2023: the year that was

Treasury Practice

Published: Jan 2024

From implementing new technology systems to navigating extreme weather events, three treasurers look back at their achievements in 2023 and discuss how they will carry the lessons they learned last year into 2024.

Every year brings its own set of challenges, and 2023 was no exception. From geopolitical tensions to extreme weather events, the events of the last year have impacted treasury teams in myriad ways. But despite the challenges, treasurers continue to seek and implement new opportunities to operate more efficiently, mitigate new risks and optimise cash management.

In the following pages, three treasury professionals from Europe, the US and Asia share their experiences of 2023, and discuss how they are planning to build on these in the year ahead.

Ferdinand Jahnel

VP, Treasurer

Headquartered in New York, Marsh McLennan is a global professional services firm that provides advice and solutions in risk, strategy and people, across its global businesses Marsh, Guy Carpenter, Mercer and Oliver Wyman. Ferdinand Jahnel, VP and Treasurer, runs three teams in New York, London and Singapore, covering treasury operations relating to cash investments, currencies, financial risk and banking and rating agency connections, as well as capital markets, debt issuance and global pension commitments.

Thriving in a volatile market

In contrast to many firms, Jahnel explains that Marsh McLennan’s clients tend to be particularly focused on seeking advice during times of volatility. “So our business has performed phenomenally well in the last year: we’ve grown substantially and we are investing in our global infrastructure.”

And while interest rates present something of a challenge, Jahnel notes they are “actually also a tailwind for our business, because we have a lot of investable cash that benefits from higher short-term rates. That offsets the somewhat higher cost of capital when we go to market and issue new debt, which we do from time to time.”

Nevertheless, Jahnel and his team have been paying close attention to the economic volatility around the world, “to keep the company safe and make external events as plannable as possible.” This includes monitoring the competitive environment between the US and China, as well as looking ahead to upcoming elections in the US and UK.

Supporting M&A

Supporting the firm’s acquisitions is another key area of focus for the treasury team. Jahnel explains that around half of Marsh McLennan’s free cash flow is allocated to shareholders via dividends and share buybacks, “and the other half pretty much goes back into the business – not so much through capex, because we are a capital-light business, but via acquisitions, which is a strategy that we expect to carry over into the new year.” He adds that treasury has an important role to play in supporting M&A, “as we need to fund those transactions and do them in an intelligent way.”

TMS implementation

Where technology is concerned, the treasury is currently implementing a new treasury management system (TMS), in a process which began almost two years ago with a best practice analysis and selection process based on a request for proposal (RFP) exercise. The implementation phase began in early 2023, and the new system is due to go live in the second quarter of 2024.

“As you can imagine, this is not just a treasury exercise,” says Jahnel. “We have controllership, tax people and internal IT folks that are very closely involved in this process. It’s a truly collaborative team effort.” With the new TMS replacing an older system that had been in place for over 20 years, the exercise is also likely to result in some process and organisational changes.

Preparing for the unexpected

While Jahnel describes the company’s treasury team as a “pretty well-run machine”, he notes that any business needs to be alert to any “unknown unknowns” that might materialise. “These black swan events don’t announce themselves; they just happen and then you have to deal with it,” he reflects. “So, you have to make sure you have enough redundancies built into your infrastructure that you can still run the organisation and keep it online.”

As Jahnel concludes, “There could always be something that happens, but I’m typically an optimist – I feel pretty confident that if anything unexpected comes along, we will work through it and succeed.”

Séverine Le Blévennec

Global Head of Treasury

In 2021, Séverine Le Blévennec joined Aliaxis, a global leader in advanced piping systems for building, infrastructure, industrial and agriculture applications headquartered in Belgium. Since then, she has been focused on achieving a deep transformation of the treasury function – an ambitious project which spans everything from systems and banking structure to treasury policies and recruitment.

“In the last year, we’ve implemented a new banking structure for the LATAM region, where we operate in ten countries,” she says. “This has involved carrying out KYC, opening accounts and achieving connectivity to our payment hub, Trax. And on the back of this we refinanced the whole region, significantly improving borrowing cost and decreasing FX exposure.” In addition, the last year has seen the company select new banks in India and in 15 European countries.

The company went live with its new treasury management system in January 2023. “In the course of the year, we have focused a lot on reporting,” adds Le Blévennec. “The operational reports were ready for the go-live, of course, but the dashboards and more strategic reports are being finalised now.”

