- Jack Gogarty
- Global Finance Operations (GFO) Europe, Eurasia and Africa, Coca-Cola
by Jack Gogarty, Global Finance Operations (GFO) Europe, Eurasia and Africa, Coca-Cola
In 2009, The Coca-Cola Company announced its vision to double system revenues by 2020, effectively replicating 125 years of success in only a decade. To achieve this, the company needed a fundamental shift in the way that we ran our business, of which the creation of GFO is an important part. By concentrating operational (and latterly more analytical and strategic) activities into a centre of excellence, our operating business units would be able to focus on growth rather than diverting resources into activities such as accounting and compliance.
Establishing GFO
Since our GFO centre here was first established, we have built a team of 110 finance professionals who provide all accounting, control, compliance, statutory reporting and treasury operations for 130 legal entities, with 450 accounts and 40 banks across Europe, Eurasia and Africa. As we have migrated local operations from each country into GFO, we continue to look for ways to streamline our activities to allow us to scale up our activities and deliver additional value year-on-year. Inevitably, this becomes increasingly challenging as the organisation matures and all the obvious efficiency opportunities have already been captured.
Role of technology
Technology is a key enabler to achieving our efficiency and control objectives and supporting the business effectively as it grows. We use an ERP which forms the backbone of our operations. Although we use SAP wherever feasible, we also use specialist solutions such as a treasury management system (TMS), although we plan to replace our current system with another specialist TMS in due course. We also use proprietary software for reconciliation and journal posting and we are implementing solutions for human resources and travel & entertainment expenses management.
Currently, we connect our TMS to our banks to obtain bank balance information, but we still receive bank information by email in some cases, so we need to collate these balances manually before creating our daily cash position, forecasting cash flow and managing internal funding. This is inevitably a complex process given that we manage around a significant of our global cash position across 80 currencies. However, we are currently centralising our cash management activities with our strategic banking partner Citibank in London, which will simplify this issue, but this is a lengthy task given the localised nature of our business and the number of countries and legal entities involved.
GFO evolution
Although our GFO was primarily transaction-focused to start with, we were able to become more analytical and customer focused as processes became more automated, with operational requirements largely restricted to exceptions management. We therefore became involved in a wider range of activities, such as balance sheet analytics, engaging with business units to understand and manage financial risks and opportunities. Now, we are entering a third phase, focusing on strategy, building trusted partnerships with our business units, and identifying further opportunities to add value.
Responding to evolving trends
Treasury has become a highly collaborative space, which is a welcome development, as treasurers and finance managers seek to find ways of solving common challenges. In an increasingly tough business environment, we liaise closely with our local treasury association, the Irish Association of Corporate Treasurers to share experiences with other treasurers and understand changing cash and treasury management trends. Similarly, we work with our business partners, particularly our primary cash management bank Citibank, to discover and help shape trends and innovations, such as through their innovation labs.[[[PAGE]]]
While working with external partners and peers is an essential means of responding and anticipating changing business trends, we also need the skills within the business to manage evolving requirements and increasing responsibilities. While initially we relied primarily on accounting skills, we are now recruiting mathematicians and economists who have problem solving skills. In addition to depth of specialist skills, we need people who can think laterally to identify how we can achieve our objectives and find new ways to add value.
From regional and global
Today, we are experiencing a shift in organisational emphasis and demand from regional centres to global centres. This has considerable implications, particularly bearing in mind that diversity in regulations, tax and cash management culture increases significantly as the geographic reach of a GFO centre expands. Compliance and process standardisation therefore becomes extremely challenging. For example, when setting up our intercompany funding structure in Manila for our Asia Pacific business, it was essential to review our business in each country in detail, and be very clear about the implications of a new structure to avoid consequences that could negate the benefit of centralisation.
Principles of success
The success of our GFO has been based on three key principles: cost efficiency; breadth and depth of capability, and proven competence. Our senior management actively promote a culture in which people can challenge and change the status quo, which is easier in some countries than others. Like many others, our GFO is tasked to deliver 2-4% additional cost savings every year, in addition to delivering ever-increasing quantitative value, which we can only achieve by constantly reviewing and further streamlining processes. This becomes increasingly challenging as GFOs expand the scope of their activities into more challenging countries, such as emerging markets in Africa, where the regulatory environment can be very complex and fast-changing. Investment in technology and skills is essential to keep up with new opportunities and business demands, whilst enabling the SSC to migrate from an operational to a strategic role.
