Remote offers global employment services for internationally distributed workforce. It takes care of payroll, benefits, compliance, taxes, equity incentives and more, so that companies can employ someone internationally as easily as they do at home. The company’s vision is to make it simple to manage, employ, and pay anyone, anywhere. Founded in 2019, Remote is growing quickly and expanding into different markets. In 2022, Zanders supported the company to accelerate the onboarding of new banks. Ana de Sousa, Director and Global Head of Treasury at Remote, explains the collaboration in this Q&A.

"We tackle some of the biggest challenges involved in building distributed teams, which are the risk, cost, and complexity of employing international employees and contractors,” De Sousa clarifies. “Our customers include GitLab, DoorDash, Loom, Paystack, and thousands of other companies around the world.”

You have been Director Global Treasurer at Remote for a year now. What attracted you to join the company?

“At Remote we often say that ‘talent is everywhere, but opportunities aren’t.’ I grew up in a very small village in Portugal so I personally identify with this. I saw that Remote is changing the world and I wanted to be part of this change. Beyond the mission, it’s also exciting to be part of a company that is applying technology and automation to bring efficiency to an area as complex as global employment. I am also very aligned with Remote’s values. The value of kindness is very special for me, as I believe that we can always make extraordinary things when we are kind.”

How would you describe the company’s corporate culture?

“Because Remote is a fully distributed virtual company with no offices, most roles are country-agnostic and our employees can work from their chosen locations around the world. That means we have Remoters from 75+ different nationalities, coming from all different cultures, backgrounds and experiences. This contributes to a diverse work environment where everyone is encouraged to share their culture and interests with everyone.”

What would you say drives the need for remote work/remote hiring and remote services in general?

“Over the past few years, many companies turned to remote work as a solution to a problem. What they are discovering now is that it can provide significant business advantages as well. Remote work enables you to build a team without being constrained by geography, meaning companies can tap into wider pools of talent while also supporting greater flexibility and work-life balance.”

What is your experience within different regions/markets?

“Remote has a global presence with around 80 legal entities on six continents. I started my career overseeing cash management for the EMEA region. Later, I moved to a new job with a global scope. Here at Remote, every single member of the Treasury team has global coverage. This means we can leverage asynchronous and flexible work for the entire team to be effective.”

You are working completely remotely, without having a physical company office. What has been your experience with this setup and do you miss meeting your colleagues in person?

“I do miss team birthday parties with cake sometimes. I advocate freedom of choice, based on whatever is best for you. Working from an office is still offered by plenty of companies. For me, remote work has allowed me to keep my career in an international environment while prioritizing family and flexibility. It’s certainly still possible to meet up with colleagues without a company office. I recently met one of my team members in person for the first time, and it was just like catching up with a friend.”

In terms of managing family/work time, are there days where you would prefer to work in a physical company office?

“No, I manage my time according to my priorities. If my kids need me, I will be available for them. If my work is my priority, that is my focus. It is not a physical place that defines my commitment or my capacity of producing results. It is important to have the right structure that supports your professional career independently of the place.”

What are the communication tools you use internally and externally?

“We use tools like Slack, Notion, Loom, and Asana for communication and documentation. Beyond the tools, Remoters are trained in asynchronous communication, documentation, inclusive language, meeting best practices, and even to use the UTC time zone companywide. These are all essential for a team that is as distributed as ours.”

What would you say are treasury-specific challenges when working remotely?

“The biggest challenges of remote work arise when we try to take the old office-centric methods of doing things and expect them to work just as well in a remote setting. Remote work does require some different considerations. Treasury teams in particular need to be rigorous about documentation and practicing ‘overcommunication’ given the critical nature of our work.”

What is the company’s approach for creating an integrated team and what is your personal approach to build a team spirit while working completely remotely?

“As a fully remote company, Remote works hard to build belonging and a sense of community throughout the company. There are numerous opportunities for social connection, including bonding times, games, and even virtual reality time. We have more than 1,700 Slack channels including channels for music, TV, pets, food, sports and much more. At the same time, our culture is asynchronous, so people can participate on their own time and all scheduled events rotate across time zones.”

Expanding into new markets is part of Remote’s core strategy. What role does Treasury play to enable new country operations?

“At Remote, Treasury is part of the backbone of our operations and an enabler of international growth. In the majority of cases, without a bank account, we cannot launch in a country. In addition, domestic bank accounts are also critical to offer better experience to our customers.”

How did Zanders support you to accelerate the onboarding of new banks?

“Zanders helped streamline what could be a very complicated process with banking partners. We appreciated their continuous communication and follow-up on progress, as well as their advocacy on our behalf to challenge some of the requirements we faced and even get a few of them waived.”

How did you perceive the collaboration between Remote and Zanders, given the project was delivered on a fully remote basis?

“It worked very well. We would not have been able to work with a partner that didn’t know how to collaborate remotely. Working with the Zanders team, we were able to apply the same operating principles we use internally – clearly defining guidelines and expectations, overcommunicating, and building a high degree of trust between our teams.”

To round off, what advice would you give anyone starting to work 100% remotely?

“Life is too short to waste time commuting. Remote work is all about freedom, flexibility and happiness. When we do what we like, we’ll get great results, regardless of where the work is done.”

The collaboration between Remote and Zanders

Viktorija Janevska, manager at Zanders: “Account opening and KYC has been a challenge for many corporates in recent years, given the increasing KYC requirements and rather cumbersome onboarding experience. We at Zanders have been happy to support Remote with this interim project, taking the workload from the team and being the first point of contact for the banks with regards to the account opening and onboarding documentation requests. Key success factors for the project were the open and transparent communication between the two teams, regular update calls and priority setting.

Remote not only demonstrates an innovative working approach when it comes to working remotely, but also by using chats for most of their internal communication rather than email communication. During the project, the transition from email to chat communication required some adaptation and from time to time a reminder to use the preferred channel. It has been a great experience to accompany Remote on its journey and are looking forward to see the company’s further success.”

LyondellBasell, with its global presence and significant operations in the United States, the company has been affected by the IBOR reform. The Treasury team was well aware of this impact and proactively approached the transition away from the IBOR rates in order to be ready ahead of time.  