In addition, the company implemented a global notional multi-currency cash pool, which has proved particularly valuable in a rising interest rate environment. “With interest rates going up, this easily pays for many of the investments that we are doing. If you are not too leveraged, and you optimise your liquidity, the business case to invest in treasury transformation is pretty easy to defend,” she says.

Goals for 2024

The treasury transformation project is set to continue this year, with key activities expected to include selecting and implementing a new netting tool, and connecting ERP systems to a data lake which is in the process of being implemented. “Data will be automatically uploaded to the netting tool, and people will just have to provide confirmations, with a direct debit at the end, so we will have a process that is automated as far as possible,” Le Blévennec explains.

If you are not too leveraged, and you optimise your liquidity, the business case to invest in treasury transformation is pretty easy to defend.

Séverine Le Blévennec, Global Head of Treasury, Aliaxis

Other goals for the year ahead include implementing new treasury policies and rolling out existing FX and money market fund platforms into additional regions. In addition, the treasury will be working to support the company’s growth ambitions by building relationships with rating agencies and securing finance. “And of course, now that we have selected our banks for EMEA and India we’ll go and implement them next year, including the connectivity to Trax for payments and to the global overlay liquidity structure.”

Enabling success

When it comes to building on the team’s achievements in 2023, Le Blévennec notes the importance of exchanging with people in the business about the transformation project, “so that they understand the vision, what we want to do, the status of the project, how they can help us and what’s in it for them in the short and medium term.”

Likewise, she says that the TMS implementation was followed by nine months of hypercare. “That doesn’t mean that things were going wrong – it was about supporting people in the region and making sure they had the training they needed,” Le Blévennec explains. “We know that people are extremely busy, so you have to make sure you can make your project a priority, but in a way that’s manageable for them.”

She adds, “I’m very grateful for the trust and commitment of my team, both in Brussels and the wider region. Nothing makes me happier than when you close a phase and see that people are so pleased that it has exceeded their expectation – it’s great to have that feedback.”

Christopher Emslie

Asian Regional Treasurer

As Christopher Emslie explains, 2023 was a year of change for General Mills’ Asian treasury team. “As we came out of Covid, we decided there were things that could be improved,” he recalls. “Our big focus in 2023 was therefore on liquidity and making sure that most of our markets had liquid cash, so that we would be ready to face the next challenges.”

In particular, the company’s Asian treasury team was working on a multi-year project to integrate with the global treasury team on SAP – a project which involved much communication with the company’s banks. “We’d previously implemented SAP in the US and Europe, so we decided that Asia would become part of that,” says Emslie. “It’s basically been about creating a connection point between SAP and our banks, and bringing automation to the fore in order to make life easier for our treasury people on the ground.”

Today, he explains, the company’s US treasury team can use SAP to access treasury information from additional markets including Asia as well as Brazil. “So it’s made us part of that global family, with all that information at our fingertips. And it’s made our reporting and our information flows much easier.”

However, 2023 also brought some unexpected challenges, including a series of typhoons, as well as flooding in Beijing following record levels of rainfall. “Covid isn’t the only black swan event we’ve faced in recent years – there have been many other events that have really impacted businesses and consequently the treasury world,” says Emslie. “After all, if you’re not selling, you’re not getting cash into your business.”

Goals for 2024

This year, Emslie says the Asia treasury team will be looking to improve its liquidity management activities. “We’re looking at cash flow forecasting tools and seeing how we can do things better. We’re also looking at building our relationships with our banks and talking about the structures we have in place.”

Where learnings from 2023 are concerned, last year highlighted the importance of diversifying investment portfolios, as well as being prepared for everything from regulatory challenges to unexpected geopolitical developments. “I think we’ve learned that it’s important to be a bit more open minded and pay attention to what’s happening,” Emslie says. “That includes surrounding yourself with third party suppliers including banks, insurance brokers and investment houses, and making sure that you’re getting the right information. It also means keeping your ear to the ground and seeing what’s happening in the markets.”

Likewise, Emslie plans to focus more closely on the impact of weather events such as floods and typhoons. “What do you do when your customers can’t get to the shops? How do you get your products to market if people can’t get to you? I think some out-of-the-box thinking is needed to keep ahead of these types of risks.”

Last but not least, he emphasises the importance of simplicity: “You don’t want to overcomplicate things, because you never know what’s going to happen.”

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