The art of being there

Having built a number of treasuries from scratch, including his current team at Vertu, James Koh has accumulated a wealth of knowledge, experience and friendships on his journey so far. He tells Treasury Today how his early mentors shaped his view of the world for the better.

From Malaysia to the UK via Australia, and from banking to luxury retailer via travel, finance and telecoms, by his own admission, James Koh has always managed to be in the right place at the right time. He says it is luck, but there is strong evidence that he has worked hard to get where he is today, having seen and taken every opportunity that came his way.

After school in Malaysia, Koh spent a brief period in banking before heading off to Macquarie University in Australia. Graduating with a Bachelor’s Degree in Economics, majoring in Accounting and Financial Management, he set his sights on qualifying as an accountant. In the mid-1980s he moved to the UK to find work, pitching up with the asset management company, Oppenheimer, as a fund management accountant. A position managing repo valuations at Kidder Peabody Securities awaited him in his next move, but with an eye on his first steps into treasury, Koh switched tack and found himself at holiday firm, Owners Abroad (later known as First Choice, now part of TUI). Here he met his first real challenge, being asked to establish an internal audit department and a group treasury function. “I took the challenge, set them up and started learning treasury from scratch; it was very hands-on,” Koh recalls. He was guided in the treasurer role by one Geoffrey Stone, who became Koh’s mentor, steering him through some of the intricacies of the job as both he and the company went from strength to strength.

The A to Z of treasury

From his first exploratory steps at First Choice, Koh moved to Lombard, a financial services firm that was part of NatWest bank. “Here I met my second great mentor, David Loosley, who took me under his wing.” Under his tutelage, Koh says he grew quickly. Loosley’s “no-nonsense” approach ensured the team of 12 efficiently managed internal treasury for five banks, Koh also managing to attain Associate of the Chartered Institute of Bankers (ACIB) and Member of the Association of Corporate Treasurers (MCT) letters in the process. Further study was deemed a necessary part of the plan to advance his career, states Koh. “As a young man, I decided to do all my letters and now I have A to Z,” he jokes.

The exacting nature of Loosley’s regime saw Koh extend his knowledge into a broader field of finance than he might otherwise have experienced. Thus armed, when Lombard was acquired by RBS, he was given the task of integrating the internal treasury functions as Loosley moved on to GEC Marconi. Following a successful project at RBS, the call came to reunite with Loosley. At that stage, GEC Marconi was the largest FTSE 100 firm: “What an accolade,” says Koh of his call to arms. What an opportunity to learn too: with GEC transforming into Marconi, Koh was appointed as Treasurer of Marconi Finance, running the company’s global treasury team, with offices in the UK, EMEA and the US. “Running a global treasury team is quite different – and launching a Eurobond and EIB vendor financing was exciting too. It all gave me the kind of international exposure I was hungry for.”

Marconi went into liquidation during Koh’s tenure (no fault of treasury), giving him unexpected hands-on experience of winding-down books and operating under strict INSOL Principles. “It was a very rigorous process; it took me a couple of months before handing it over and moving on,” he recalls. With an opportunistic eye he moved into the consultancy and interim field, feeling that he was ready to expand his repertoire.

The next phase of his career saw him taking senior treasury roles across a range of sectors, either setting up corporate treasury teams from scratch (both domestic and international), taking established units to the next stage and implementing finance and treasury transformation programmes. These included amongst others RBS, Direct Wines, Fortress Investments Inc, Travel City Direct, Cendent Corporation (Travelport), Courts and Burberry. Having accumulated a wealth of hands-on experience, exposure and friendships in the interim line, after eight years Koh decided to head back to a permanent Group Treasurer position. In December 2011 he joined Vertu, a UK-based manufacturer of ultra-high-end mobile phones, as Group Treasurer, his task once more to carve out and establish a group treasury function from scratch.

From public to PE

Koh joined Vertu as it was divested from Nokia and transferred to Nordic private equity (PE) group, EQT. Vertu’s customers are located all over the world, buying from top-end boutiques and stores. It required a truly international treasury, offering a centralised take on treasury policy, strategy and traditional operational activities such as treasury risk management, liquidity management, cash pooling funding, FX and establishing key banking relationships.