While it was a global and multi-functional project, one of the first goals was to ensure the TMS readiness for the calculation with alternative reference rates and the new discounting methodologies. As part of the action plan, the LyondellBasell (LYB) Treasury team (supported by procurement and IT) issued an RfP in Q4 2020 with the aim to get external support for (a) the required system changes, (b) to provide business support for initial transition plans and (c) to adhere to the best-in-class ambition of the company.

Preparing for the transition

LYB selected Zanders as implementation partner and right after the selection the project kicked off in January 2021. Urszula Chwala, was the Treasury Lead for LYB and she outlines why LYB initiated the project earlier than many other corporates: “The project team was already busy since the beginning of 2020. We analyzed the potential global impact of the IBOR reform to LYB. Amongst other impacts we were aware that LYB’s SAP Treasury Management System was highly customized, especially in the area of SAP In-house Cash. As such, we wanted to make sure that we would be ready for the transition to support our business and to enable all teams at LYB to move forward with changes on financial, commercial and legal matters.” Urszula also further comments on the RfP process: “We were looking into the third party that had both technical and business knowledge related to the IBOR reform and could bridge the gap between LYB IT and the Treasury department.”  

Appreciated approach 

LYB is using SAP ECC EHP8 as their treasury system and as such the standard functionality developed by SAP to support daily compound interest calculation could be implemented. On the Zanders side, SAP consultant Aleksei Abakumov, Adela Kozelova (who fulfilled the role of the business expert and project manager) and Anuja Naiknavare in the role of support consultant have been closely working with LYB’s Treasury and IT teams throughout the project.  

Zanders made this project as easy as it could be. What I really appreciated was the approach taken by Zanders team. They have taken all the suggestions from us and tested them and then came up with additional suggestions as well. The Zanders team was thinking with us, taking our best interest in mind. They supported us in every detail and removed concerns and roadblocks. Zanders also acted as business alliance in the project to ensure that all business requirements are now fully translated into the technical solution.

Urszula Chwala, Treasury Lead for LYB

A new functionality 

In order to achieve system readiness, the project included configuration and diligent testing of a new data feed source which was required as a base to enable the daily average compound, the simple compound interest calculation and the new evaluation type with enhanced discounting curves. Considering the uncertainty, the availability of the new alternative reference rates, market conventions and the exact timing, the project’s aim was to make sure that the system would be able to support different variations of interest calculation. The project went successfully live in May 2021.  

Urszula outlines different challenges encountered in the project: “Technically the biggest challenge was finding the right market data feed for the new rates. The challenge was finding the source and, making it available in SAP and test all scenarios. For the actual transactions, the system is a lot more flexible with respect to entering transactions, which makes a deal capture more complex. But Aleksei has supported the team a lot in navigating through the new functionality and we are confident to enter new deals with overnight risk-free rates. On the business side, the market clarity, especially with regards to market conventions, is still challenging the business cutover.” 

Transactions 

On the transition side, Treasury was cautiously managing the exposure to the IBOR reform by refraining from entering variable interest rate referencing transactions over the last two years. As a result, there is no need to cutover of any existing transaction. However, there are few intercompany loans that will mature by the end of this year and some of them might be replaced by the deals referencing to the overnight risk-free rates. Having strong presence in the United States, the exposure to the USD LIBOR is considerably higher than to the GBP and CHF LIBOR ceasing at the end of this year. Therefore, the major transition is only expected over the next year, closer to the cessation of the USD LIBOR.  

Urszula elaborates on the business transition: “Understanding the logic of how new instruments are going to work gives me a piece of mind for the transition. LYB never meant to be an early adopter of the change. Switching intercompany loans as first seems to be the best approach for us, because there are no corresponding derivatives needed for these products. Also, there is no dependency on the external counterparties, which makes the transition easier.”  

Really achieved 

LYB and Zanders are currently working on a follow-up project for the cash flow aggregation of interest in SAP. This need emerged from the new daily compounding functionality, which by default creates daily cash flow postings that are difficult to reconcile with the interest settlements. A user-friendly solution to aggregate these daily cash flows has been defined and configured and is currently being validated by the end users. This is the last step for LYB to be ready to create a first deal with daily compounding interest calculation in the system.  

The change is coming so you can choose either to embrace it or to postpone it. We decided to embrace it now.

Urszula Chwala, Treasury Lead for LYB

Urszula concludes: “The change is coming so you can choose either to embrace it or to postpone it. We decided to embrace it now. The greatest achievement of this project is that the project was executed within original timelines, without major issues and it gave the whole Treasury team confidence that the system will perform well. What needed to be achieved was really achieved. The complete solution is already implemented for the technical side.” 

One of the key subjects in this re-assessment is the implementation of tangible and transparent Environment, Social, and Governance (ESG) factors into the business.

Treasury can drive sustainability throughout the company from two perspectives, namely through initiatives within the Treasury function and initiatives promoted by external stakeholders, such as banks, investors, or its clients. When considering sustainability, many treasurers first port of call is to investigate realizing sustainable financing framework. This is driven by the high supply of money earmarked for sustainable goals. However, besides this external focus, Treasury can strive to make its own operations more sustainable and, as a result, actively contribute to company-wide ESG objectives.

Figure 1: ESG initiatives in scope for Treasury

Treasury holds a unique position within the company because of the cooperation it has with business areas and the interaction with external stakeholders. Treasury can leverage this position to drive ESG developments throughout the company, stay informed of latest updates and adhere to regulatory standards. This article shows how Treasury can become a sustainable support function in its own right, highlights various initiatives within and outside the Treasury department and marks the benefits for Treasury – on top of realising ESG targets.

Internal initiatives

Automation and digitalization drive certain environmental initiatives within the Treasury department. Full digitalized records and bank statement management and the digitalization of form processes reduce the adverse environmental impact of the Treasury department. Besides reducing Treasury’s environmental footprint, digitalization improves efficiency of the Treasury team. By reducing the number of manual, cumbersome operational activities, time can be spent on value-adding activities rather than operational tasks.

