Delivering quality

Stephen Hogan, Vice President, Regional Treasury Asia Pacific at Deutsche Post DHL Group is not someone who enjoys being bogged down by mundane processes. In his view, the real value of the treasury department is in providing strategic support to the business and helping it to achieve its full potential.

In the past 20 years, trade has become a truly global phenomenon. Not only do companies now do business with a growing variety of counterparties from around the world, but individuals (thanks to the internet) are also able to purchase and sell items across borders with greater ease than ever before. Whilst the internet has without a doubt facilitated this global marketplace, it is logistics companies, such as DHL, that make it happen.

Unsurprisingly, as the complexity of these companies has increased, so has the role and importance of the treasury function to be able to provide the financial support and keep the wheels of global trade and commerce moving. It is this exciting and constantly evolving industry that has energised and invigorated Hogan for most of his career.

Public to private

Perhaps in stark contrast to his current role, Hogan – following his graduation from Manchester Metropolitan University with a degree in economics – began his career working in the UK public sector as an accountant for the National Health Service (NHS). “It was a fantastic role to begin my career in as the scope was broad, covering all areas of both accounting and tax,” says Hogan. “The NHS also has to manage incredibly large cash flows every month, so there was a significant cash management and treasury aspect to the role.” Hogan therefore, from a very early stage, found himself accumulating knowledge and skills in areas such as money market funds (MMFs) and bank relationship management.

Whilst this role was certainly interesting and provided a fantastic learning experience for Hogan, he knew that he needed to diversify and move away from public service. “Although the UK public sector is a vast organisation covering multiple areas, I found the various business units to be quite siloed. Therefore, it was my belief that if I continued with the NHS my options would narrow and I would likely be restricted to the health service on a linear path for the rest of my career.”

After two and half years with the NHS an opportunity for Hogan to diversify and move to the private sector arose with DHL Express, one he was very keen to take. “It was a very attractive proposition. DHL is a well-known brand with a vast global presence and I perceived that because of this the opportunities with the company would be greater.”

Hogan’s first role with DHL was that of treasury accountant: “The role offered me a great chance to continue to utilise my core accountancy skills whilst also building my treasury skillset,” he says. Interestingly and perhaps fortunately – given the fact that Hogan was beginning to tire of the routine month-end accounting cycle – the role increasingly became more treasury-focused despite Hogan still sitting within the accounting team. “I was responsible for the treasury operations of three UK-based companies within the group and also supervised the treasury staff.” Given this increasing treasury focus, Hogan began linking up with the DHL Express treasury team based in Brussels, eventually joining the team as a treasury analyst.

Whilst Hogan was working in Brussels, there was significant change across the organisation after DHL was acquired by Deutsche Post. The treasury then had the big task of integrating the two departments. Once this was completed however Hogan received a surprise call from his soon-to-be boss asking him if he would lead a cash management project in APAC. “It seemed to me a perfect time to take on such a project as the whole dynamic in the company had changed since the acquisition,” says Hogan. “Initially it was meant to be just a 12-month project, but as soon as I hit the ground both the company and I recognised the importance of being close to the market. We therefore decided to set up a permanent regional treasury centre (RTC) in Singapore.”

A core business partner

Having established the RTC in APAC, Hogan and his team of four now oversee the financial matters of 140 legal entities, spanning four business divisions and 42 countries. Aside from covering such a large number of countries and different legal entities, the regional treasury support them in a wide variety of activities. “We assist them with all the ‘typical’ treasury activities such as bank relationship management, cash and liquidity management, financing and debt management, and risk management,” he says. “But we are also responsible for the legal structure of our subsidiaries. In many respects we play the role of an internal shareholder concerned with issues around who the directors are and how the entity is managed.”

Hogan and his team are able to cover such a vast region and range of responsibilities because unlike other regional treasury departments which are separate from the global organisation, DHL is intimately linked to the head office in Germany and operates as a corporate function. “In many respects the only reason we sit in Singapore and not in Germany is because of the need to be close to our business units in the region and their regional management,” he says. “The treasury department in Germany manages all the treasury systems, they give us access to these and we get on with our work, avoiding some of the more mundane tasks that sometimes treasury can be associated with.”

“I like to see us as gatekeepers into the corporate function for our business units in APAC,” says Hogan. “They come to us and we can help them or send them to the team who can. Having this single point of contact dramatically removes the friction points which can often be found when trying to navigate through such a vast corporate structure.”

In being intimately linked with the corporate function, the DHL regional treasury is also reinforced by a well-equipped support team in Europe. “I like to see us as gatekeepers into the corporate function for our business units in APAC,” says Hogan. “They come to us and we can help them or send them to the team who can. Having this single point of contact dramatically removes the friction points which can often be found when trying to navigate through such a vast corporate structure.”

