Cash & Liquidity Management

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Future-Proofing Treasury Management Simeone Sperotto, Group CFO, Tecnica, explains how his company had triggered a digital transformation process before the pandemic hit enabling the company to absorb the economic shock and maximise internal liquidity.

Future-Proofing Treasury Management

Future-Proofing Treasury Management 

By Simeone Sperotto, Group CFO, Tecnica and Massimiliano Cirelli, Managing Director - Head of Cash Management Sales Corporate Italy, UniCredit


In light of the ongoing economic downturn, the need for treasurers to streamline their cash management processes and unlock trapped liquidity is growing. Simeone Sperotto, Group CFO, Tecnica, explains how his company, an international Italian sports equipment provider, was already upgrading its treasury systems when the pandemic hit – enabling the company to absorb the economic shock and maximise internal liquidity.


In 2017, strategic investor Italmobiliare acquired a 40% equity stake in Tecnica – a leading retailer of outdoor footwear and ski equipment. This was a pivotal moment for Tecnica’s treasury department, with the new shareholders triggering a digital transformation process designed to upscale and streamline the Group’s treasury processes.

The transformation involved partnering with a selection of fintechs – including Piteco, to fully-digitise treasury management; SAP, to establish efficient accounting and finance practices; and AnaPlan, to implement structured reporting capabilities. At the same time, UniCredit was brought onboard to advise on Tecnica’s transformation and sought to rationalise the company’s numerous subsidiary accounts – establishing a complete, digital payment factory solution, spanning the length and breadth of Tecnica’s large sales and production network.

Originally conceived as a progressive exercise to generate internal efficiencies, the importance of these treasury upgrades has since been underlined by the Covid-19 pandemic, which left the business facing reduced collections on winter sales and severely dampened consumer appetite across spring and summer. Countries heavily impacted by the pandemic, including Italy, Spain, and France, saw sales and collections fall considerably – contributing towards a drop in top-line revenue and a squeeze on liquidity.

In this respect, Covid-19 has functioned almost as a stress test for the new treasury infrastructure. Adjusting to localised shocks, for instance, would have been challenging under Tecnica’s previous structure, with cash siloed across numerous physical accounts, managed by around twenty subsidiaries. Indeed, collating the cash to support branches in need of short-term liquidity would have been a laborious task – requiring the request and co-ordination of inter-company payments from each of the various local finance teams.


Overcoming the liquidity challenge

At the core of this new cash management solution – and central to the liquidity optimisation effort during the pandemic – is cash pooling. Working with UniCredit, Tecnica has implemented a fully-automated cash pooling solution, rationalising the company account structure to incorporate just two bank accounts per country, with daily international sweeps from local accounts into the company master account in Italy.

Under the new framework, Tecnica has been able to respond quickly to the economic crisis – unlocking trapped liquidity and directing it to the most impacted branches. For instance, if a local subsidiary is short on cash due to low collections and needs to make salary payments, the treasury team can quickly and efficiently reallocate funds from the central cash pool to cover the costs. This capability has proven critical in keeping the company running smoothly – minimising the need to draw on short-term credit lines. 

It was also important that Tecnica could maintain existing accounts with other relationship banks. As such, UniCredit’s solution ensured the company could continue to do this – executing sweeps from both UniCredit and third-party bank accounts. The only requirement was to establish a dedicated sweeping account at each of our other relationship banks in order to link it to the UniCredit cash pool.

The cash pooling tool also gives Tecnica the ability to sweep cash into overnight investment facilities – ensuring surplus liquidity is put to work, even when not needed for immediate disbursements.

 

“UniCredit is delighted to have had the opportunity to advise Tecnica through such a fundamental, strategic transformation. Thinking ahead and anticipating the needs of treasurers is central to our approach and it has been a pleasure to collaborate with the Tecnica team, working on such a strong strategic vision.

The comprehensive, tailor-made package of cash management optimisation solutions we put together, combined with the support of Tecnica’s fintech partners, has enabled the treasury to centralise control and visibility over its cash positions on a global basis – optimising liquidity, streamlining internal processes and improving the speed, traceability and transparency of payments.

Of course, UniCredit couldn’t have anticipated quite how valuable this solution would be during the pandemic, but it goes to show how critical future-proofing exercises such as this are.”

Massimiliano Cirelli, Managing Director – Head of Cash Management Sales Corporate Italy, UniCredit

 

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