Another great example of how Treasury can contribute to the ESG goals of the company, is to incorporate ESG elements in the capital allocation process. This can be done by adding ESG related risk factors to the weighted average cost of capital (WACC) or hurdle investment rates. By having an ESG linked WACC, one can evaluate projects by measuring the real impact of ESG on the required return on equity (ROE). By adjusting the WACC to, for example, the level of CO2 that is emitted by a project, the capital allocation process favours projects with low CO2 emissions.

An additional internal initiative is the design of a mobility policy with the objective to lower CO2 emissions. On one hand, this relates to decreasing the amount of business trips made by the Treasury department itself. On the other hand, it relates to the reduction of business travel by stakeholders of treasury such as bankers, advisors and system vendors. A framework that offsets the added value of a real-life meeting against the CO2 emission is an example of a measure that supports CO2 reduction on both sides. Such a framework supports determination whether the meeting takes place online or in person.

Furthermore, embedding ESG requirements into bank selection, system selection and maintenance processes is a valuable way of encouraging new and existing partners to undertake ESG related measures.

When it comes to social contributions, the focus could be on the diversity and inclusion of the Treasury department, which includes well-being, gender equality and inclusivity of the employees. Pursuing these policies can increase the attractiveness of the organization when hiring talent and make it easier to retain talent within the company, which is also beneficial to the Treasury function.

The development of a structured model that defines the building blocks for Treasury to support the achievement of companywide ESG objectives is a governance initiative that Treasury could undertake. An example of such a model is the Zanders Treasury and Risk Maturity Model, which can be integrated in any organization. This framework supports Treasury in keeping track of its ESG footprint and its contribution to company-wide sustainable objectives. In addition, the Zanders sustainability dashboard provides information on metrics and benchmarks that can be applied to track the progress of several ESG related goals for Treasury. Some examples of these are provided in our ‘Integration of ESG in treasury’ article.

External initiatives

Besides actions taken within the Treasury department, Treasury can boost company-wide ESG performance by leveraging their collaboration with external stakeholders. One of these external initiatives is sustainability linked financing, which is a great tool to encourage the setting of ambitious, company-wide ESG targets and link these to financing arrangements. Examples of sustainability linked financing products include green loans and bonds, sustainability-linked loans, and social bonds. To structure sustainability-linked financing products, corporates often benefit from the guidance of external parties when setting KPIs and ambitious targets and linking these to the existing sustainability strategy. Besides Treasury’s strong relationships with banks, retaining good relationships with (ESG) rating agencies and financial institutions is critical to stay abreast of the latest updates and adhere to regulatory standards. Additionally, investing excess cash in a sustainable manner, using green money market funds or assessing the ESG rating of counterparties, is an effective way of supporting sustainability.

Apart from financing instruments, Treasury can drive the ESG strategy throughout the organization in other ways. Treasury can seek collaborations with business partners to comply with ESG targets, which is another effective manner to achieve ESG related goals throughout the supply chain. An increasing number of corporates is looking to reduce the carbon footprint of their supply chain, for which collaboration is essential. Treasury can support this initiative by linking supplier onboarding on its supply chain finance program to the sustainability performance of suppliers.

To conclude

As developments in ESG are rapidly unfold9ing, Zanders has started an initiative to continuously update our clients to stay ahead of the latest trends. Through the knowledge and network that we have built over the years, we will regularly inform our clients on ESG trends via articles on the news page on our website. The first article will be devoted to the revision of the Sustainability Linked Loan Principles (SLLP) by the Loan Market Association (LMA) and its American and Asian equivalents.

We are keen to hear which topics you would like to see covered. Feel free to reach out to Joris van den Beld or Sander van Tol if you have any questions or want to address ESG topics that are on your agenda.

In a changing global floriculture market, Royal FloraHolland created a new digital platform where buyers and growers can connect internationally. As part of its strategy to offer better international payment solutions, the cooperative of flower growers decided to look for an international cash management bank.

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 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.”

Our business has developed both geographically and digitally, so we noticed an increased need for a platform for the global flower trade

Wilco van de Wijnboom, Royal FloraHolland’s Manager Corporate Finance

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.”

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.”

You only have one chance – when choosing an international bank for cash management it will be a collaboration for the next couple of years

Wilco van de Wijnboom, Royal FloraHolland’s Manager Corporate Finance

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.”

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.”

What are the main changes influencing treasury’s added value within corporates?

Laurens Tijdhof (LT): “Business models are changing. In the decades since the introduction of the internet, ‘digital natives’ - new multinational companies such as Uber and Google - have emerged to disrupt all industry sectors. These companies have less legacy than traditional multinationals. Treasury plays an important role in that digital native environment, for example with payment innovation in ecommerce. Traditional multinationals are typically dealing with a lot of legacy because of mergers and acquisitions throughout their history. For them, the change is more transformational in nature, as they are doing something different than they have done in the past decades or even in the past century. This is one of the elements where treasury can add significant value; to understand from a financial point of view where the business is in the current cycle and to see what things need to be changed, updated or optimized to add value.”

Ron Chakravarti (RC): “Firstly, the pace of change in commerce has picked up, driven by new technologies and new ways of doing business. These are shifting the timing, value, and volume of cash flows and, of course, that impacts treasury. Secondly, while treasury always has to manage regulations and the cash flow impact of changes in global taxation, the pace of change in these have also picked up. Finally, geopolitical uncertainty has created additional considerations at this point in time. Corporate treasurers, therefore, need to ensure their teams are increasingly nimble to deal with all of these issues. The good news is that the availability of new technologies, data and artificial intelligence have the potential to change how treasury works and to create added value.”

At which point are companies ready for new technology?

LT: “Before a company can enter the next stage of treasury maturity, it first needs to get the basics right. This means having a focus on centralization, standardization and automation, typically using traditional technology like a TMS or an ERP system. And if you have these systems in place, be sure you’re using and benefiting them optimally from that environment first. Once you have the basics right, you can go to the next stage of a smart treasury, using the new digital or exponential technologies. Then you can benefit from the good basis and use more of the data in analytical ways, with algorithms or newer technologies like robotic process automation (RPA) or artificial intelligence (AI).”