As part of a PE house, treasury must take a slightly different approach. Having experienced many forms of ownership over the years, the key difference for Koh is that whilst the ‘cash is king’ mantra still holds true, it has more intensity about it than in other business ownership models. “It’s about counting the pennies; there are plenty of them, but everything is under scrutiny – and so it should be,” he comments. “I find that the regime is much more rigorous; these are expert investors and they expect a professional treasury – and they get one.”

A major difference between Vertu and other corporates on Koh’s CV is the amount which its customers pay in a single transaction. Although some use bank transfers, the majority are card transactions. The volumes are not especially large but the values can become “exceedingly high.” Vertu’s stock-in-trade is exclusive, hand-crafted mobile phones aimed at a market that typically does not have to ask the price before buying (the average, if you do have to ask, is around £7,000 but the highly customised versions can rise substantially higher). This creates an interesting profile in terms of online Cardholder Not Present transactions and fraud prevention; the typical automated fraud solution “is just not good enough,” notes Koh.

In response, Vertu deploys an in-house security team, to look after the best interest of the customer, customer data protection and payments. In-store is reliant upon the skill and judgement of the team at the point of sale and they must adhere to policy guidelines. However, because the phones are often bought as bespoke items, the lead time between order and delivery affords Vertu the necessary window to carry out due diligence.

An eye for technology

The delivery of a successful treasury team is in no small part due to deployment of the right technology, and Koh likes to keeps abreast of developments in this space. “I am always on the lookout for sensible improvements,” he says. “If you run multiple bank accounts on a global basis with multi-currency cash flows and you have to consolidate the start and forecast close position – including rolling cash flow forecasts – automation is extremely important, especially when your boss wants it yesterday.” In treasuries the world over, spreadsheets persist “because treasurers can tailor them to meet their needs.” But when it comes to cash flow forecasting, behaviouralisation for timings, leads and lags is an ongoing quest for Koh. By looking at local activities to determine the actual ebb and flow of cash, it is, he says, possible to manage cash flows based on expectations rather than contractual terms. However, he is yet to find a good cash flow reporting and forecasting tool which also incorporates the cash behaviouralisation assumptions on a necessary dynamic basis. “Maybe I will invent the first one!”

Market challenges

There are certain countries where treasurers face additional demands on their skill and judgement. Some, currently subject to trade sanctions, happen to be within Vertu’s current distribution. Facing entrenched bureaucracy, tight regulation and certain difficulty when repatriating cash must be tackled intelligently and sensitively. “Obviously we try to use local currency to pay wherever possible rather than having to convert,” says Koh. “We directly repatriate via trade payments and convert only the net long positions.” Vertu also takes action in terms of its pricing. While its margins are generally fairly stable, pricing can be used to mitigate global FX volatility in extreme cases. This is ‘best practice’ for the luxury goods market and, to a degree, customers are less sensitive to price volatility. “If you have forward FX contracts in those markets you would probably be badly burnt,” Koh explains. The team nonetheless carries out relentless stress testing to determine how much it needs to move to mitigate these volatilities.

Having worked many years in banking and treasury, Koh feels he has never been busier than now, not least because global liquidity management, finance change management, sanctions and regulations are an ongoing theme for him. They will always require a response and he knows he must be both aware of and in compliance with all that comes his way. “I deal with all the internal and external treasury matters – that is my bread and butter – but at Vertu we do trade in regulated markets and for that I find that the best information comes from our own local people on the ground.” Koh says that he also talks to other treasury professionals in similar markets, and expert providers, enabling him to assess the changing mood of the industry, and his local and global banking partners help out in an advisory capacity too.

Befriending the banks

Banks are natural facilitators in practical treasury operations and Koh says he considers some of his key banking partners as friends, having known them for many years and taken the finest exponents on the journey with him. Having come from a financial services and banking background, he understands what many financial institutions have gone through recently. “Many have taken a lot of flak, rightly or wrongly. Now, from the treasury side of the fence, of course I insist on the best I can get from friends who are still within banks.” His policy is to be clear about his expectations and time-frames so no one should be under any illusion as to what must be delivered. If a mandate is awarded then both sides should go all out to make it happen within the deadline. “If you are fair with the banks, they will go the extra mile for you,” he believes.

