Insights from the Nomentia Treasury Summit 2024: Navigating the dynamics of modern treasury management
This article is written by Nomentia Treasury management – For the future In an engaging opening address, Nomentia’s own Lauri Bergström and Tapani Oksala painted a vivid tableau of the ever-evolving landscape of treasury management and Nomentia’s customer-centric and dynamic approach to its developments. Three key trends emerged as focal points: financial strategy, risk management, and technological advances. Emphasizing the critical role of teamwork and leadership across organizations, the duo set up a robust foundation for the summit’s discussions. Unlocking liquidity management: The story of Caverion and the dynamics after an M&A The event kicked off in full with a deep dive into the complexities of liquidity management, as exemplified by Caverion’s finance operations amidst a strategic merger. In this session, Viljami Vainikka, Head of Group Treasury at Caverion, provided a comprehensive overview of Caverion’s liquidity landscape during a merger with Assemblin, highlighting their approach to optimizing cash visibility and addressing challenges in cash flow forecasting. He outlined Caverion’s liquidity management setup, which includes cash management across multiple currencies, numerous bank accounts, and entities, with a focus on optimizing liquidity and improving forecast accuracy. In conversation with Tapani Oksala, Vainikka shed light on the challenges of optimizing cash visibility and underscored the importance of robust and accurate cash forecasting, leveraging technology and strategic partnerships, and the potential for integrating AI to enhance liquidity planning processes to increase efficiency and accuracy. Key takeaways from “Unlocking liquidity management” How BioNTech dealt with turbulent times In the second presentation of the Nomentia Treasury Summit, Dirk Schreiber, Head of Treasury at BioNTech, shared with the audience insights into BioNTech’s journey amidst the centennially turbulent times leading toward the COVID-19 pandemic and its aftermath. Founded in 2008, BioNTech experienced initial challenges until the onset of the COVID-19 pandemic in early 2020. Recognizing the potential of their mRNA technology for developing a COVID-19 vaccine, BioNTech swiftly pivoted its focus, leading to the rapid development and distribution of a vaccine in collaboration with Pfizer. Schreiber highlighted the unprecedented growth and financial influx that followed the successful vaccine development, presenting BioNTech’s treasury management journey in response to these dynamic circumstances. With a surge in funds, BioNTech urgently required a robust treasury management system to manage its expanding financial operations. Despite facing initial challenges with an untested treasury function, Schreiber and his team swiftly implemented a treasury management system, leveraging Nomentia’s expertise to build BioNTech’s treasury operations. The presentation explored the intricacies of BioNTech’s treasury transformation, emphasizing the rapid expansion of requirements for the treasury and the establishment of essential treasury guidelines and processes for future development. Schreiber emphasized the critical role of the right technology in this transformation, particularly the implementation of Nomentia’s treasury management system to provide real-time visibility into cash positions, automate trading activities, and streamline reporting processes. Key takeaways from “How BioNTech dealt with turbulent times” Panel discussion: Bank as your partner in the fight against financial crime The panel discussion featuring representatives from Nordea, SEB, and OP shed light on the evolving landscape of financial crime prevention and the role of banks as strategic partners. Against the backdrop of increasing cybersecurity threats, the panel emphasized the importance of collaboration between banks and corporate treasuries in combating financial crime. As technology evolves, it brings with it new and exciting opportunities to those companies that are able to manage their risk appetite accordingly. Unfortunately, the development of technology also provides opportunities to the criminal element. The threat landscape in the digitalized business environment is significantly more complex than before. Thanks to technology we’re living in an environment wrought with crime and fraudulent behavior. The ecosystem of crime in the digitalized financial environment is complex and ever more susceptible to human error and poor processes. The panel’s discussions centered on the adoption of innovative technologies and best practices for enhancing security and mitigating risk in treasury operations. This session focused on the crucial role of proactive measures and strategic partnerships in safeguarding financial assets in an increasingly digital world. According to the panel, treasury management and financial professionals would do well not to treat the fight against financial crime as a digital problem only, as the evolving threat landscape requires an adaptive and nimble approach not only to security technology but the organizational culture as well. Fortunately, this is not a fight that businesses have to face on their own. The banking and finance industry has taken proactive steps to improve its resilience and business continuity. On the legislative side, the EU’s DORA (Digital Operations Resilience Act) is a great example of how demands for businesses to secure their operations in the financial threat landscape is not only a digital undertaking but requires a wider scope that encompasses their operations fully. Key takeaways from “Bank as your partner in the fight against financial crime” Digitalizing bank account management with smart workflows at EATON In the 4th presentation of the day, Stefan Müller from Eaton discussed the digitalization of bank account management (BAM) during the Nomentia’s Treasury Summit. Previously, BAM was cumbersome and fragmented, involving manual tasks, email exchanges, and Excel spreadsheets. Eaton recognized the inefficiencies and partnered with Nomentia in 2019 to modernize their BAM processes. The transformation involved leveraging advanced digital technologies to automate tasks like account openings, closures, signatory changes, and transaction monitoring. This shift required comprehensive cleanup of account and signer data, process documentation, and target workflows. By mid-2021, the project was underway, and by March 2022, the new BAM system was live. Today, Eaton manages BAM operations on one centralized platform, gaining efficiency, control, and compliance. Automated reconciliations and streamlined workflows have reduced manual efforts significantly. The treasury function has seen tangible benefits, including the closure of 200 accounts and the removal of over 200 signers and 2,300 permissions. The digitalization of treasury operations has offered opportunities for greater control and efficiency. Real-time data access enables informed decision-making and proactive risk management. Automation of routine tasks frees up time for strategic analysis. However, increased reliance on digital platforms necessitates robust security…