RC: “I completely agree that getting the basics right, by completing the journey to an efficient treasury comes first. Treasury is on an evolution path of becoming first efficient, then smart, and finally integrated. Getting to efficient means that you must standardize, centralize, and automate. Even among multinational companies, not all have mature, centralized treasury models. Getting to a best in class model is key. In most industries that includes a functionally centralized regionally distributed treasury model, with operational treasury on a common infrastructure and processes. Once you are substantially there, you can work on the next step change, in making the move to a smart treasury. And ultimately to an integrated treasury.”

How should a treasurer deal with the continuous change driven by these exponential technologies?

RC: “Well, an issue is that – as The Future of Treasury whitepaper indicates - only 14 percent of corporates have a digital strategy at the treasury level. Why is this so low? One reason is the availability of the right resources. While treasurers have previously adapted to technology change, this change is all happening a lot faster now - for treasury and the broader business. Ultimately, treasury is all about information. Today, more than ever, the treasury function needs to include people who are technologically savvy. People who are able to comprehend what is changing and how to best deploy technology. That will become increasingly important to create value for the business. Treasury teams recognize that they need to have a digital strategy, but many of them are not fully equipped to define one. They are looking for help from industry leaders with a treasury framework to define their digital treasury strategy. That is one of the reasons for this collaboration between Citi and Zanders; in many cases we recognize that we can better do it together, creating added value for our mutual clients.”

LT: “If you compare the current situation to ten years ago, a treasurer would only buy new technology if there was a real requirement. Today, there’s new technology that many treasurers do not fully understand – in terms of what problems it could potentially solve for the company. What you often see now is that treasurers start with small projects, proofs of concepts, to test some innovative ideas. You can compare it with the iPhone; when Steve Jobs invented it, it took some time before people really understood what to do with it, what value it would add in their life. First you need to see what it is, what it can do for you, whether it can solve a real problem. That’s the exiting stage in which we are now. Some treasurers are trail blazers, others are more followers that first want to learn from others about how it has brought them forward.”

Where can these latest technologies really improve treasury? Are there any issues they cannot solve?

LT: “Treasury is all about information and data. There’s a lot of information available in a treasury environment and you sometimes need new technologies and standardized processes to unlock the value out of these data. Treasury covers a large amount of structured data in all kinds of systems. If you want to translate that data insight into valuable conclusions, then technology is probably the right enabler to help; with data analytics and visualization, for example. But, if you don’t have your data centrally available in a data warehouse or data lake, then that’s the first part you should work on; you first need to have your data centrally available to be able to do something with it. Unfortunately, many large multinational companies are still in that stage, they still have data that’s very fragmented and decentralized. For those companies, you could say that the newest technologies have come too early.”

RC: “What will improve treasury? We should first consider what treasurers are seeking to do. Today, we are seeing an increasing appetite from corporate treasurers for integrated decision support tools going beyond what treasury management systems can provide. To that end, we at Citi are running a number of experiments, collaborating with our clients and fintechs, and enabling our clients’ journey towards smart treasury. This is about moving beyond descriptive analytics to decision support and decision automation, and offering opportunity to realize the full automation of operational treasury. What won’t be solved? Well, we won’t get there in 2020 but we will certainly soon start seeing the foundational steps in this transition to a fully automated operational treasury and that’s what is so exciting.”

Traditionally the company insures events that can lead to huge losses, such as natural disasters. Two years ago, this reinsurer decided to further strengthen its payment processes. Swiss Re has engaged the support of Zanders, in several areas, since 2012. At first, this was mainly related to Group Treasury’s balance sheet management and risk reporting processes. Among others, a new liquidity risk measurement and reporting system was put in place using a combination of an in-house built data warehouse, a vendor risk management system and modern business intelligence (BI) technology.

Connectivity ‘on par’

At the time, account manager Jeroen van der Heide was already Group Treasury’s main point of contact. “Since 2017, we’ve also been helping Swiss Re to improve their operational treasury processes,” Van der Heide says. In early 2017, the reinsurer organized several workshops on bank connectivity. “We participated in those workshops and provided our point of view assessment on their as-is. Swiss Re’s connectivity demonstrated to be ‘on par’ with the market standard. However, our other feedback during those workshops strengthened their resolve to work towards a new central financial messaging hub in the medium term. We were chosen to support them in the realization of that ambition.”

Single source of truth

A central financial messaging hub is a considerable undertaking, given that the company has at least a dozen different systems from which payments are initiated and where bank statements are consumed. Like many big financial multinationals, Swiss Re has grown substantially over the years, partially through acquisitions. One of Zanders’ first tasks was to analyze the presence of bank account information in the various systems – and the consistencies and inconsistencies between them. This analysis then served as the basis for a blueprint of the 'to be' data model.

It’s crucial to designate a single source of truth for different types of master data, simply because that avoids getting stuck in master data reconciliation, it really is the starting point for any move towards operational excellence.

Nicolas Andres, head of Group Finance Transformation at Swiss Re

SWIFT network

In the fall of 2017, the focus shifted to connectivity with the SWIFT network. Zanders made sure that compliance with the Customer Security Programme (CSP) was achieved without problems and, with an eye on improving business continuity, an initial analysis was carried out on the SWIFT Alliance Lifeline program. Then it was time to support the switchover to a new SWIFT Service Bureau (SSB). Zanders provided both the project management and subject matter expertise to support the requirements analysis, drafted the RfP document and guided the selection process towards choosing a new SSB. Throughout this process, special consideration was given to complementary services, which a new hub could benefit from. Andres explains: “As the single exit point towards the wider financial system, the hub is naturally well-suited for complementary controls, for example to detect payment fraud.”

Feasibility study

On this topic, Zanders was asked to assess the benefit of leveraging modern machine learning techniques on the traffic to and from the SSB gateway. “Nowadays, advances in machine learning and artificial intelligence receive attention nearly on a daily basis,” says Van der Heide. “Vendors have been quick to take advantage of this development, and they promise a lot.” Andres continues: “We were curious to what extent these techniques would actually bring us forward. We know Zanders prefers to segregate hype from benefit. Plus they’re well acquainted with our infrastructure and have relevant experience from their risk advisory practice, so they were the natural partner to ask this question.”

Zanders' advice on what to do next, and particularly on what not to do, was totally appropriate.

