Dublin Dialogues

Mastering Mergers and Other Top Tips from Ireland’s Treasurers

Ahead of the Irish Association of Corporate Treasurers (IACT) annual conference, FIS brought together three of Ireland’s leading treasury minds to share their insights on innovating and integrating technology. They discussed the impact of acquisitions and divestitures, cash-flow forecasting, TMS implementation, and how to harness the power of the IACT community.

Three key treasurers came together and embraced the opportunity to compare notes and share their experiences.

The past year has provided them with plenty to discuss, from advancing technology to banking consolidation during acquisitions and divestitures. Here they unpack some common themes:

Sweeping impact of M&A

Aimee Cullen, Associate Director of Treasury at Carrier, a global climate and energy solutions company has been kept busy in her role taking on a range of challenges.

This included being closely involved in the build-out of Carrier’s treasury centre in Ireland. To add to the load for treasury, Carrier is active in acquisitions and divestitures (A&D) and is in the throes of multiple divestitures, the fourth and final one for 2024 expected to close by end of year. “As expected, these projects added significantly to our already sizeable plans to stand up the Irish Treasury Centre,” comments Cullen. “Legal entity integrations demand a deeper understanding of the bank account footprint, for example. We need to know, for instance, which accounts and portals we can carve out, and who the system administrators are, before we can move on.

Current activities will see the existing operation augmented with additional team members and new technologies, with a continued TMS implementation in progress.

For Niall Cooney, Treasury Executive, James Hardie Industries, a global building materials company, the past year has also been about business transformation. This has involved a new sweep structure being established for all the company’s European entities, says Cooney. As part of a larger transformation strategy across the business, this has required work on its banking set-up. Despite the acquisition of Fermacell around five years ago, a number of non-core legacy banks remained. The aim has been to move away from these, centralising core banks onto one platform, while increasing cash visibility across them.

“We now have sweeps into a major European bank, which needed new accounts opening in 10 countries. It’s created a lot of work, for example in gathering signatories and IDs, and standardising payment formats, lifting that into SAP across the business units, and setting up treasury reporting,” explains Cooney. “It’s been labour intensive, but the effort has saved us time with regards to cash visibility. And end-of-day sweeps are a massive time-saver for us.”

Break-ups can be hard

Meanwhile, for Kiera Agnew, Assistant Vice President, Corporate Assistant Treasurer, Kellanova – the global snacking powerhouse more commonly known as Kellogg’s – has also experienced the impact of a divestiture, and now looks ahead to a scheduled acquisition.

Kellogg’s was split into two companies in 2023 (Kellanova and WK Kellogg) and Agnew had been involved in the set up of treasury on both sides. With the two businesses having been closely integrated prior to spin-off, certain functions would cease to exist in Kellanova on transfer and obviously vice versa for the new company. These had to be quickly rebuilt, ensuring year-end became “more challenging than usual”. And soon after, thoughts had to turn to Kellanova’s capital structure, and “right-sizing” company finances culminating in the issuance of two well-received bonds, USD300m and EUR300m, in May 2024.

Even though treasury is primed to keep looking ahead, the announcement in August 2024 that the global giant Mars is to acquire Kellanova for $35.9bn, means Agnew cannot set the agenda beyond the acquisition date (likely to be H1 2025). “Most of what I’m focusing on now is what I want to achieve by year-end and Q1 next year,” she offers.

Seeking STP and achieving automation

Meanwhile at James Hardie, an active transformation strategy places Cooney at the forefront of “as much automation as possible”. With working capital and cash forecasting major areas of focus for treasury, the aim is for all payments runs, and requests made to treasury for POBO to be standardised worldwide. “My goal is 100% STP,” confirms Cooney. For this, treasury is working closely with the firm’s AP and AR departments. “They’re on the frontline of our business so we’re trying to see things from their perspective because if we can make life easier for them, it makes it easier for us.”

While the push for automation is “gaining a lot of buy-in from the business units”, Cooney admits that treasury’s scope of duties “will always throw you a curve-ball”. Finding ways to tackle these outliers and making sure they are brought into the overall process, is essential to avoid the inefficiency of manual workarounds. “We want every process to be manageable by colleagues wherever they are,” he declares.

