Photo of Magnus Attoff, Telefonaktiebolaget LM Ericsson.

Five-year journey pays dividends for how Ericsson now manages treasury transactions

The challenge

The scale of Ericsson’s US$27bn operation is massive and the regionalised approach created key stresses on Ericsson’s programme, which in 2016 drove the treasury team to begin a five-year transformation with the focus on increased control, efficiency and visibility. “We started by taking a critical look at all pieces of the programme: people, process, and technology,” recalls Magnus Attoff, Head of Digital Transformation and Financial Risk Management. The scale of what was addressed is emphasised here; Ericsson has operations in more than 180 countries with bank accounts in over 150 countries and over 100 currencies.

The solution

Ericsson implemented an in-house bank (IHB) solution, a cash management solution, and rolled out FX trading platforms for onshore execution. The firm defined common global processes for treasury transactions and moved the treasury staff from company control hubs to four regional treasury centres (RTCs) under group treasury. As a result of implementing the new platforms, Ericsson has:

• Generated savings by executing FX volumes on automated trading platforms and cut transaction costs by moving settlement to internal bank accounts in over 100 entities. The company has also saved interest spreads by internalising liquidity and the ability to manage liquidity daily using the cash management system implemented in over 180 companies and 64 banks.
• Increased the speed and efficiency as each risk manager has access to liquidity and FX positions to allow for efficient daily use of corporate liquidity. Ericsson risk managers now have more time for strategic analysis, and the ability to act with agility.
• Reduced the amount of time the team spends on manual data gathering, reconciliation and accounting by 60 working hours each month.

This transformation was driven by people and maybe most importantly, Ericsson is now able to promote a more autonomous and innovative company environment on the risk management side as opportunities can now be captured in any company and any country. The company has empowered its smartest people to focus on analysis and decisions that make a strategic impact. A recent example of how this new time to be strategic has proven critical, occurred during the tumultuous waters of 2021’s currency markets. As a result of common processes and risk measures and access to data in their trading platforms, Ericsson quickly identified opportunities to execute simultaneously in two separate markets getting more favourable pricing overall. This type of thinking, much less the ability to act on it, simply was not possible prior to the transformation.

Best practice and innovation

Ericsson’s programme should not have been successful, if for no other reason than sheer scale. Ericsson implemented massive change in transaction processes and structure while embracing new technology across 70+ people, four regional hubs and 180+ entities. Rarely do projects of this size get fully implemented, and even more rarely do they produce measurable, positive outcomes during implementation. The results produced by Ericsson’s currency risk management have generated over 90 days’ worth of human capital savings yearly, reduced transaction costs, increased automated platform trading by over US$3bn with significant saving in rates, and lastly, saved interest spread by internalising liquidity. Ericsson has set an important example for risk and liquidity management teams operating on a global scale. The results send a clear message that being quick and strategic with change is necessary to manage in today’s fast-changing world.

Key benefits

• Cost savings.
• Process efficiencies.
• Return on investment.
• Increased automation.
• Risk mitigated.
• Improved visibility.
• Errors reduced.
• Manual intervention reduced.
• Increased system connectivity.
• Future proof solution.
• Exceptional implementation (budget/time).