Corporate View: Royston Da Costa, Ferguson

Published: Jul 2024
Royston Da Costa, Assistant Treasurer, Ferguson

A passion for knowledge

For Royston Da Costa, Assistant Treasurer at Ferguson, the pursuit of knowledge is a lifelong passion. He shares his views on the future of treasury technology, the need for vigilance in the face of the cyberthreat, and the importance of keeping abreast of new developments.

Royston Da Costa

Assistant Treasurer

Ferguson is a major distributor of HVAC (Heating, Ventilation and Air Conditioning) equipment and industrial products and services, and the largest US distributor of plumbing supplies, waterworks and fire and fabrication products. The company has around 35,000 employees and reported revenues of US$29.7bn in 2023.

Although the company is headquartered in the UK, its operations are almost exclusively focused on North America and managed from Newport News, Virginia. From here, the US operation serves all 50 states with ten national distribution centres and over 1,500 branches.

“What I find really enjoyable about treasury,” says Royston Da Costa, “is that it is very much a people business. To work in treasury, you have to get on with people and interact with internal and external stakeholders, including vendors, banks and other professionals.”

With nearly four decades of experience, Da Costa is a seasoned treasury professional with extensive knowledge of processes and automation, driving Ferguson’s strategy on treasury technology. He has been an affiliate member of the Association of Corporate Treasurers since 2012, and gained his Certified Treasury Professional (CTP) qualification in January 2024.

A passionate and engaged member of the broader treasury community, Da Costa has received awards for cybersecurity solutions and future-proofing technology, and enjoys sharing his insights in treasury publications. He regularly speaks at international treasury conferences about the need to implement best practice and the importance of furthering diversity and equality across the treasury world.

Path into treasury

As with many treasury professionals, Da Costa didn’t start his career in treasury: after college, where he studied computer science, economics and pure maths, his first role was at a merchant bank in the City of London. But after a few years, he realised that banking was not a career that would excite or inspire him. Following a short stint at a finance company, he landed his first treasury role at the fledgling satellite broadcaster British Satellite Broadcasting, the forerunner of BSkyB, which went on to become Sky.

Da Costa subsequently had a brief spell at Gillette before joining PolyGram as a treasury analyst, and three years later he was promoted to the position of Foreign Exchange Manager. When the company was sold to Seagram, he became part of the merger project group (managing the front office daily operations for both companies) that was set up to make sure that all the various processes and systems would transition smoothly. He went on to join Ferguson – then called Wolseley – in 2002.

Initially responsible for cash management, Da Costa’s responsibilities have evolved since he started at Ferguson. The company itself has also undergone considerable change during that time. Since Da Costa joined the company, its revenues have grown from around US$7bn to almost US$30bn. Ferguson’s geographical reach has also changed significantly: the company was once active in 28 countries, but following a series of divestments it now operates only in the US and the UK.

Although Ferguson has sold off its interests in other countries, the firm continues to acquire businesses in the US. “Even though we’re a US$30bn business, the market we operate in is worth over US$300bn,” explains Da Costa. “It’s a very fragmented market at the moment, so we see a lot of scope there for us.” In December 2023, Ferguson plc’s board announced that – subject to shareholder agreement – it would seek to establish a new corporate structure that would domicile the Group’s ultimate parent company in the US.

With the treasury function now essentially headquartered in the US, part of Da Costa’s role is therefore to support the treasury team in the US, particularly in respect of strategic transactions, such as dividend hedging and share buybacks. As Assistant Treasurer for the UK, his chief responsibilities also include looking after the UK intercompany loan structure and driving the treasury technology for the group.

Safe pair of hands

Aside from the people aspect of treasury, what Da Costa enjoys most are the challenges that it constantly provides, and the sheer variety of the work.

“It may sound like a cliché, but no two days in treasury are the same,” he reflects. “A few years ago, I saw a chart published by the ACT that outlined 24 different areas of responsibility for a treasurer or a treasury function. These were not just the core functions – things like liquidity management and risk management – but also areas such as procurement and mergers and acquisitions.”

In many companies, says Da Costa, CFOs and senior directors allocate finance projects to treasurers when it’s unclear who should be responsible for a particular project. “Treasurers are renowned for their ability to take on new challenges,” he says, adding that they are also seen as a safe pair of hands due to their responsibilities for handling cash. “And when something goes wrong in another part of the business, say in terms of cybersecurity, treasury can be asked to sort it out.”

Da Costa notes that the challenges faced by treasurers can broadly be divided into two categories. On the one hand, there are the factors associated with the macro-economic environment, including interest rate hikes, bank collapses and economic crises. Then there are the day-to-day challenges faced by the treasury, including managing liquidity and risk.

In both cases, Da Costa believes that the most important thing for any business is to ensure that it is well positioned to be able to deal with any eventualities. Citing the Covid pandemic, he explains: “No one knew that it was going to happen. We started our automation journey in 2010, and five years later we implemented our first cloud-based solution, Coupa. By 2018 we had pretty much automated all of our processes.”

