Royal FloraHolland is a cooperative of flower and plant growers. It connects growers and buyers in the international floriculture industry by offering unique combinations of deal-making, logistics, and financial services. Connecting 5,406 suppliers with 2,458 buyers and offering a solid foundation to all these players, Royal FloraHolland is the largest floriculture marketplace in the world.

The company’s turnover reached EUR 4.8 billion (in 2019) with an operating income of EUR 369 million. Yearly, it trades 12.3 billion flowers and plants, with an average of at least 100k transactions a day.

The floriculture cooperative was established 110 years ago, organizing flower auctions via so-called clock sales. During these sales, flowers were offered for a high price first, which lowered once the clock started ticking. The price went down until one of the buyers pushed the buying button, leaving the other buyers with empty hands.

The floriculture market is changing to trading that increasingly occurs directly between growers and buyers. Our role is therefore changing too.

Wilco van de Wijnboom, Manager Corporate Finance

Challenge

The Floriday platform

Around twenty years ago, the clock sales model started to change. “The floriculture market is changing to trading that increasingly occurs directly between growers and buyers. Our role is therefore changing too,” Wilco van de Wijnboom, Royal FloraHolland’s manager corporate finance, explains. “What we do now is mainly the financing part – the invoices and the daily collection of payments, for example. Our business has developed both geographically and digitally, so we noticed an increased need for a platform for the global flower trade. We therefore developed a new digital platform called Floriday, which enables us to deliver products faster, fresher and in larger amounts to customers worldwide. It is an innovative B2B platform where growers can make their assortment available worldwide, and customers are able to transact in various ways, both nationally and internationally.”

The Floriday platform aims to provide a wider range of services to pay and receive funds in euros, but also in other currencies, and across different jurisdictions. Since it would help treasury to deal with all payments worldwide, Royal FloraHolland needed an international cash management bank too. Van de Wijnboom: “It has been a process of a few years. As part of our strategy, we wanted to grow internationally, and it was clear we needed an international bank to do so. At the same time, our commercial department had some leads for flower business from Saudi-Arabia and Kenya. Early in 2020, all developments – from the commercial, digital and financing points of view – came together.”

Solution

RfP track record

Royal FloraHolland’s financial department decided to contact Zanders for support. “Selecting a cash management bank is not something we do every day, so we needed support to find the right one,” says Pim Zaalberg, treasury consultant at Royal FloraHolland. “We have been working together with Zanders on several projects since 2010 and know which subject matter expertise they can provide. They previously advised us on the capital structure of the company and led the arranging process of the bank financing of the company in 2017. Furthermore, they assisted in the SWIFT connectivity project, introducing payments-on-behalf-of. They are broadly experienced and have a proven track record in drafting an RfP. They exactly know which questions to ask and what is important, so it was a logical step to ask them to support us in the project lead and the contact with the international banks.”

Zanders consultant Michal Zelazko adds: “We use a standardized bank selection methodology at Zanders, but importantly this can be adjusted to the specific needs of projects and clients. This case contained specific geographical jurisdictions and payment methods with respect to the Floriday platform. Other factors were, among others, pre-payments and the consideration to have a separate entity to ensure the safety of all transactions.”

Strategic partner

The project started in June 2020, a period in which the turnover figures managed to rebound significantly, after the initial fall caused by the corona pandemic. Van de Wijnboom: “The impact we currently have is on the flowers coming from overseas, for example from Kenya and Ethiopia. The growers there have really had a difficult time, because the number of flights from those countries has decreased heavily. Meanwhile, many people continued to buy flowers when they were in lockdown, to brighten up their new home offices.”

Together with Zanders, Royal FloraHolland drafted the goals and then started selecting the banks they wanted to invite to find out whether they could meet these goals. All questions for the banks about the cooperative’s expected turnover, profit and perspectives could be answered positively. Zaalberg explains that the bank for international cash management was also chosen to be a strategic partner for the company: “We did not choose a bank to do only payments, but we needed a bank to think along with us on our international plans and one that offers innovative solutions in the e-commerce area. The bank we chose, Citibank, is now helping us with our international strategy and is able to propose solutions for our future goals.”