Nicolas Andres, head of Group Finance Transformation at Swiss Re

Electronic banking tools

Meanwhile, as the SSB selection project slowly drew to a conclusion, an analysis was made of the various electronic banking tools that had worked their way into the organization over the years. “The analysis was an important step in the preparation process for the financial messaging hub. It turned out there were quite a few more tools in use than expected.” concedes Andres. “The vast majority are actually only used to collect statements from individual banking partners. That confirmed our viewpoint that proper bank statement distribution would be an important feature of the new 'to be' solution.”

Webservice-centric approach

At the start of 2019, the implementation of the new financial messaging hub finally kicked off. “An important benefit of the 'to be' solution is that we move from a batch-centric approach to a webservice-centric approach. This means that upstream systems can basically deliver their messages whenever they want,” says Andres. The first step of the project includes implementing the switchover to the new SSB, finding an adequate compliance-filtering solution, rationalizing the Bank Identifier Codes (BICs), implementing the SWIFT Alliance Lifeline and putting the first REST APIs in place. Two years later, Zanders is still involved, coordinating progress surrounding the six workflows and ensuring that all stakeholders are adequately involved.

Trust

When asked what makes the collaboration work, Andres says: “I believe in resourceful and intelligent junior consultants, supported by pragmatic experts where needed. Zanders offers both.” Jeroen feels the relationship is largely built on trust – and that is something that works both ways. “Nicolas trusts me on the quality we provide. That is something I am proud of and we are pulling out all the stops to ensure we continue to justify that.” Andres summarizes: “It is the engagement and skill shown to get the job done after the initial Powerpoints that convinces.”

“The biggest challenge in the area of cash management is, and will remain, obtaining good information about the expected cash flows to make the best possible liquidity forecasts in the short and long term,” reveals Marcel. “The current trend is that banks can do their payments and bookings 24/7 – even at weekends. Thanks to instant payments, bank payments from private individuals are debited and credited within a few seconds. That will also happen in business. For Achmea this acceleration means that the claims of insured parties can be paid even quicker. From a cash management and treasury perspective, you have to make sure that enough money is available to make these payments, but at the same time you don't want to be holding too much cash, as it actually costs money to have too much of a credit balance. The biggest challenge is establishing an optimal forecast of the incoming and outgoing cash flows, and of the balances of our accounts, so that we can do our payments at any moment.”

The market has become increasingly volatile, with new developments quickly following one another. How do you achieve accurate cash flow forecasting in the medium term?

“We receive forecasts from all the business units every month – for instance of Zilveren Kruis health insurances, FBTO health insurances, and Achmea’s Non-life, Pension and Life insurances. For every type of flow - premium, value transfers, benefits, proxies, costs etc. - monthly forecasts are made 18 months in advance. All flows are linked to specific bank accounts that also provide insight into the expected bank stocks for the next 18 months. The forecasts are entered into our cash management system, Cash & Liquidity Management from Serrela (CLM), the first two months on a daily basis and the remaining 16 months on a monthly basis. In addition to the forecasts of the business, our treasury management system, SAP TRM, also includes the expected cash flows from the treasury activities in CLM. Together with the actual banking positions, our Treasury can always look ahead for 18 months to the expected banking positions and look back at the actual stocks. During a month, the forecasts are regularly adjusted for the coming days of the month in cooperation with the business. The business itself has permission to look in CLM at both the actual cash flows and the expected cash flows. After each month, a post calculation is made by the cash manager, in which the forecasts are compared with the actual cash flows. In case of large differences, the business must issue a statement for this and, if necessary, adjust the upcoming forecasts. It’s therefore about continuous alignment with the business.”

Achmea started implementing a new TMS some six years ago. What changes did this herald for Achmea’s cash-management activities and cash position?

“We use SAP TRM for all treasury activities and Serrala CLM for cash management. Since the implementation of both systems, a lot of work has become simpler and more efficient and we can more easily extract information from both systems.”

To what extent do legislation and regulations influence cash management at Achmea?

“We take the regulations of the banks into account, such as Basel III and the Payment Services Directive 2 (PSD2). Under Basel III, for example, the debit and credit positions in a cash pool cannot be settled with each other. As a result, the debit positions are seen as lending and banks therefore have to keep more equity on their balance sheets. The extra costs for this will be charged by the banks to customers who make use of this pooling technique. This affects all major legal entities of Achmea. In this context, cash management will regularly top off high credit balances and replenish high debit balances of accounts in a cash pool. The introduction of PSD2 brings changes in the area of ​​access to the payment account. To this end, the banks are following an open banking strategy whereby they develop new services in combination with the opening obligation of customer information. For this purpose, an API (Application Programming Interface) can be used, which makes it possible for us to retrieve information from the banking systems. Instead of the SWIFT MT940/MT942 electronic account statements, we are now investigating whether we can harvest the necessary information differently, using APIs.”

And what exactly are the advantages of APIs?

“They allow us to obtain information from our banks quicker and more accurately, which in turn enables us to determine a more up-to-date cash position for cash management. We also investigated whether an API can retrieve all past statement transactions distributed over a day and replace the complete daily statement the next morning. This way, the financial administrations can handle all mutations and spread a day’s workload more efficiently.”

What is your own prognosis for the future of insurers?

“Thanks to new technology it’s possible to obtain far more information much quicker than before. IT systems within the financial sector are more open to sharing information and communicating externally. Processes can thus be arranged more efficiently. Insurers can use this information to better serve customers and to develop new products and services.”

As MuniFin has been growing fast in recent years, the bank is now under the supervision of the European Central Bank (ECB). This means complying with the corresponding regulations, particularly in the field of asset and liability management (ALM). How does the organization deal with the new ALM challenges?

MuniFin, the shortened name for Municipality Finance Plc, aims to promote welfare in Finland through the financing of municipal projects related to basic infrastructure, healthcare, education and the environment. Therefore, a significant portion of its lending is used for socially responsible projects such as building hospitals, healthcare centers, schools, day care centers and homes for the elderly. Finland’s local government sector is characterized by a high degree of autonomy over financial matters and strong credit quality, which is reflected in the high quality of MuniFin’s loan portfolio.

We do 200 to 300 transactions in the funding market, in almost 20 different currencies. This results in quite a bit of complexity.

