Any treasurer who doubts the efficacy of virtual accounts should listen to the story Marek Chruściel, Treasury Director at Play tells. Every month, Play handles millions of incoming payments all through the company’s recently established virtual account structure. But before sharing with us the secret of this success, Chruściel talks about how his career in finance got started, why treasurers need a broad education and why the virtual account solution is only just the beginning of his efforts to transform the treasury function at Play.

One of the most remarkable things about virtual account solutions is their scalability. Whether your company handles payments from several dozen customers or several million is of no consequence; an infinite number of IBANs can be created to give treasurers those enriched bank statements that have become so coveted in recent years.

Marek Chruściel is one treasurer who can testify to that. The Treasury Director of Polish telecommunications firm Play was at EuroFinance last October to tell an audience of astonished treasurers at a bank-hosted seminar how at his company, virtual accounts now handle no less than 3.6m individual monthly payments. After he had finished telling the audience how in the month prior, only six of that number required manual correction from his team, the room was momentarily stunned to silence.

It certainly is an impressive case study. When speaking with Chruściel, however, it quickly becomes apparent that the introduction of the virtual account solution at Play is but one of many interesting stories he has accumulated over a near two-decade long career. In that time his work has taken him around the globe: from Poland to the US and Asia and back again, and from overseeing the treasury operations of a major financial institution to where he is today in the corporate world. It is a journey which, as we will see, has given him a unique perspective on the corporate treasury profession today.

A different world

Having moved to Play after close to two decades in the treasuries of various subsidiaries across the American International Group (NYSE:AIG), the first question which comes to mind when interviewing Chruściel is what he considers to be the biggest difference in working for a non-financial corporate.

“The biggest difference is that finance is more heavily regulated than the non-financial corporate sector,” he says, without hesitation. Regulators pay particularly close attention to financial institutions, of course; especially those, like Chruściel’s former employer AIG, that are deemed to be of systemic importance. Treasurers in the non-financial space have regulatory responsibilities of their own too, but nothing approaching the level of scrutiny their peers working for banks and insurance companies must contend with on a regular basis.

“The non-financial sector affords much more freedom around treasury management,” he says. “Otherwise I would say that the basic principles – whether it is funding, liquidity and financial risk management – remain the same; each require a similarly high degree of understanding and attention from the treasurer. In my view, experience with the systematic, more demanding approach to treasury in financial institutions is a superb foundation for a corporate treasurer.”

Chruściel began developing his understanding of treasury back in the late 1990s when he was recruited to work as a money and capital markets specialist by the Polish arm of AIG Bank. That his initial role was very broadly defined afforded him an early career advantage. Instead of finding himself pigeon-holed early on as a specialist focusing of a particular process, he was able to develop a broader skillset by jumping from one activity to another. “At that time the treasury team at the bank was relatively small, and that gave me an opportunity to get involved in all aspects of banking treasury.”

Remaining within the AIG Group, Chruściel moved on from this initial role to take up other senior positions in a range of different locations (including Thailand and the AIG Consumer Finance Group New York headquarters) and different areas of the bank. In 2011, he parted ways after more than a decade at AIG when he was hired by AIA, one of Asia’s leading insurance companies (and former AIG subsidiary), as an associate director for Group Treasury. An even bigger career change was imminent however.

Play time

In second half of 2012 the call came from Play, the mobile operator which in a few short years had gone from being one of Poland’s smallest and newest operators to one with a 23% market share. It was an exciting opportunity for Chruściel: certainly exciting enough to pull him away from where he seemed to have settled in financial services. A large part of his job now, of course, is communicating with the very same types of people he used to work with. That has its advantages. He says: “My experience of treasury in the financial sector helped me to develop a very deep understanding of the financial markets which is, of course, a great asset for me now especially when it comes to those regular discussions I have with banking partners.”

So what has the former bank treasurer been doing in the past few years at Play? What have been his priorities? Along with all of the daily routines around liquidity management and risk management, much of Chruściel’s time since taking up his position has been occupied remodeling collections processes and making sure financing is in place to support the company’s long-term growth ambitions. Given Play’s rapidly expanding customer base, the meeting of these objectives remains as challenging as it is essential.

My experience of treasury in the financial sector helped me to develop a very deep understanding of the financial markets which is, of course, a great asset for me now especially when it comes to those regular discussions I have with banking partners.

Fortunately, Chruściel says he has an experienced and flexible team to support him in such endeavors. This is a benefit of the deliberate way in which the department is structured, he says. Chruściel explains that too much compartmentalisation in a department is not only harmful to the professional development of staff, but can also be very disadvantageous from a management perspective too. After all, what senior treasury manager would want to be in a position where a certain task can only be executed by one individual? “We try our best to make sure people are not only responsible for what they do, but replaceable by colleagues” he explains. “From time to time, then, I am shifting treasury staff between different roles and responsibilities so that they can explore other areas and learn new skills.”

A flexible team undoubtedly helps when some areas of the department become preoccupied with a huge project. And Play’s treasury has had one or two of those in recent years.