The Royal FloraHolland team involved in the selection process now look back confidently on the process and choice. Zaalberg: “We are very proud of the short timelines of this project, starting in June and selecting the bank in September – all done virtually and by phone. It was quite a precedent to do it this way. You have to work with a clear plan and be very strict in presentation and input gathering. I hope it is not the new normal, but it worked well and was quite efficient too. We met banks from Paris and Dublin on the same day without moving from our desks.”

Van de Wijnboom agrees and stresses the importance of a well-managed process: “You only have one chance – when choosing an international bank for cash management it will be a collaboration for the next couple of years.”

We have been working together with Zanders on several projects since 2010 and know which subject matter expertise they can provide.

Pim Zaalberg, Treasury Consultant

Performance

Future plans

The future plans of the company are focused on venturing out to new jurisdictions, specifically in the finance space, to offer more currencies for both growers and buyers. “This could go as far as paying growers in their local currency,” says Zaalberg. “Now we only use euros and US dollars, but we look at ways to accommodate payments in other currencies too. We look at our cash pool structure too. We made sure that, in the RfP, we asked the banks whether they could provide cash pooling in a way that was able to use more currencies. We started simple but have chosen the bank that can support more complex setups of cash management structures as well.” Zelazko adds: “It is an ambitious goal but very much in line with what we see in other companies.”

Also, in the longer term, Royal FloraHolland is considering connecting the Floriday platform to its treasury management system. Van de Wijnboom: “Currently, these two systems are not directly connected, but we could do this in the future. When we had the selection interviews with the banks, we discussed the prepayments situation – how do we make sure that the platform is immediately updated when there is a prepayment? If it is not connected, someone needs to take care of the reconciliation.”

There are some new markets and trade lanes to enter, as Van de Wijnboom concludes: ”We now see some trade lanes between Kenya and The Middle East. The flower farmers indicate that we can play an intermediate role if it is at low costs and if payments occur in US dollars. So, it helps us to have an international cash management bank that can easily do the transactions in US dollars.”

WPP has treasury operations on three continents and each center has its own individual needs. The company needed to devise a request for proposals (RFP) for implementing a new treasury management system (TMS) and Swift-based bank communication that would serve the diverse needs of each regional office. Zanders worked on this project from an early stage, helping WPP to write a cohesive RFP and providing objective advice at the selection stage.

The biggest marketing company in the world, with 2,400 offices and operations in 107 countries, WPP has four main treasury centers. With headquarters in London and three regional treasury centers in Brussels, New York, and Hong Kong, the requirements of each hub differed considerably. The process of writing an RFP that would meet, combine, and harmonize the needs across the London, Brussels, and New York treasury offices was the first conundrum.

An RFP to meet all TMS requirements

Zanders was involved in the RFP from the outset, having come through a consultant selection process. Paul Delaney, director of treasury at WPP’s London headquarters, says: “We felt Zanders were best qualified to help us in the project, and they had good feedback from other companies with similar requirements.”

It was Zanders’ task to become very familiar with the organization, processes, and system requirements of each of WPP’s three treasury centers, and they did this by visiting each office and spending three days assessing their needs. Three Zanders consultants were working on the project throughout: Thomas Pels, David Kelin, and Laurens Tijdhof, all of whom worked with the treasury staff at WPP to write up an RFP that would set the company on its way to selecting a new TMS. “It was a joint effort between WPP and ourselves to make sure that we went into great detail and got all the questions we needed for the RFP,” explains Thomas Pels, of the Zanders’ Brussels office.

We felt it was important to bring in an independent view partly because, as a treasury department, we aren’t necessarily up-to-date with the changes in TMSs and aren’t best-placed to make an objective assessment of what best suits our needs.

Paul Delaney, Director of Treasury at WPP.

Paul Delaney believes that bringing Zanders on board was the right way to manage the project. “We felt it was important to bring in an independent view partly because, as a treasury department, we aren’t necessarily up-to-date with the changes in TMSs and aren’t best-placed to make an objective assessment of what best suits our needs,” he says. This is an opinion echoed in each of WPP’s treasury offices. David Hughes, WPP’s director of treasury operations in New York, points out that Zanders facilitated the RFP process between the three offices: “That is something I think we would have had a really hard time doing if we didn’t have Zanders – they were able to take an objective point of view.”