Pyry Happonen, head of ALM at MuniFin

International player

MuniFin operates domestically, but is an international player, says Pyry Happonen, head of ALM at MuniFin: “We do all of our lending in Finland, but we fund our operations through international capital markets. Traditionally we have been very flexible in terms of funding. Each year we do 200 to 300 transactions in the funding market, in almost 20 different currencies. This results in quite a bit of complexity.”

In the meantime, MuniFin’s balance sheet has grown significantly in the last few years, to approximately EUR 35 billion. Simultaneously, the number of people working at MuniFin has increased to 149. As a result, the bank moved from domestic supervision to European supervision. Together with many developments in the financial markets, this has brought new challenges for MuniFin. European supervision raises the bar continuously regarding risk management.

“We therefore need to stay on top of things”, says Pasi Heikkilä, head of Treasury at MuniFin. “Not just by checking the boxes and fulfilling the requirements. To maintain our profitability and reduce risks, we need to improve the way we work too.”

External requirements and internal goals

According to Heikkilä, the changes bring both challenges and opportunities. “We’ve been directly regulated by the ECB since 2016 and our focus has been very much on complying with all ratios and liquidity requirements. We also want to put more focus on the long-term profitability side. The external requirements and our internal goals can strengthen one another. Both encourage us to look at ALM in different ways and to manage our balance sheet more efficiently.”

In terms of interest rate risk management, MuniFin is compliant. “We can manage our economic value of equity (EVE) and our net interest income (NII),” Happonen explains. “But we also wanted to dive a bit deeper than ticking the boxes and to find an optimal way to manage this risk. We wanted to enhance the capabilities and at the same time, we were looking for a third party to share and discuss our thoughts on our interest rate risk strategy. We therefore engaged with Zanders; to review the strategy and to ensure that we are optimally managing our profitability with regards to interest rate risk. Furthermore, we want to ensure we are fully leveraging the increased data and modeling capabilities.”

Iterative process

Ensuring compliance and simultaneously striving for improved internal risk management has influenced MuniFin’s strategy, says Heikkilä: “It’s an iterative process, a constant development which happens in cycles. For a relatively small company like ours, additional support is welcome. We continuously have active dialogues with our peers. But not all information is open; market participants cannot always share all information. So, in some cases we consult experts like Zanders, to help us with gap analyses so that we can figure out what to further improve on.”

Better quality data

In the current regulatory environment, managing a balance sheet efficiently is not a trivial task, Heikkilä explains. “Balance sheet profitability and risk need to be managed and optimized while considering multiple metrics, like the liquidity coverage ratio (LCR), the net stable funding ratio (NSFR) and the leverage ratio. To ensure liquidity is priced correctly and to have a sustainable profit margin, a robust funds transfer pricing (FTP) framework is required. At the same time, this needs to be done in a cost-efficient manner and with good data and systems.”

To meet these requirements, MuniFin is significantly improving its data and modeling capabilities too, to provide the company with reliable information on a daily basis.

“To ensure liquidity is priced correctly and to have a sustainable profit margin, a robust funds transfer pricing (FTP) framework is required”

Pasi Heikkilä, head of Treasury at MuniFin

“Latency is decreasing”, says Happonen. “We can do analyses and calculations more frequently. In Finland the big banks are investing hundreds of millions in their IT and systems. They are getting rid of legacy systems and bringing in new software, in order to improve quality of data and modeling capabilities to enable good decision-making. This is key in going forward in ALM; subpar data and Excel files no longer cut it. We are also proactive on this front, investing in our data collection and modeling capabilities for better analyses on a more frequent basis, with up-to-date data. And of course, technology helps us to make better strategic choices too, concerning managing interest rate risk, net interest income and so on.”

Green finance

In terms of the future strategy, green finance is a very important topic in MuniFin’s plans. The bank offers green financing, funded by green bonds, for projects that promote the transition to low-carbon and climate resilient growth. Sustainability initiatives and climate change ambitions are increasingly key in financing, according to Happonen.

“On the global bond market many investors are craving for green bonds”

Pyry Happonen, head of ALM at MuniFin

“Green finance is a very big thing for us. We are lending to a lot of domestic green projects, like public transportation. And we report the impact of the green financing we’ve done. On the global bond market many investors are craving for green bonds. The better our ALM strategy, the more optimal our profitability and risk return profile are and the more we can contribute to sustainability too. It means that we need to be sustainable in all senses, so both financially and environmentally.”

Sustainable balance sheet management: Running a sustainable business model requires maintaining a sustainable balance sheet. A stable profit margin and a risk profile that is in line with the risk appetite is essential. Finding the balance between risk and profitability can be a challenging task that requires continuous monitoring and steering. On the one hand, long lending with short funding results in high margins and therefore great profitability, in the short run. However, such a position yields significant risks in the longer run. As interest rates increase, more expensive funding is required, potentially resulting in a negative margin. Only by making the right trade-off between risk and profitability, and therefore between the short-term view and the long-term view, can a sustainable balance sheet be maintained.

Dutch company AkzoNobel is known worldwide for its coatings and specialty chemicals for both industry and consumers. As part of a new strategy to accelerate growth and value creation, the multinational decided to spin off its chemicals division. The challenge was to do this in just eight months. How did AkzoNobel’s treasury manage to split its activities into two?

With activities in more than 80 countries and 46,000 employees, AkzoNobel has a turnover of around EUR 14 billion. In April 2017, the company decided to change its strategy and transform itself into two high-performing businesses focused on coatings and specialty chemicals. “We needed to embark on a new strategy to build two strong independent companies”, says Gerrit Willem Gramser, head of treasury at AkzoNobel. “This plan had been on our mind some for some time, but was accelerated by market forces.”

Apart from timelines, the challenge in this project was to set up the new environment technically, with the right master data.

Laura Koekkoek, Partner Treasury Advisory Group

Rules of engagement

The announcement to split up the company went out on April 1st, 2017. “We almost immediately started having discussions for treasury on how to digest this”, says Gramser. “In Q1 of 2018 we wanted the company to be completely separated. So, as treasury, we started to do our math backwards. And we realized, given the timelines, it was probably something we couldn’t fully execute ourselves. When you realize that, all other decisions fall into place.”

