Building a Treasury Function to Support Business Growth
by Suzanne Hosmans, Group Treasurer, Celio International
Since its incorporation in 1985, Celio has become a major international menswear brand. Celio has over 1,000 stores across 70 countries, with particular strength in France, which sell 35 million items across four collections of 800 designs per collection each year.
Celio has experienced impressive growth in recent years both through organic expansion and acquisition, leading to an increase in the complexity of its financial activities. In this article, Suzanne Hosmans, Group Treasurer explains how she established a new cash and treasury management function to support the company’s current and future international strategy.
Until I joined the company, most treasury processes at Celio were conducted manually, with little definition or separation between treasury and accounting. Payment processing was the major treasury task and we communicated with our banks via fax. This meant that tasks were labour-intensive and lacked security and control, while value-added activities such as managing cash and risk were not being undertaken.
Initiating the change
We were able to demonstrate convincingly to senior management that there were some immediate areas in which a treasury function could add value. For example, each store maintained its own bank account at a local bank, resulting in a large number of banking partners and major difficulties both in constructing a group-wide cash position and negotiating terms with banks. We identified a series of initial objectives:
- Firstly, to disconnect treasury from the accounting operation to form a distinct business function;
- Secondly, to implement a specialist, integrated treasury management system (TMS). We recognised that a robust platform was an essential foundation for a well-managed treasury, and would also enable us to develop a payments factory with an in-house bank.
- Thirdly, to put in place a secure and automated means of communicating with our banks. We realised that SWIFT was the best long-term solution, which would not only allow us to automate communications across multiple banks, but also streamline the approval process;
- Fourthly, to rationalise our banking partners to enable greater visibility and control over cash and better economies of scale.
These were all substantial undertakings which were impossible to resource with only one person alongside the normal daily routine. Consequently, we appointed PricewaterhouseCoopers (PwC) to support the bank migration and system selection, and help us to implement industry best practices in our treasury policies and processes.
We reviewed a variety of TMS at a EuroFinance conference, and spent time with the different providers. We found that although there were a number of high quality systems available, we quickly identified the type of system that would meet our current and future needs, and the suppliers that we could work with successfully. We provided a shortlist to PwC who then issued a request for proposal (RFP). In addition to our functional requirements, the quality of the ongoing relationship with the supplier was an important criterion, such as implementation consultancy, helpdesk, and a high level of IT support. We also took references for our preferred systems.
Based on this process, we appointed IT2, recognising the quality of the product and the flexibility of the supplier in managing the relationship. This gave us the platform we needed to secure, control and automate our treasury and cash management processes, implement an in-house bank and streamline our banking communication with SWIFT.
We awarded our cash management business to the banks that provided financing to the company, which was a positive step in developing stronger banking relationships. We were able to rationalise our bank accounts, reduce banking costs and improve visibility and control over cash substantially. Cash is now centralised using cash pools, supported by a payments factory with an in-house bank to cater for the financing and transactional needs of our international network.