Fully embracing the concept of business contingency planning (BCP) and preparing for various worst-case scenarios meant that the business was well prepared for a major disruption. And having already been set up to be able to work remotely – albeit for one day a week – the treasury was well positioned to be able to operate normally, at a time when many others were caught by surprise.

Automation and technology

During his career, Da Costa has been a witness to the extraordinary speed at which treasury and its technology has evolved. When he started at BSkyB, everything was done on a spreadsheet – his very first treasury report was a one-page straight spreadsheet and a graph. Meanwhile, the netting process at PolyGram was reliant on the fax machine.

As Overall Winner of the Adam Smith Awards Best Cyber-Security Solution in 2019, Da Costa recognises that the downside to greater automation and digitisation is the potential threat posed by cyberfraud. “Obviously I am a big fan of technology,” he states. “But I also recognise its potential to be used by a lot of bad actors.” Acknowledging that in the real world no business can be 100% protected from the risk of fraud, he believes the solution is to have robust procedures in place, and to make sure that these are continually reviewed and updated.

“We must try to make sure that we are not only looking after the risks that we currently know about, but also looking out for the unknown ones,” he says. “You may not be able to predict what’s going to happen tomorrow, but you can ensure that you’ve got the right technology and the right processes in place. We can’t always get it right, but we can adopt the tools that could help us future-proof the business.”

While he believes that Ferguson has the right processes and technology in place, he is all too aware that companies cannot rest on their laurels and assume that they will not be a target. “There are solutions out there which are becoming increasingly more important for treasury,” he adds. “There are the banks, of course, and also tools such as vendor validation, which can help us to enhance our processes and make sure that we are paying the right suppliers.”

Looking at the treasury landscape more broadly, Da Costa cites cash forecasting as an area that continues to present significant challenges, and that could be addressed more effectively through technology. “And there are also areas that aren’t challenges for us today, but could become a challenge in the future, such as digital currency.”

While AI is a major talking point for the industry at present, he notes that treasurers should remain focused on the value and efficiency that technology can deliver, rather than on the hype. Looking forward, he says developments such as quantum computing could also present new opportunities to handle and process large amounts of data at speed.

Above and beyond

Alongside other attributes of a successful treasury professional, such as strong people skills and the ability to manage risk and liquidity, Da Costa also emphasises the importance of flexibility. “You need to be able to take on whatever comes at you at any time,” he notes.

But while the role of the treasurer continues to evolve, he emphasises that he doesn’t see the core skill set disappearing anytime soon. “Treasury is one of those age-old arts which is going to continue for the foreseeable future,” he reflects. “On top of that, there are the additional aspects of how the job evolves, the tools that we use and interact with, and the world we live in. The necessary skill set has been enhanced, and treasurers need to be able to meet that standard.”

In addition to these core skills, he believes that part of the continuing evolution of the treasurer is to be open to, and adept in using, new technology. “What has been becoming more prominent these days is having a technology skill set,” he says. “It’s not that you need to be an IT specialist, per se. It’s just about being open to technology and being able to use it. I wouldn’t consider myself an IT specialist, but I have gained some basic level of knowledge of how the technology works.”

Unsurprisingly, Da Costa is a firm believer in pursuing appropriate training and qualifications. “One change I’m seeing is treasurers getting into coding,” he says. “I haven’t embarked on this journey myself yet, but it does involve AI. I think to some degree, companies like Microsoft are making it easier for everyone – not just treasurers – to develop their knowledge of how to write programmes and automate processes, without needing to know the actual language.”

Out of the office, Da Costa enjoys travelling and is a great believer in exercise. Although he finds it difficult to find the time to do as much running as he used to, he thinks nothing of going on a ten kilometre walk with his wife, whatever the weather. Meanwhile, his passion for the pursuit of knowledge is not limited to the professional domain: preferring articles over books, he is keen to keep abreast of new developments and acquire new knowledge whenever the opportunity arises.

What is the best advice you’ve ever been given?

For me, this goes back to my banking days. It sounds so simple, but one of my managers said, “make sure that you understand the basics, and never be afraid of asking what might seem like a silly question.” It means that if something becomes an issue later, you should be in a better place to resolve it.

A second piece of advice is not to be afraid of seizing opportunities. And the last is to be honest. In my experience it’s always better own up when you’ve made a mistake, rather than try to cover it up or pretend that it isn’t important.

What has been your most enjoyable project to date?

That was undoubtedly the implementation of Coupa, our cloud-based solution, which was part of a very large finance transformation project. It was pivotal in terms of the technology it brought and the connections it offered to the other systems that we were using. It was a huge milestone for me, and by being involved so much in the project management, I learned a lot and gained a number of new skills. It also taught me to focus on the objectives and avoid the temptation to get sidetracked.

What is your favourite gadget or piece of technology?

Whose gadget wouldn’t be their phone? They are so important to us. But what I would also like to see is a communication device that you don’t have to hold, maybe an earpiece or spectacles. I recently discovered that Google Translate – although it’s a bit clunky at the moment – enables you to speak into the phone and translate into another language. It would be great if you could speak into a device, without holding a phone, and get the translation through the earpiece.

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