T&R:  What led your company to undertake a treasury transformation project?

Jenny Seitanidou:  Coca-Cola HBC is one of the world's largest bottlers and vendors of Coca-Cola products. We operate across 28 countries on three continents—Europe, Asia, and Africa. We serve 581 million people, produce 2.1 billion cases every year, and our generated revenues are over €7 billion annually. In 2008, our head office and the treasury functions in the 28 countries were all using different technologies. Some were running different versions of SAP; some were using Excel files; and some were using non-SAP systems to meet their treasury requirements. We had many bank accounts, and we had to use different proprietary software with each bank to make payments, see the balances of the accounts, those sorts of things.

Cash reporting was done in Excel spreadsheets for all 28 countries. Our exposure reporting for foreign exchange [FX] trading was done in Excel also. So there were a lot of manual activities and inefficient processes, which not only took staff time but created audit and compliance challenges as well. When Coca-Cola HBC began rationalizing its enterprise IT systems and deploying a single SAP ERP [enterprise resource planning] platform across all the countries in 2008, we decided to centralize and refine treasury processes at the same time.

T&R:  What did cash forecasting look like in your legacy environment?

JS:  Each country used a different method to monitor and forecast their cash flows. They would send short-term forecasts and rolling budget estimates to the head office, where we would consolidate this information into our cash management reports using Excel. There was no automation of cash forecasting, cash management reporting, or cash-position setting.

T&R:  What were your priorities for treasury as you embarked on the project?

JS:  The first one was to deploy and standardize an FX exposure reporting process, so that we could easily access exposure information for all the countries and make the right hedging decisions. We also needed to implement a multibank trade-booking platform for FX and money market instruments so we could eliminate the use of traditional trading methods such as emails, phone calls, etc.

Of course, we also wanted to improve visibility into our cash positions, which is the objective of every treasury in the world. We wanted to automate cash flow forecasting, both short-term and long-term, and to establish connectivity with the banks so we could reduce the number of proprietary systems we were using. And last—but also very important—we wanted to ensure that our treasury-related accounting entries were standardized and automated across the group.

T&R:  So, what area did you tackle first?

JS:  The first year, in 2010, we implemented our common SAP platform and a multibank trading platform, which integrates with SAP. We also developed SWIFT connectivity with our main relationship bank. We set up SWIFT messaging so that payments, confirmations, and bank statements could all flow directly in and out of SAP. This was critical in automating our treasury processes, but it was also really complicated. We didn't have the in-house expertise to do it ourselves within our tight project deadlines, so we decided to work with Fundtech, which is a SWIFT service bureau. We used their expertise to help facilitate and expedite the process. We also hired a third-party consulting firm to help with the systems implementation.

T&R:  What kind of internal staffing did you dedicate to the project?

JS:  We had two project managers, one on the business side and one from IT. They led project teams with subject matter expertise in areas like front office, cash management, back office, and accounting. We also had in-house IT consultants. Both business and IT project teams were working full-time on the project for the first year.

T&R:  That's a serious commitment of resources.

JS:  I think it's very important on a project like this to assign people to work full-time, as business process re-engineering should be worked on in parallel with technology changes. Both are very complex and require time and effort. It's also important to bring the expertise in-house for managing the system and the SWIFT connectivity. This will save time in the long run, and it gives a company the capability to make changes to the infrastructure over time.

T&R:  OK, in the first year you got the SAP system and SWIFT messaging set up. What did you tackle next?

JS:  In 2011, we worked on fine-tuning the newly implemented processes and systems. We also started the implementation of the in-house cash functionality for several of our key countries; we finished that in 2013 when we rolled it out to the last countries. In 2012, we implemented Reval SaaS [software as a service] to manage the trade booking and exposure reporting of our commodities exposures. In parallel, we added more counterparties in our existing SWIFT connectivity and expanded our scope. Every year has been really intensive with several projects running in parallel, which is why this has truly been, and still is, a big transformation project.

T&R:  Are treasury groups throughout the whole company now on these new processes and systems?

JS:  We started with the head office and several countries, and every year we bring more countries on board. Currently 26 countries are operating on the common SAP Wave 2 treasury platform, and the last two will be joining over the next year. We've established SWIFT connectivity for many of the countries and banks (around 10 in total) using our SAP infrastructure and the communication channel of Fundtech. Approximately 18 countries also participate in the in-house cash scheme, which is run by our shared-service center in Bulgaria.

T&R:  Have you reduced the total number of banks you work with as a company?

