Treasury is a value center at Ingram Micro

We hedge just about everything

Treasury is a value center at Ingram Micro

Towards the end of 2007 Ingram Micro was confronted by the departure of its European treasury controller.

The timing could hardly have been worse, just before the end-of-year accounting period. Laurens Tijdhof, a partner at Zanders, received a phone call asking whether an interim consultant was available quickly who could not only help with closing the books, but could also input some extras in the field of best market practices.

Consultant Jaco Boere fitted the profile and is still fulfilling the role.

“How did we end up at Zanders?” says Esther Lemmens, repeating the question. Ingram Micro’s executive director, tax and treasury EMEA (Europe, Middle East and Africa) no longer knows exactly. “I regularly talk to people from Zanders during a conference or workshop. I knew what they did and that they had an office in Brussels.

One central service provider for all treasury activities throughout the EMEA region.

Treasury is not a very big world. That’s certainly true when it comes to consultants and interim specialists in treasury accounting and management. And that’s precisely the expertise that we needed towards the end of 2007.”

An indication of the urgency of the situation is that Jaco Boere’s deployment was arranged in under two weeks. “That doesn’t mean that we accept the first consultant that comes along,” emphasizes Esther Lemmens. “The opposite is true. As a European treasurer or controller at this company you hold a key position.”

Ingram Micro Inc.

Ingram Micro Inc. has an annual turnover of approximately USD 34 billion, ranks among the Fortune 500 and is listed on the NYSE.

The company is the world’s largest distributor and market leader in sales, marketing and logistics of IP products and services. The range consists of tens of thousands of types of hardware products (including PCs, notebooks and consumer electronics) and software products (applications, games and licenses).

Ingram Micro does not directly supply consumer markets, but instead forms a vital link between around 1,500 manufacturers and more than 170,000 wholesalers in over 150 countries. Besides purchasing, storing and distributing, Ingram Micro supports the trade through marketing programs, product bundles and product repacking, pre-sales and after-sales (including return logistics), technical support, financial services and credit management.

Ingram Micro Inc. was set up in California in the USA in 1979. Ten years later the company entered the European market when it acquired Belgian enterprise Softeurop. From here the company grew quickly, expanding into the Middle East and Asia. While the company operates distribution centers in many countries, the administrative tasks for the EMEA region (such as financing, treasury and risk management) have been centralized in Vilvoorde in Belgium.

Beyond Europe, more than the euro

Ingram Micro works on the basis of a particularly large, dynamic and complex business model. For example, Esther Lemmens manages the EMEA treasury group, which is the central treasury service provider for the entire EMEA region. In the treasury
back-office, mid-office and front-office there are eight people who take care of such matters as cash and foreign currency management.

They also provide financial services and supply chain contracts for all European entities, perform cross-border payments via a payment factory that uses SWIFTNet, manage transactions between the entities mutually and run all bank accounts.

”We act as the in-house bank for all of our entities in about 25 EMEA countries,” says Lemmens. “As new entities are regularly added and merge, it’s always a very dynamic setting. It is important for us to integrate every new entity as quickly as possible in our business policy and processes.”

David Henrion, senior treasury manager in the front office, adds: “When you have such a large international field of work it means that you also have numerous diff erent tax structures and foreign currencies. We work with about 15 diff erent currencies and have a gigantic range of products, but the margins on them are very low due to the nature of the business model.

That’s part of the reason why treasury activities, and especially foreign currency risk management, are vitally important. It’s why we approach the treasury department more like a value center than a cost center and are a service provider for the entire business.”

Position literally ‘irreplaceable’

Jaco Boere set to work full-time on closing the year. Thanks to that work he became thoroughly familiar with the company’s structures and systems and was already familiar with the treasury management system. This proved to be a stepping stone to a new task: optimizing the monthly closing procedure.

Esther Lemmens says: “We were still calculating and entering too many things manually, so I knew there was still scope for numerous improvements. It sounds simple, but you have to put your mind to it.” That is precisely what Jaco did. Within a few months he was able to optimize the structure and automation to such an extent that his own – interim – position of European treasury controller was largely wiped off the headcount!

But it was not yet the end of his work at Ingram Micro. In the meantime the back-office manager had left and the mid-office manager was about to go on maternity leave. With the knowledge already acquired, Jaco was the ideal person to fill these openings temporarily.

Exchange of expertise

The Zanders consultant worked on a variety of diff erent projects at Ingram Micro. They ranged from restructuring the back office to producing an RFP (Request For Proposal) for cash management in the UK. Esther Lemmens adds: “We stayed with the same bank in the end, but at substantially lower costs.”

Jaco was also involved in reviewing a receivables-backed financing program in Germany. Even now he can still be found each month in Vilvoorde where he supports the closing process, which he does together with David Henrion.

”Jaco works out the results from the point of view of controlling, but I have to explain them to the management. It’s very reassuring to be able to spar with each other. Together we look for anything odd. I can ask him questions about hedge accounting or more technical matters concerning treasury and risk management,” says Henrion.

Jaco adds: “David is very good at separating matters of primary and secondary importance. He is the real insider and expert in FX exposure management. That’s incredibly important for this company. And for me it’s a learning curve.”