Cash & Liquidity Management

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Streamlining Cash Management in a Decentralised Global Company AkzoNobel enhanced its cash management infrastructure, rationalising its many bank relationships, using cash pooling where possible, and is in the process of rolling out its payment factory. We talk to the Head of Treasury Operations about this major transformation.

Streamlining Cash Management in a Decentralised Global Company

Streamlining Cash Management in a Decentralised Global Company

by Marco Schuchmann, Head of Treasury Operations and Payment Factory, AkzoNobel

As readers of TMI will be aware following the series of interviews with Peter van Rood, Corporate Director, Treasury, AkzoNobel during 2010, and the article in March 2011, the company embarked on a major cultural and business organisation transformation. From a treasury perspective, this involved taking the department from an operational function conducting payments to a strategic partner for the business, providing the financial efficiency and risk mitigation that positions the company for the next stage in its development.

The importance of cash management efficiency

Enhancing our cash management infrastructure was a key element of our treasury transformation project. Firstly, we recognised that the transaction banking infrastructure would be one of the cornerstones of a successful transformation. Secondly, the ICI acquisition in 2008 brought a large number of new bank accounts and bank relationships into the group. With over 120 cash management banks, we were experiencing considerable challenges in terms of visibility and access to cash, bank communications, and capital efficiency.

It is easy to describe concepts and ideal scenarios when considering how a global corporation can streamline and optimise its cash management. Rationalising banks and accounts, concentrating cash, centralising treasury and finance processes are all straightforward on paper, and/or in a model organisation, but the reality can be quite different. This article aims to address some of the practicalities of realising a vision in an imperfect world.

Business realities

AkzoNobel is a company that has grown through acquisition, with business units located across the globe. Traditionally, we have had a highly decentralised business organisation and culture, with local business units taking their own business and finance decisions. This resulted in around 120 banking relationships externally, but just as significantly, we had 141 ERP systems in operation, 168 separate charts of accounts and 198 processing centres. It took nine days to produce our reports at the end of each financial period, with a non-competitive cost structure of our finance function.

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