JS:  Yes. As a big corporate operating in 28 countries with different country specialties and restrictions, we're always going to have multiple counterparties, but we have greatly reduced the number of bank accounts we use. This is the result of business change management activities and automation of our systems infrastructure.

Consolidating our banking relationships and setting up a proper messaging infrastructure have enabled us to move away from proprietary banking software. That is reducing our administrative costs, audit costs, and compliance costs.

T&R:  What about staffing costs? Have you fully centralized treasury staff?

JS:  We will always need treasury people in the countries to do the main country treasury activities, the processing, cash forecasting, exposure reporting, etc. We have centralized financing, FX, and commodity trades, but the countries provide the inputs for everything we're doing.

T&R:  What are your processes now for FX and commodity trading?

JS:  Most of our FX trades are done through the multibank trading platform. It's a seamless process. We just book the trades on the platform and they're automatically transferred to SAP, where they're automatically confirmed through SWIFT. The rest of our trades still go through traditional channels, such as tapped lines. The majority of our FX confirmations are performed via SWIFT, with a few over long-form confirmations mainly because of the local specifications of some of our countries.

The market practice is not the same, however, for commodity trading. Our traders enter into trades with the banks via traditional channels and book them manually in our commodity TRM [treasury management system], Reval SaaS. The deals are then manually confirmed via long-form confirmations from the back office.

T&R:  What do cash management and cash forecasting look like today at Coca-Cola HBC?

JS:   We obtain bank statements electronically via SWIFT. We review the forecasted transactions and set the cash position in SAP. Automation of all these processes has improved our efficiency and our visibility into our cash across our countries. Our in-house bank is another area where we're achieving major efficiencies. It has enabled us to have cashless transactions between internal counterparties and has eliminated the need to process them via the banks, which has the additional benefit of reducing bank charges.

We're also using SWIFT connectivity for all our treasury payments and the majority of vendor payments. Our payments are processed through our shared-service center in Bulgaria, and because we've standardized our payments so much, we've achieved SWIFT straight-through processing for most payments. This increases security, as well as efficiency.

Because we've reduced many cumbersome administrative tasks, our treasury team can focus on taking the right decisions based on the information coming out of our systems. We still have room for improvement on automation—and primarily on reporting—but when I compare where we are now with our old Excel-based processes, it's clear that we have come a very long way.

T&R:  Do you feel the treasury decisions are better as a result of this project?

JS:  If you don't have one uniform, standard system across all your countries, you can't access the right information at the right time. When you've gathered all the required information into one system and you can extract it via user-friendly reports, you have the right foundations to take the right decisions.

T&R:  So, what would you say to a company that is still running its treasury function in Excel?

JS:  You can't really move forward with treasury operations if you don't have one common treasury system, as well as a standardized approach for pulling together the information that is going to flow into the system from all your business units. Potentiality and benefits come from standardization and automation of processes. Once you have set a common ground with your operations and solid infrastructure foundations, you can continue building by adding automation and improvements based on your business needs and priorities.

With regard to the SWIFT connectivity, I would suggest you start with your main relationship bank first—preferably a bank with good technology—and work with a SWIFT service bureau, at least for the initial project to build the right infrastructure and implement the "right" business case. A service bureau can bring a lot of expertise to the project that you're unlikely to have in-house. Also, allocate the right internal resources so that you can then maintain and expand your connectivity with your own "forces," by which I mean the project team.

The key to building a successful global template is to have a long-term vision of what you want to do and where you want to be in the years ahead.

T&R:  Is Coca-Cola HBC continuing to expand the reach of your new treasury platform?

JS:  Yes, definitely. We are continuing to add counterparties into the SWIFT messaging infrastructure. This year, we're working on implementing SWIFT connectivity with a key counterparty in Russia. We're also looking at implementing SWIFT connectivity for direct-debit collections and payroll, although that will happen after 2014.

That's one other piece of advice I have for companies that aren't yet on an automated treasury platform: Keep in mind that the sky's the limit. When you establish SWIFT connectivity, you typically start with treasury payments, confirmations, and bank statements. Then you think about vendor payments. Then you think about direct-debit collections from customers. And then you wonder, 'Why aren't we sending inquiries to the banks using SWIFT?'

You can't just establish a new treasury system and forget it. Having an efficient treasury function brings a lot of benefits to the business, because the business needs treasury to be focusing on supporting strategic decisions rather than managing manual processes. It really is important, once you start with this connectivity, to continuously improve it.