FranklinBiopharmaceutical Giant Breaks out of the Cash Forecasting Mold
This article is written by TIS Payments Note: This article was originally published by Treasury & Risk Editor in Chief Meg Waters, based on her interview with the treasury team at Bristol Meyers Squibb. You can view her original article here: Biopharmaceutical Giant Breaks out of the Cash Forecasting Mold (treasuryandrisk.com). Interview Participants The corporate treasury team at global biopharmaceutical company Bristol Myers Squibb manages cash and cash equivalents in the billions of dollars (US$11.5 billion as of December 31, 2023) across more than 200 legal entities around the world. Efficient cash forecasting in this environment requires clear visibility into global accounts and as much automation as possible. Until recently, the forecasting process provided treasury with visibility into 99 percent of the company’s accounts—but it was manual and cumbersome. “We take two approaches to cash forecasting,” explains Amy Szuting Chen, director of international treasury. “Treasury prepares a top-down, P&L [profit and loss]–driven multiyear forecast and a bottom-up forecast based on receipts and disbursements for the current year. For the bottom-up forecast, in each budget cycle—so, four times per year—treasury would collect data from our business partners, line by line. We would gather gross sales projections, as well as spending and payments, such as operating expenses and capex [capital expenditures] at the legal-entity level. “The information for a standard bottom-up cash forecast was submitted by different teams, and not in a standard format,” Chen continues. “Each business views their forecast differently, and there are variations in their methodologies. So the treasury team would have to consolidate all this data in Excel, which created a lot of manual work and took a month or more each quarter.” International business units added another layer of complexity because different geographic regions handled forecasting differently. “Internationally, we had three different forecasts that were not 100 percent in sync with each other,” Chen says. “Occasionally, one forecast might show a cash surplus, while another forecast for the same region might show a net outflow using a different set of assumptions.” The forecast timelines also varied. Whereas corporate treasury generated daily forecasts for the U.S. market, the international team worked with business units to predict monthly cash receipts and disbursements. “We are operating in a dynamic environment as a company right now, and we are required to make a lot of business decisions quickly,” says Abhishek Jhunjhunwala, director of capital markets. “On the capital markets side, we work on many scenarios around different capital allocation strategies, and cash is a critical component. When we had a manual process to pull together forecasting information, it certainly created a decision-making hurdle. We would all have to wait for the top-down and bottom-up forecasts to be generated and then reconciled, which slowed down our decision-making. “Bristol Myers Squibb has engaged in a lot of M&A [merger and acquisition] activity recently, and every transaction requires cash,” he adds. “A couple of years ago, we were considering whether we had the capital to complete a certain acquisition, what our cash flows would look like, and whether we needed more support from a liquidity perspective. We had the P&L forecast, but the final cash flow forecast was not immediately available.” Bristol Myers Squibb treasury needed to standardize and accelerate global cash forecasting, shifting toward automation wherever possible. With the help of a third-party consultant, the team identified their requirements for a cash forecasting solution, including cybersecurity and access control needs. The treasury team assessed four systems, selected one (TIS CashOptix), and negotiated a contract with the help of internal procurement teams. As they neared the end of this process, the IT budget allocated to cash forecast upgrades ended up being committed to a different finance initiative, so the forecasting project lost its funding. The treasury leadership team decided that the project was so necessary that they would fund it out of treasury’s internal budget, with the expectation that the additional interest income generated by investments would offset the costs. In deploying the system, the project team established four driving principles: First, they vowed not to customize the system to fit their current processes, but instead to use the system to standardize processes across all teams. Second, they wanted to minimize manual workflows. Third, they committed to think outside the box and challenge the existing mindset. And fourth, they agreed to continuously reprioritize the different aspects of the project. The project team worked with IT to build interfaces between TIS CashOptix and key source systems—including Bristol Myers Squibb’s enterprise resource planning (ERP) system, treasury management system, and planning system—with the goal of automating data feeds. They established logic for converting information from different systems so that all the data in the forecasting system would be standardized. The team stepped outside their comfort zone and redesigned their processes to fully leverage system capabilities and minimize manual efforts. The resulting cash forecasting system uses historical, market, and other data inputs to automatically generate forecasts of daily cash flows. The forecasts can span custom time periods, in days, weeks, months, or even years. And the system offers scenario modeling based on the forecast data, so treasury staff can create events and combine them into forecast scenarios to project potential business impacts of all kinds of external and internal events. Treasury teams agreed to use one forecasting cycle and work off the same version of the forecast. “Now the entire treasury team—U.S. cash managers, international cash managers, the European treasury center, everyone—all look at the same numbers,” Chen says. “That means we can make better decisions based on an updated and thorough cash forecast, rather than just cash position. Plus, our investment and financial risk management teams can use these forecasts to decide how much further out to invest our cash or issue commercial paper. The system provides a view of global liquidity, which helps facilitate these investment decisions, and we continue to discover new uses of the system. It’s a journey, rather than a destination.” “This solution supports quicker, easier decision-making,” Jhunjhunwala says. “This is partly about technology and partly about the processes we…