A virtual reality

One of the surprising things Chruściel reveals about virtual accounts is that in Poland they are not especially new or cutting-edge – as seen by much of the rest of the treasury universe – but a very well-established solution already used by a large number of organisations.

After the collapse of communist rule in the late 1980s, a whole new financial infrastructure needed to be built and the country chose to implement the most modern banking and settlement systems available at the time. Beginning in the mid-1990s, collections factories and virtual accounts became quite commonplace in Poland.

Introducing a virtual account-based collections operation was not, therefore, an especially radical step for the treasury of a big biller like Play to be taking in Poland twenty years on. But it is something that has, without a doubt, made cash management a great deal more efficient.

The company now runs three billing cycles each month and payments are received 365 days a year – running to over 350,000 on peak days. Payment data files are delivered on a daily basis by the bank via secure file transfer protocol (SFTP) or web service every afternoon and they are processed overnight with payments assigned in Play’s billing system. Payments are automatically allocated, with very occasional manual input for any individual payment that requires it. But savings on treasury time and resources is just where the benefits of virtual accounts start, says Chruściel. “It is a very powerful solution,” he says. “The biggest benefit is the true automation of incoming payments, but it can also help to improve customer satisfaction, because you can avoid unnecessary interaction with the clients regarding any payments that you think you didn’t receive but did receive. Virtual accounts give us all the information we need the same day as the customer makes the payment.”

I am seeing more corporate treasurers focusing now on cash visibility and I think this is more than the right time to do it.

Implementation of the virtual account structure – even at a firm with a customer base the size of Play’s – can usually be achieved in a fairly expedient time-frame of about two to three months. But treasurers will encounter challenges along the way, Chruściel warns. “The biggest is actually working out technical details: the structure of the virtual accounts; the composition of the data; the ironing out of the service level agreement,” he says. “These processes need to be carefully thought through, to ensure maximum automation. Otherwise you might end up with a lot of transactions that still require manual entry and intervention.”

Lessons from a crisis

As Chruściel revealed earlier, a second important strategic priority for treasury over recent years has been ensuring the company has the financing it requires. At the beginning of 2014, Play boldly decided to refinance its entire capital structure, replacing the long-term bank loans on its books with high-yield bonds in euros and Polish zloty.

Exceptionally favorable borrowing conditions on the capital markets (especially relative to the deleveraging banking sector) naturally factored in this decision. But Chruściel explains that there was also another, more strategic, reason: one stemming from his experience working at AIG during those dark days in 2008-2009 when liquidity was all of a sudden in very short supply. “I remember very clearly how banks were turning their backs on major clients, cutting off credit lines and demanding early repayment of long-term debt commitments,” he says.

On the one hand, the experience has made Chruściel more attentive to the minutiae within the contractual clauses in funding agreements he is negotiating. But it has also made him more wary of the danger inherent in being overly reliant on one funding source. “I think one of the lessons learned from the 2008-2009 financial crisis is to pay special attention to short-term liquidity, cash visibility and funding structure,” says Chruściel. “And, just to keep in mind, that things might get messy very quickly when the help isn’t there.”

The freedom offered by the capital markets compared to bank financing is also helpful. Although issuing bonds for the first time is naturally a major step change that demands a lot of preparation (in Play’s case the process took approximately three months and involved visits to all leading financial centres in Europe), once concluded returning in the future is much more straightforward than it is to refinance bank loans. “It is much easier to tap the market again and refinance existing bonds, compared with going back and obtaining more funding from the banks,” says Chruściel. “Usually you need approval from your current lenders to get more funding from other banks. So when it comes down to it, the flexibility of the capital markets is one of the most important reason for switching to the capital markets. Bank finance is just a lot more rigid.”

Next steps

After the successful implementation of virtual accounts and the overhaul of the company’s capital structure, Chruściel has already achieved a great deal in a very short space of time since arriving at Play. But he is adamant that the job of reengineering the treasury at Play is still far from over. In fact, one could say he is only just getting started.

First on the agenda is communication between Play’s ERP system and the banks. Over the coming year, Chruściel plans to be working on streamlining processes around this, with the idea being to harness technology for the purpose of optimising the workflow internally within the company at the same time guaranteeing segregation of duties and security of outgoing transfers. And a new TMS is also on the shopping list for 2016.

It is a very powerful solution. Virtual accounts give us all the information we need the same day as the customer makes the payment.

Both of these projects reflect the importance Chruściel attaches to the automation of treasury processes. Whether via SWIFT or other software that integrates bank systems with ERP and TMS, the ongoing automation of treasury processes remains no less a key priority for Play than it did before the implementation of virtual accounts. “I am seeing more corporate treasurers focusing now on cash visibility and I think this is more than the right time to do it,” he says. “It surprises me when I talk with my industry peers that some of them do not exactly know how much cash they have at a given time and where that cash sits.”

In addition to an unswerving determination to find ways to improvement, Chruściel identifies one other trait which he believes has helped to make him the treasurer he is today, and his possession of which can perhaps be traced back to the early days of his career when he was being rotated around the different areas of AIG’s treasury function. “You have to be open-minded, because treasury issues can be extremely multifaceted. One needs to be able to consider issues from many different angles.”