The challenges of accurate cash-flow forecasting

Cash flow forecasting is an area generating common treasury concerns. With a number of different systems on the market, Agnew would like one “to take it to the next level of understanding”. For example, where data relates to a client at year-end, she says it would be valuable to understand where that client is positioned in terms of its cash flow – over- or under-delivering – to better judge likely adherence to payment terms.

Currently, Kellanova’s cash flow forecasting has got to at least around 50% automated, before requiring manual overlays in Excel, says Agnew. By comparison, less 10% of its FX trades require manual intervention.

Free cash flow forecasting at Carrier, notes Cullen, requires regular interaction with the FP&A team, with discussion around which department owns the cash, and which one takes responsibility for the variances. “It’s easy for FP&A to say treasury owns cash, but we really only have certainty on the actuals. We need to receive their forecast, which is based on the strategic plan, to inform our forecast, which will then reflect that business strategy, and where FP&A want to go with it. We could generate our own forecast, based on policy- implied days of payments, collections and so on, but then the actual days don’t always happen in line with that policy.”

Forecasting creates issues that are yet to be fully resolved for most treasurers. Indeed, says Cooney, while his TMS has a route to gathering all the information he needs for forecasting, extracting the information to obtain a proper analysis has been challenging. As the various business units of James Hardie move towards standardised processes, the possibility of deeper analysis, and more robust cash flow forecasting, has become a major focus for treasury, he reports.

Clearly forecasting remains a major point of discussion in most businesses. As Cooney comments: “It’s a topic that generates most questions as management tries to understand the variances and their impact on liquidity, especially as year-end approaches. But we know from conversations with our IACT peers that this really is a global treasury challenge.”

Top TMS tips and going live quickly

In grappling with cash-flow forecasting, and other treasury challenges, prior experience of a TMS implementation is, of course, a major advantage. With three under his belt, Cooney knows what works, and his insistence on well- managed static data is unswerving. To help “future-proof the system”, especially against forthcoming mandatory data requirements, a TMS user must be open to entering as much static detail at the outset as possible.

Cooney also advocates treasurers learning as much of the workings of their TMS as possible, something best achieved by closely following its implementation, from project kick-off.

The value of the in-house project team is similarly appreciated by Cullen. “They know the business and its goals, and they’ll be building up vital system knowledge,” she states. Indeed, as Cooney suggests: “A deeper understanding will save you time and money in the longer run, because when you have an issue, you’ll be better equipped to exhaust all possibilities before lodging a ticket with the vendor [an act he likens to “admitting defeat”].”

When an internal team is called to action with a new TMS, Agnew advises building capacity into the team’s working schedule. The Kellanova spin-off team handling the TMS comprised some 30 people who were located around the world. Often engaging solely via video conference, leveraging team size and location enabled continual ‘follow the sun’ project coverage between North America, Europe, and Asia. Within two weeks, the TMS (FIS Treasury and Risk Manager – Integrity Edition) was live, and executing its first payments.

Harnessing the power of many

Bringing individual treasury professionals together, and creating access to a wealth of skill, knowledge and experience, is the lifeblood of the IACT. The power inherent within this is something Agnew understands clearly. While she says it’s comforting to know others are in the same boat when it comes to today’s treasury challenges, she adds that it’s also good “to get a posse of treasurers together” to highlight a common issue to a bank or vendor. Using the power of many to influence change has, she states, “often been very effective”.

The fact that IACT members need not tackle any challenge alone is an obvious advantage. But that spirit of co-operation goes further, with banks and vendors appreciative of the members’ willingness to share their expertise and first-hand experiences as new solutions emerge.

When conference time comes around, the use cases brought by the sponsors, often via the panel sessions, play an important role for Cullen. She feels they bring life to otherwise abstract notions. “It helps us figure out what we can actually do with these tools, and how we can take our first steps towards realising their benefits.”

Of course, as Cooney further notes, the IACT annual conference is also an excellent way to forge new connections and rekindle existing friendships through the perfect combination of serious discussion and old-fashioned friendly chat.

The IACT2024 Annual Treasury Management Conference takes place between 13th and 14th November in Dublin where FIS will have a stand to speak about solutioning all things treasury.