Three treasury centers – one global TMS

The most important requirement for the TMS from the London headquarters’ point of view was to have an updated reporting function, says Felicity Ronayne, UK treasury operations manager in WPP’s London office. “We wanted a system we could all use that was up-to-date, with really good report-writing features and a cash position worksheet that we could access across all regions.”

The heavy reliance on checks, zero-balancing, and WPP’s large number of US operating companies meant that the needs of the US office varied significantly from the offices in Europe. David Hughes notes: “We sometimes have over USD 100 million checks clearing in the morning, so one of our needs was for controlled check disbursement funding notification to be included in the workstation cash positioning. We also need to maintain a lot of inter-company schedules on the treasury workstation and another big difference is our reliance on zero-balancing from the operating company accounts to the main WPP account – in the US it is the basis of everything we do.”

The requirements for the Belgium office were slightly different. Veronique Freymann, European treasury manager at WPP’s Brussels office, notes: “The Belgium team manages more than 2000 accounts of the 750 entities in more than 15 countries. Furthermore, we manage the cash pools (zero-balancing, notional, and multi-currency), the group account structure, inter-company loans, and the group’s guarantees. For this, the possibility to have cash forecast information delivered via the web was one of the major requirements.”

Zanders managed to combine all the different regional requirements into one global RFP document. The RFP resulted in three potential TMS providers, but WPP finally chose IT2. The system is being implemented gradually across the headquarters and two regional centers. It is near completion in New York and Brussels, while implementation in the London office will begin with static data in Q4 2012.

Veronique Freymann says: “The implementation of IT2 is gradual – so we have started to upload data from bank statements, which enables us to use some tools already. We will start with the inter-company loans and it will be a step-by-step process.”

The TMS in the New York office will be fully functional by the first quarter of 2012, although they will be testing it and running parallel with it before then.

Choosing a Swift Service Bureau (SSB) provider

As well as playing an active part in the TMS selection, WPP’s Brussels office also led the process in selecting an SSB provider. David Kelin, director at Zanders’ London office, points out that the TMS selection and the choice of SSB provider were complementary projects. “When we were looking at the TMS, we also assessed WPP’s banking relationships and communications – we established early on that an SSB would be necessary and that Alliance Lite would not be sufficient for WPP’s needs.”

WPP eventually chose Swiss provider BBP to provide their Swift bank communication. The selection of the SSB was completed in August but it has not gone live yet. WPP’s Brussels office is currently transmitting data across to the new SSB system, and it will become effective before the end of 2011.

As with the TMS selection process, Zanders was instrumental in helping WPP to understand their needs for Swift and then choose the right product. “We are the end users, so we know what we want, but we don’t know what advantages one solution offers compared to others,” says Thierry Lenders, European treasury manager at WPP’s Brussels office.

It is expected that the SSB will bring significant benefits for the Brussels office. Veronique Freymann notes: “SwiftNet gives a single channel of communication between us and the banks, so it will be a lot easier for us.” For now, WPP is reserving judgment on whether the SSB will be needed in its other treasury centers. Paul Delaney says: “It was evident that we needed the SSB in Brussels, but it is not yet clear if we will get the same benefits from it in New York and London. We are watching what happens in Brussels closely and we’ll make a proper assessment once it’s fully installed there.”

Bringing the project to a happy conclusion

This has been a long and complex project. What began as a challenging RFP in 2010 then became the selection and implementation of a TMS and an SSB. The project is ongoing, and several months remain before both IT2 and the SSB are fully functional.

We were very impressed with the quality of the people at Zanders and the depth of their knowledge. Most of all, we really appreciate the fact that the same three Zanders consultants have seen the project through from beginning to end.

David Hughes, Director of Treasury Operations.

For more information on selecting a Treasury Management System or on the process of choosing a Swift Service Bureau provider, contact us.