account with SEB. In Germany, we have a zero balancing cash pool with all accounts sweeping into the GMBH account, supported by an in-house bank in place for funding business units, although in reality, our financial flows are generally stable. [[[PAGE]]]

Enhancing technology

From a technology standpoint, we have been using a legacy banking system from one of our key banking partners. This has become outdated, so we are now implementing a new eBanking solution from another banking partner. This provides multi-banking capabilities, and is proving efficient and cost-effective. In addition, we use systems for each cash management cluster. For example, in the Nordics and UK, we use SEB’s multi-banking system C&I Online to exchange information with both SEB and RBS. We have achieved a high level of integration and automation using this system which is interfaced with our booking and payments system, Coda. SEB’s C&I Online, closely integrated with our in-house system, has proved very successful, providing broad functionality and easy administration. It is robust and secure, and provides a high degree of stability, which we have not always experienced with similar solutions in the past. Furthermore, by providing market data such as currency rates, we have immediate access to this information for revaluation and exposure management purposes. We use the system for making payments and retrieving statements, and pass information automatically for straight through reconciliation.

Building internal support

Initially, a centralised approach to treasury, cash management and financing brought a mixed response from business units, particularly as we had strong, capable business managers at a local level. However, over time, any initial reluctance has dissipated as we have been able to help reduce local resourcing costs. Furthermore, some managers have since retired, and new management have embraced centralisation more fully, so it is now well-accepted.

SEB's C&I Online, closely integrated with our in-house system has proved very successful, providing broad functionality and easy administration. It is robust and secure, and provides a high degree of stability, which we have not always experienced with similar solutions in the past.

Future developments

Looking ahead, we will seek to standardise our electronic banking environment, using one system across the company as opposed to at ‘cluster’ level. At present, we also anticipate implementing a treasury management system (TMS), with which our electronic banking system will be integrated; however, as we are planning to simplify our business by rationalising our external contracts, the complexity of our cash management activities is likely to reduce so we may not require a specialist TMS. As we develop our business in the future, we have a firm but scalable foundation with trusted banking partners, excellent visibility and control and a high level of financial and operational efficiency.

Hoyer Group

Hoyer Group is a second generation, family-owned company founded in 1946 and is a market leader in bulk transportation of liquids and gases, including chemicals, gas, foodstuffs and mineral oils. Headquartered in Hamburg, the company operates globally, particularly in western Europe, with 40% of its activities in Germany and 60% international. Hoyer Group has enjoyed considerable organic growth in recent years, with a 2009 turnover of €857m.

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Article Last Updated: May 07, 2024

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