Softer side of treasury

Cultivating strong working relationships with the key stakeholders, the treasury team and external providers are a vital part of Koh’s armoury. Drawn from his breadth and depth of experience, the so-called ‘soft skills’ of people management, negotiation and influence are, he feels, an essential element of a best-in-class treasury function. “When you are looking to deliver in very tight deadlines and you have a team of providers helping you out, as well as an internal team that works alongside you, things are so much easier to accomplish.”

To draw the best deals out of banks and vendors, and to encourage the team to buy into plans and targets, negotiation skills have to be “spot on,” he believes. “If you go head-on into conflict you get nowhere.” The skill to influence is vital too, he says. Of course, he has his own views in terms of what the best solutions may be, and these may not accord with the views of another. But in seeking the best course of action, enabling and convincing stakeholders to see that there are better alternative ways of achieving the same goal is important.

Building the right team is the best way to succeed. Koh knows that many CFOs and CEOs expect the incumbent to hit the ground running and one of the most important elements, alongside aspects such as treasury strategy and policy, he states, is in getting the right people on board. This is where his experience with previous teams and his mentoring and networking activities, and those well-honed soft skills, all come in handy; he knows who works well and who will fit in. In this space he says relationships tend to be long-lasting “and treasurers have a very good memory of who is good and who is not.”

The right choice

Having considered his options en route, Koh knows now that he has taken the right course, not just with Vertu but with his career too. “I didn’t just want to be an accountant; there’s nothing wrong with that but it is not really my cup of tea, I wanted to expand on that.” Treasury, he feels, gets him involved in different functions and, when the need arises, “allows me to really put the pedal to the metal.” And building a global treasury function from scratch “really is my cup of tea,” he states. On top of all this, he feels that he has been truly feted in his chosen path, citing his win at the Treasury Today Adam Smith Awards in 2013 for ‘Best MME/SME Treasury Solution’ as a highlight.

As his career has progressed, Koh feels lucky to have been mentored by two experts in their field and he has made the most of their advice. The cumulative benefit of this experience is something he wishes to pass on to others. To this end he is currently mentoring the treasury team at Vertu. It is, he states, “a pleasure for me to be able to see my staff excelling in their ACT letters and being able to mentor, fast-track and shape their treasury skills and see them grow.” To other individuals looking for their first step on the rung, Koh says finding the right mentor is the luckiest break anyone can get. “Don’t think you know everything until you have worked with the very best,” he says. “It takes time and you will make mistakes but make sure you learn from them.”

As younger practitioners come up through the ranks and start taking on more responsibility, Koh is pragmatic about the steep learning curve, always very much aware of the need to look out for “the first big mistake,” hopefully catching it before it happens. “I encourage anyone starting out in treasury to double and triple check with the treasurer if they are unsure before they execute,” he advises. “If you make a mistake as an accountant you can do a correcting journal; as a treasurer, you cannot do that and need to get it right first time, every time.” One way in which he is able to rein in over-enthusiasm is by literally keeping an ear open for errors. “I keep telling my team members to make a lot of noise; if they are noisy I know what’s going on; if they are quiet then I worry.”

A late career move?

With the volume and intensity of his particular operation turned to max, it might be expected that Koh has adopted some tranquil pastime to while away the hours. Nothing of the sort: he enters the high octane world of motorsport, power-sliding his BMW M3 around the chicanes and hairpins of the race track. He does also donate his time freely to a couple of charities as a way of “doing his bit,” but he has an equally fast-paced alternative career option lined up, taking to the streets as an “Interceptor Cop,” driving fast cars and chasing down the baddies. Whilst waiting for the call to kick-start his crime-fighting career, treasury still manages to offer him some very exciting moments, especially when he is building a team from scratch. He may not have super-villains to apprehend but when faced with a blank treasury canvas, where a lesser mortal might wilt under the pressure, Koh will already be making his mark.