AkzoNobel’s treasury department had already gone through a bank rationalization and had a fit-for-purpose treasury management system (TMS), in the form of SAP Treasury. “The system was complex, but it fit our needs very well”, says Joshua Watts, treasury infrastructure and project manager during the internal spin-off activities. “With the tight timelines, the first thing we decided as a treasury team, was to determine our so-called ‘rules of engagement’. We needed full focus on replication, duplication, cleansing – and not transformation. The treasury management structure we had was a strong solution. We’re going to continue working as one team and apply strict strategic discipline to meet our deadlines. That was our starting point.”

Treasury setting the scene

To achieve its aims, AkzoNobel required more resources than were available internally. “We were cautious about the deadlines”, says Watts. “The infrastructure we had was built, to a large extent, with the continued support of Zanders. We already had a long-running partnership, so we said: this is where we want to go – can you support us? By the end of June we had started and according to the planning, which was aligned between AkzoNobel and Zanders, we should have the system up and running by the first of January 2018.”

AkzoNobel also built up a cross-business project management office (PMO) to manage the separation from a group level, for all functions. The governance for the project consisted of the central PMO and expert-separation teams for treasury, tax, HR, commercial, accounting and other functions. “Beneath that we had local separation teams to deal with the local issues”, says Gramser. “We aligned ourselves as treasury in that expert-separation team in which the separation of our cash management and treasury technology were our primary deliverables. It was a layer of projects with a portfolio management on top of it. In the end, that structure worked very well. We started very early, so instead of watching how the rest of the company would approach the separation, we immediately formulated a plan. Quite deliberately we made choices in the beginning of the process – from a timeline and resources perspective – and that was crucial.”

From a systems point of view, the SAP Treasury system was cloned and the set-up was adjusted to fit the new bank account landscape. Watts says: “The system was already built for purpose and, as such, we had a good starting point for both companies.”

Integrated complexity

During the project, the main challenge was to align the cash management stream and technology stream. The idea to clone the system and not to build a new environment and cash management structure was therefore an important decision, says Zanders consultant Laura Koekkoek. “Apart from timelines, the challenge in this project was to set up the new environment technically, with the right master data.”

Decisions needed to be made regarding which entities belong to the coatings business and which to the chemicals business. Some entities needed to be split and it took time to arrange these new legal entities. For the integration at the end and to test the new solution, the bank accounts also needed to be ready, as well as the banking infrastructure. Koekkoek adds: “But at the end, all bank accounts were open, with all legal documentation in place.”

That was an achievement, according to Watts. “Everything is so integrated; you can’t start on one area without knowing the status of the other. The complexity is that – apart from all of the individual legal entity or bank account issues – there are so many interdependencies. You can’t approach the TMS separately from your global cash management activities. At a certain point we put a lot of energy into the so-called long tail of the separation. Small entities or small branches, that have a small impact on the overall figures, were consuming a significant amount of project resource time. So at a certain stage we changed the priorities to the bigger impact issues.”

We needed full focus on replication, duplication, cleansing – and not transformation

Joshua Watts, AkzoNobel

Team effort

Across AkzoNobel, the vast majority of the teams were already allocated to the specific business units, so fully separated. Both parts are and remain active in the current global markets. Gramser notes: “The two separated businesses are both good businesses, but they have different futures. And that will be the same for the treasury environment. But starting from now, the businesses can run very well on what we’ve given them.”

In March 2018, AkzoNobel announced the sale of its specialty chemicals part to The Carlyle Group and GIC. “Irrespective of the new owner’s system, our function was to be ready, no matter what scenario. That has been successful, with treasury being an early mover, having a clear plan and sticking to these rules of engagement. We’ve been quite brutal in protecting our own boundaries and guidance. The ‘as-is principle’ was leading: this is what you get. Treasury is an integrated, global operational function.”

According to Watts, the project’s success was a real team effort: “The interaction was great, on all levels. Compared to the more generic technology consultants, Zanders is much more strategic in its advice. We understand each other’s language and our teams were quite impressed by the efficiency of the work. There was good integration, good communication. It was on time, on budget – we’re very pleased.”

Endemol Shine Group (ESG), a private equity-owned, Dutch-based media company with global operations, is the world’s largest independent producer and traveler of formats. The company has grown mainly through acquisitions, resulting in a treasury organization that was largely decentralized. In 2017, the new treasury team opted for a full treasury transformation project, to unlock the available potential and to support the business’s growth ambitions.

With activities in more than 80 countries and 46,000 employees, AkzoNobel has a turnover of around EUR 14 billion. In April 2017, the company decided to change its strategy and transform itself into two high-performing businesses focused on coatings and specialty chemicals. “We needed to embark on a new strategy to build two strong independent companies”, says Gerrit Willem Gramser, head of treasury at AkzoNobel. “This plan had been on our mind some for some time, but was accelerated by market forces.”

Moving to more scripted productions has led to significantly longer cash conversion cycles, which increased working capital needs

Albert Hollema, Treasury Director at Endemol Shine Group

In 2017, Endemol Shine Group created over 800 productions in 78 territories, airing on more than 275 channels around the world. The group’s turnover is around 2 billion euros. Global hits include many non-scripted formats such as MasterChef, Big Brother, Your Face Sounds Familiar, Fear Factor and Hunted. The company's scripted business focuses on scripts for films and television series with a longer life cycle, such as the drama blockbusters Black Mirror, Humans, Peaky Blinders and Broadchurch. These series were each sold in at least a hundred regions. Another example is Sweden’s critically acclaimed hit Bron/The Bridge, which has been successfully adapted for different local regions.

As the group has mainly been growing through small acquisitions and the merger of the Endemol and Shine business, the decentralized treasury organization lacked full visibility at a central level. Consequently, treasury head office wasn't aware on a daily basis of the cash movements and other activities of thousands of bank accounts at more than 40 banks, resulting in high amounts of trapped cash. Besides, the company is highly leveraged with limited additional borrowing opportunities. Although a treasury management system was in place, it was mainly used to maintain intercompany accounts only.

