Photo of Shane Kirby, Ball Corporation, Serina Hourican, Bank of America Merrill Lynch and Claude Tadros, Ball Corporation.

Combining two treasuries, upgrading technologies, consolidating banks: here’s how one team has tackled the lot in one go. It has created a remarkable modern treasury for its effort.

More than the sum of its parts: combining and upgrading for future success

When US packaging giant, Ball Corporation, acquired UK-headquartered Rexam in 2016, the challenge of integrating the two companies’ treasury operations might have seemed significant enough. But Ball Corporation Treasurer, Jeff A. Knobel, decided to use the opportunity to upgrade the combined company’s treasury structures.

Working with Bank of America Merrill Lynch (BofAML), Ball Corporation’s global banking provider, Knobel’s team established a very sophisticated treasury operation. This was described by one bank advisor as “some of the most complex policies and complex solutions we see in transaction services across the industry”.

The new structure born out of the two companies includes a payment and collection factory, with payment-on-behalf-of (POBO) and receipt-on-behalf-of (ROBO), allowing the headquarters entity to carry out payments and receipts on behalf of some 43 entities in 13 countries, all managed by one central entity.

The on-behalf-of (OBO) structure uses a virtual account management solution, combined with the in-house cash module of SAP, to streamline European wide accounts receivable, accounts payable and treasury processes. It does this by creating EUR, USD and GBP ‘virtual’ accounts for each entity, linked to three physical bank accounts in the headquarters.

This solution allows Ball to receive a virtual account statement per entity which in turn ensures 100% bank reconciliation for its entire OBO setting. The new structure has enabled Ball to reduce the number of existing bank accounts by approximately 150; the cost savings here alone are considerable. But the set-up affords greater benefits.

Streamlining and upgrading

Today, 43 entities in 13 countries are using three physical bank accounts for all of their transactions in EUR, USD and GBP. As the external bank relationship is with the headquarters, no yearly ‘know your customer’ (KYC) check for the participating entities is needed, and the year-end balance audit confirmation is streamlined.

The headquarters has full visibility and access to all funds and so there is no need to fund local bank accounts. Indeed, all former local transactional services have been centralised with the new approach.

Furthermore, the SAP automatic booking solution was configured only for three bank accounts instead of 150+, which gave a huge reduction in local accounting hours across Europe.

Alongside the payment and collection factory, Ball Corporation has also implemented FIS Quantum/Kiodex, a cloud-hosted treasury management solution to support all cash management activities, financial risk management activities (currency and commodity hedges) and to track and automate the company’s intercompany loans.

The virtual account set-up was implemented in the new TMS as well as the automatic booking of all derivatives (commodities, FX, interest) under IFRS 9. The SAP in-house cash module has improved the efficiency of the cash entries being recorded in SAP, and also facilitated an automated monthly netting between the legal entities. This had historically been done manually, so the new system markedly improves the overall efficiency of the monthly closing process.

The treasury team, along with its business partners in sourcing and operations and the team at BofAML, were also able to improve working capital by approximately US$300m in 2017.

In addition to the above initiatives, the treasury team ran a travel and entertainment global cards RFP and began the process of rolling out a new global card programme in 2018.

All of this was put in place while the team was transitioning from a different bank to BofAML, which is now Ball’s global cash management provider.

Working together

Knobel’s treasury team is just five strong in the UK, yet it has simultaneously managed multiple complex projects, any one of which might have challenged other treasury organisations. This effort is testament to their ability to drive strategic change whilst maintaining the company’s day-to-day treasury operation.

It would be fair to say that Ball Corporation’s reorganisation of its treasury, sparked by the Rexam acquisition, has left the company with an extremely sophisticated, modern treasury, using the very latest technology (VAM, TMS and OBO) to view and manipulate its liquidity and transaction needs.

At Ball, we value great relationships, teamwork and EVA to drive efficiencies and the best possible return for our stakeholders on the invested capital deployed. Our global treasury project epitomises the journey we shared with the Bank of America Merrill Lynch professionals.

– Jeff A. Knobel, Global Treasurer

By any standard, this is an incredible achievement; it certainly would not have been possible without the thoughtful leadership and tenacity demonstrated by Ball Corporation’s treasury every day since the merger.

Through their commitment and diligence, they have successfully managed not one but six distinct projects, any one of which would have been a challenge on its own.

The benefits delivered by the team in just this year include:

• Automatic accounting and faster reconciliation of payables and receivables through the POBO, ROBO and VAM structures. A side effect of those was a massive time reduction for the European local accounting and finance teams.
• Standardisation of T&E and other card payments, with richer data and clearer oversight of expenditure across the group through the introduction of a card programme.
• Hugely improved visibility of group liquidity through the deployment of the new Quantum treasury management system.
• Greatly reduced requirement for cash following a successful working capital optimisation programme.
• Successful integration of the treasury operations of Ball Corporation and Rexam.
• Reduced costs overall.

The Treasury Today view

Ball Corporation’s five-strong treasury team has achieved more in a year since the Rexam acquisition than many other teams manage in a decade. Its successful management of six simultaneous projects, each one of them complex in itself, has resulted in the creation of one of the most modern treasuries in the world.

All of this was achieved to a very exacting timescale, while simultaneously managing not just the ongoing treasury requirements of the corporation but also the additional burdens imposed by a merger of this size, such as co-operating with banks on KYC and other pressing regulatory and commercial issues.

The year’s hard work has paid off in measurable benefits for the wider organisation as well as a strong, resilient treasury structure which is well prepared for whatever the future might hold.

As the team behind such an astonishing treasury transformation, Ball Corporation’s treasury team deservedly takes the Highly Commended Winner award for Treasury Today’s Top Treasury Team 2018.

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