Zanders Treasury & Risk Seminar 2016

Zanders Treasury & Risk Seminar 2016

The Spoorwegmuseum (Railway museum) in Utrecht symbolizes some of the subjects discussed during the Zanders Treasury & Risk Seminar 2016 on Thursday, March 17th. In short: Treasury has been and still is developing at high speed, dealing with the risks that corporates encounter on their journey to the future.

Where next for treasury?

The seminar’s opening talk was given by Zanders’ partner Sander van Tol. He took the attendants on a trip through treasury history, starting in 1157 when the first bank opened and showing the increasing role of treasury in the financial world. He ended by asking: where next for treasury? Regulation, globalization, standardization, integration and disruption will all shape the treasury of the future, he stated.

Desired treasury level

Then it was time for the audience to warm up for some interaction on the subject. Using their mobiles phones, they were asked to answer the first of some multiple choice questions, introduced by the second speaker, Zanders partner Judith van Paassen. She introduced Zanders’ Treasury & Risk Maturity Model, developed to assess enablers and activities according to five levels of development (foundation, developing, established, enhanced and optimized), resulting in an overall treasury maturity. During these levels or stages, the impact for treasury increases, from transactional, via efficiency and cost focused to value added and strategic treasury.

In a matrix of enablers (treasury strategy & organization, treasury systems & processes, and treasury governance & control) and activities (treasury operations, corporate risk management and corporate finance), Judith showed what steps can bring treasury to a next maturity level. The attendants used their mobile phones to place their own company in one of the levels (22,6% answered ‘developing’, 51,6% ‘established’ and 22,6% ‘enhancing’), to indicate the impact of technology on their treasury function (all agreed to a great impact; 60,6% even ‘strongly agreed’) and to state whether they have roadmap in place (63,3% has a roadmap; most with a 1-2 years horizon) to achieve the desired treasury level.

Building treasury in an entrepreneurial group

The first invited speaker was Jaco van der Merwe of Naspers, with a presentation on ‘building treasury in an entrepreneurial group’. He started by introducing his relatively unknown company in the Netherlands; Naspers is a leading multinational Internet and media group, with operations in more than 130 countries. Then Jaco summed up the main factors impacting Naspers’ treasury strategy, in which “there is a push for standardization in an environment where one size does not fit all.” The company therefore started a journey towards a longer term vision, to define goals, to a (technical) solution design and identify the so-called low hanging fruit, such as efficiency concerning cash – to increase the accuracy of cash flow forecasting – and internal funding processes.

This way, the journey was translated into a long term roadmap for the company’s treasury, based on the elements people (the team), processes (improvement by among others standardization and efficiencies) and systems. The audience then had some questions on shared service centers, the FX risk the company needed to deal with and other steps concerning the role of treasury to achieve Naspers’ goals.

Improving the core treasury processes

After the break, Klaas Springer presented FrieslandCampina’s journey to enhance the treasury function. He offered a general introduction to the dairy company and its owners – 19,000 ambitious member farmers – enumerating the impressive numbers: EUR 11.3 billion revenue, an annual FX turnover of EUR 2,7 billion and 718 bank accounts. After a short illustration of the most important milestones for treasury in recent years, Klaas described the new mission and vision of FrieslandCampina’s corporate treasury functions. To achieve these, the company started Project Acropolis, named after the ancient citadel located on a high rocky outcrop above the city of Athens and symbolizing the main strategy for its corporate treasury function: centralization, visibility and control.

As parts of Project Acropolis, three other ‘peak projects’ were initiated: Project Jungfrau (achieving a central payment solution, replacing all E-banking applications by one centrally managed solution), Project Vaalserberg (leading to centralization of bank account opening/closing) and Project K2 (a global roll out of the 360T trading platform for derivatives trading). FrieslandCampina’s position on the maturity model is now progressing towards the ‘Established’ phase. The roadmap towards it demands strengthening of treasury operations and a reorganization of the treasury function. By improving the core treasury processes, Treasury can create more value for the business in expanding its remit, Klaas concluded.

FX risk management

Then it was time for Philips’ group treasurer, Gabriel van de Luitgaarden, to present the changes within his company affecting treasury activities. The healthtech and lighting divisions are being separated, which means that the company is building a new treasury for the lighting division. Besides that, Philips’ treasury is working on new business models and busy improving its internal processes too. Gabriel explained the multinational’s operational journey, which started with inter-company settlements and has now led to one central treasury operations hub and IT infrastructure.

Philips’ current treasury involves over 100 countries, 150 sites, 45 currencies, 25 relationship banks, 1,500 external bank accounts, 800 reporting entities, 1,000 in-house bank accounts and EUR 100 billion worth of internal payment flow. This is why the company has chosen a new FX risk management and hedging strategy; treasury now hedges FX risk at a group level, so that the FX footprint is clearer and better accountable for all business sales and procurement. Gabriel then answered a number of questions, mainly on the centralization and FX hedging issues.

Treasury continuously changes

Before the final destination of this treasury and risk journey – the after talk with drinks and bites – Sander van Tol recapped the seminar’s presentations, concluding that achieving the highest level in the maturity model presented is dependent on the company’s ‘heritage’, leading to different outcomes. It is clear that treasury continuously changes and the role of technology in treasury operations is growing fast.