The power of networks

Of course, when a new central function is established, it can be a challenge at first to sell its worth and objectives to the on-the-ground financial managers. Given the wide remit of the DHL regional treasury function, earning this buy-in was critical from day one and something that thankfully Hogan and his team were able to achieve quickly.

“When I first moved to Singapore it was actually at the request of the regional management who noticed the need to have somebody experienced to focus on cash management and treasury – allowing them to focus on their core business responsibilities,” explains Hogan. “We therefore had a strong working relationship established from day one – plus we were taking work from them and people always like that happening,” he jokes. He also cited unity and togetherness across the group as being something else that helped.

Hogan is acutely aware however, that relationships cannot be taken for granted and the regional treasury team are constantly seeking ways to add more value to the regional management and the local business units. As such he makes an effort to visit the various businesses regularly to not only understand their work more intimately, but also to understand the cultural nuances across the region and how business is done. “Asia is very varied in this regard and whilst it can be a challenge it also makes it an exciting region to operate in.”

In addition to these visits, Hogan has also utilised the power of modern communication channels, running regular training webinars. “This is in reaction to a major internal study where one of the key findings was that there is a real desire from employees to learn and understand what the various functions do and how,” explains Hogan. “We don’t force people to attend but if it is on a topic of interest then they can join the webinar and learn. It is just another aspect of our continuous outreach.”

New channels of collection

It is not just through relationship building and training that Hogan looks to add value to the wider business. Treasury is also constantly looking at new and innovative ways to ensure they collect cash quicker, something that he feels is particularly important given the rise of e and m-commerce.

As part of the group’s overall 2020 strategy there is a strong focus on e-commerce particularly across Asia and the emerging markets. “Many of these markets we operate in across Asia have a high percentage of customers paying cash on delivery and there is a portion that may not have access to traditional bank accounts. This is proving a challenge not only in regard to working capital, but also because we live in an age when banks do not want to handle cash because it is too expensive.”

A large portion of Hogan’s time today is therefore spent analysing the various digital collection mechanisms available, such as mobile and digital wallets. “Currently, we are in the early stages of this project, working with our banking partners and the business to define our core needs from the solution. What I have noticed during these initial stages is that the landscape is very fragmented and there is no market leader. Moreover, some banks have a clear strategy and others do not. There are then those that believe that banks can be disintermediated from the processes.” For the industry to really move forward in this space, it is Hogan’s belief that standardisation and consolidation is required.

Digital delivery

Away from collections, Hogan and the wider DHL treasury function have worked endlessly in recent years to take advantage of the wealth of technology that is now available. For instance, the DHL treasury team have a global in-house bank and are currently implementing a global payments factory. “These projects are largely driven from the head office, but because of the complexity of the regulatory environment in Asia we play an important role in ensuring that these operate effectively in the region.”

Not ones to stand still, Hogan and his team are now working on further cash management projects including implementing a regional solution for Bank Guarantee issuance that seeks to improve bottom line costs as well as providing a standardised e-enabled process for applications. With currency volatility firmly on the agenda, the team is also working hard to optimise transparency on spot FX transactions through the use of e-FX solutions. What’s more, there is a continued a continued focus on supplier financing solutions across accounts payables.

Honest banking

In order to implement these solutions and achieve his role as the key financial support to the DHL’s regional business units, Hogan requires a quality stable of banking partners. “Whilst we have a group of global and regional banks that are linked to our overall financing structure, what is key for me is that these can provide us with the solutions we require,” explains Hogan. “Second to this is the relationship aspect. Of course, price is important, and we use TWIST reporting to monitor this, but when we enter into a banking relationship I always take the position that the bank has to make money out of it.”

Hogan is acutely aware however, that relationships cannot be taken for granted and the regional treasury team are constantly seeking ways to add more value to the regional management and the local business units.

Although this may seem a slightly controversial view, especially at a time when banking fees are under the spotlight, Hogan has a valid reason for this opinion. “I don’t want to enter into an agreement with a bank and for them to be losing money; this puts the service they are providing and the longevity of it in question. It is about being open and honest because if a bank can’t provide a service we will quickly find them out.”

Pushing the envelope

Hogan is also a believer in pushing his banking partners and also the rest of his team to think outside of the ordinary and try new things. “Treasury and finance is not about following a set of rules and procedures,” he says. “You need these, but you also need to be creative and challenge conventions. Sometimes people are too happy to just do things the way they have always been done, but it takes bravery to say this can be done better and see the change through. I like to think I empower my team, the business units and our external partners to do this for the benefit of all involved.”

This ‘can do’ attitude and the willingness to try things that perhaps break convention typify Hogan not only at work but also in his private life. “Aside from being a husband and father to two young boys, I like to travel and am also a bit of a thrill-seeker and have completed a number of skydives, bungee jumps and scuba dives.” And whilst Hogan remains very happy at a company he has been with for nearly two decades, he admits that he has priced up the cost of a skydiving instructor course.