Time for change

In early 2017, the treasury team underwent some changes and was slightly expanded. In the meanwhile, the demand for scripted business started to grow quickly. “For these scripted productions we need to invest more, and the broadcaster pays ESG later due to the longer production time”, Albert Hollema, treasury director at Endemol Shine Group, explains. “So, due to the longer life cycle of these productions, our opcos (operational companies) were increasingly demanding more working capital. For us there is no real credit risk – we always have signed contracts before we start to produce, so we know that the client is going to pay – but we need to bridge the gap between producing and getting paid. The cash conversion cycle is important for us. Moving to more scripted productions has led to significantly longer cash conversion cycles, which increased working capital needs. The non-scripted productions, like The Wall and Deal Or No Deal, have shorter cash conversion cycles and are therefore important for financing our business.”

Hollema explains: “We are a highly leveraged company and have a credit rating of CCC+, so for additional financing we can’t simply go to a bank to invest in working capital. Also, our two shareholders – Apollo and Fox – were not really looking to put more money into the business.” The increase in working capital thus had to come from the company’s existing resources. Hollema says: “There was a lot of cash in the organization, spread over all different bank accounts and in different entities on different locations. If we could unlock that amount of trapped cash, we would find our source of finance. That’s why we started a treasury transformation project: to make our treasury activities more efficient and to use the cash within our company to finance our growth. Because by developing the business, we generate higher profits and a higher cash flow which will help to reduce our debts and get out of the highly-leveraged situation.”

To a better category

The group’s treasury transformation included improved use of a treasury management system (TMS), bank connectivity and new treasury processes. Hollema adds: “We needed our TMS supplier to be a business partner, providing us with a solution that would really help us in today’s markets. We reached out to several providers and at the same time we had contact with Zanders, who was already supporting us on some treasury matters. They told us about their new offering, the Treasury Continuity Service, consisting of a certain number of consultancy days per month on which they support treasury, with provision of a high-end TMS and including access to their knowledge database. The service looked very helpful and was a good fit for our needs. We are a relatively small business and had just experienced a lack of interest from system providers, but due to the support of Zanders we moved to a better category on the system vendors’ lists. So, we got a state-of-the-art system that we normally wouldn’t have bought. Another important thing for us was that it offered us a software as a service (SAAS) solution, which basically needs no internal IT support. Updates are done on a regular basis and keeps our system up to date all the time. Overall, the combination of supporting elements was attractive for us.”

During the EuroFinance conference, the audience was impressed by what we had achieved in such a short time frame

Albert Hollema, Treasury Director at Endemol Shine Group

The award winning show

According to Dave van der Zwan, deputy treasurer at Endemol Shine, the implementation process went quick and smoothly: “As a team we worked closely together and within four months we were live on FIS Integrity SaaS.” At the same time, the company decided to set up new bank connectivity via Swift to receive the bank statements and access liquidity through the TMS in an efficient way. “We have a lot of opcos and learned that as a group we held over 1,000 bank accounts – and the information on these accounts was previously only available by the end of the month and a subsequent week for major opcos after the cash flow forecasting was submitted. With the managed bank connectivity solution from FIS’s Swift Service Bureau, we managed to get connected to all our banks directly to pick up all balances from all the opcos on a daily basis. Now we can see exactly how much money an individual opco holds and how much money can be extracted from it. That’s very helpful. During the implementation we opted for active pulling of balances as well – giving ourselves authority to move funds in and out of the opco accounts.”

The innovative system solution won two awards. Global Finance awarded the group for the ‘Best Treasury Management Systems Program’ and Treasury Today gave an Adam Smith Award in the ‘Highly Commended – One to Watch’ category. Hollema notes: “During the EuroFinance conference in October 2017, we presented our case and the audience was impressed by what we had achieved in such a short time frame; the solution, approach, and project management together with the scrum approach, cutting the process into small pieces.”

Bridging the gap

So what exactly made this project so successful? Van der Zwan says: “Our aim was to unlock funds for our investments in working capital. By freeing up that liquidity we were able to keep funding the business according to plan and without any need to postpone certain productions. The business case was easily made from a treasury perspective, it pays for itself quickly, but it also unlocks the liquidity we need in order to be able to grow the business. During the process, there was a snowball effect by which we’re moving from one improvement to the next. Also, the opcos realized what we were trying to achieve and proposed their own initiatives, which fitted perfectly in our overall strategy. A lot of elements came together and were unlocked in this transformation process by a small and high-quality team of Endemol Shine and Zanders people.”

Hollema adds: “From the investment point of view the treasury transformation project was a real success. By unlocking trapped cash for the company, the whole business case is basically paid out of the savings achieved in the first six months. Remember our financing costs are high given our CCC+ rating. We started to build in mid-2017 and by the end of the year the investment in the transformation was repaid, from that perspective.”

To be continued

It was the first time that the company’s head office was centralizing some activities. Van der Zwan says: “If we had taken a ‘big bang’ bank rationalization approach and required opcos to change their invoicing details, electronic banking, etc., we would have seen strong resistance. But instead we said: you can stay with your bank, things will remain as they are, we only want visibility and access. We wanted the transformation to disrupt as little as possible but on the other hand we knew exactly what our end goal was. Step-by-step, with support from the opcos, we will move to that end goal. Once you take the first step, the next step is obvious, and that response was exactly what we saw from our opcos. The support we received from both management and opcos was a big help during implementation.” Zanders consultant Adela Kozelova adds: “Endemol Shine’s treasury acted quickly, while doing things step-by-step, to get as many people on board as possible – a good example for many companies.”

With greater visibility of the company’s cash, the treasury team will be able to better evaluate which businesses are performing well and where to allocate capital. Hollema concludes: “We now pick up information via the bank statements, which doesn't require additional reporting from the opcos, but is very useful for us as a group and can even be seen as an early warning indicator on how our businesses are performing. The next steps involve the creation of cash P&Ls and cash flow overviews from this info, eliminating more manual processes by integrating the local ERPs with the FIS Integrity Solution to help improve real-time cash forecasting. Better control over FX and simplification of the IC settlement process by optimizing the in-house bank (IHB) module are also high on the priority list. The banks and bank accounts will need to be further rationalized to help the opcos. They do a lot of things that can better be centralized so they can focus on doing business. We are a business partner to our opcos, we take care of the whole financial logistics. Zanders and FIS are our sparring partners and we use them to discuss what to do in the next phase.”