The impact of the current pandemic has been wide reaching and has affected all businesses, whether small or large, international or local.
We asked members of the Future Leaders in Treasury group to provide information on what they have done over the last few months, and how this has affected their business models. This month we talk to two members in the Middle East, Roshun Tulkens, Group Treasurer, Mantrac Group and James Westerby-Jones, Treasury Business Partner, Chalhoub about how COVID-19 has impacted their businesses.
Describe your current role and how long you had been in it before the pandemic.
I’m currently Group Treasurer of Mantrac Group, based in the UAE. I’ve been in the role for two years now and responsible for treasury, trade and insurance.
Please tell us a bit about your company.
Mantrac Group is a Caterpillar dealership with distribution rights in 10 countries across Sub-Saharan Africa, Egypt, Iraq and Russia. We have sales offices in UAE, UK and China.
What were your company’s first steps when we first went in to lockdown?
Firstly, we checked that operations could function correctly, we had a formal business continuity plan in place already which is updated regularly, however around mid Feb we did an interim update. We ensured all bank contacts were correct and started engaging with banks on alternative documentation processes like DocuSign. By the end of the exercise we had an alternative process for tasks which were documentation heavy, such as issuing trade instruments, facility renewals or anything that needed to go cross border. As we had recently implemented a TMS, working from home was practically possible as many manual processes had already been transitioned. We decided to do a dummy run by working from home for a couple of days, to fully test and ensure all was working correctly.
The next challenge was around risk management especially around liquidity, headroom on facilities, counterparty risk, FX availability and covenants. We had started working on this before COVID-19, as earlier in the year the reduced oil prices meant we were already looking at scenarios and forecasts in some countries. This was mostly centred around FX availability in some of our markets and receivable management. However, with COVID-19 this was business wide, led by the CFO, and we started with reforecasting and scenario planning, with each scenario we performed subject to stress testing. Once we agreed on a final scenario the reporting and tracking took centre stage, both internally and externally in keeping the banking group updated.
The reporting now was key, and we set up a number of early warning indicators to ensure we were tracking correctly and to intervene if we were not. These focused around receivables management and collections from customers, tracking opex spend, FX exposure management, as well as cash balance and facility headroom targets. We drew down on our RCF to ensure we had liquidity ready to go, which brought additional challenges with counterparty risk which needed to be monitored.
How has your business had to adapt as a result of the pandemic?
It’s definitely pushed the move to becoming more digital, many of our customers used to visit branches to purchase, largely using cash and cheque, which is very common in the countries we operate in. Now we have moved more on-line, using technologies such as mobile money and e-wallets. From a Treasury point of view its fast tracked on-line trade, issuing bank guarantees is on-line in most of our territories now.
Do you think these changes will be adopted after we go back to ‘normal’?
Absolutely, it’s given a great platform to make the business more efficient and less manual.
What have you learnt from the pandemic?
As treasury professionals we spend a lot of time learning and preparing for these situations and I think it reiterates the fact that we must always be prepared and ensure that risk strategies are in place. Often protecting against risk comes at a cost, whether its carry cost on FX hedging, or loss of yield when depositing with higher rated banks or keeping liquidity short term and we may get challenged by the business but it’s important to remember situations like this and not to be complacent.
Describe your career path to date.
Following three years of Maths at university, I spent a year travelling, before falling into my treasury career as an analyst in UPS EMEA treasury team, looking at cash flow forecasting, payments and bank guarantees. My career quickly progressed with the help of my AMCT qualification onto Vertu, Deloitte, GSK and now I am part of the treasury team at Chalhoub Group in Dubai.
What were your company’s first steps when we first went in to lockdown?
In short, cashflow! At Chalhoub, our business was very well placed to deal with the pandemic, having had a long and successful history in the Middle East spanning 65 years and having faced challenging situations with agility in the past, such as wars and invasions. Due to the Group’s success the focus traditionally has been on the P&L and treasury have been working to push the focus onto cashflow, which was part of our transformational vision for 2020. The pandemic has helped to accelerate this transformation, but unfortunately, we still have a long way to go and were only able to utilise manual bottom-up cashflow forecasting techniques that require many stakeholders from 8 countries and many more hours of work. Our record was a 33-hour working day getting the consolidated Group cashflow forecast finalised and in the hands of our senior leadership team (I will admit I did have a 1-hour sleep in the middle when all the forecast numbers were blurring into one!).
How has your business had to adapt as a result of the COVID-19 pandemic?
The business has traditionally been reliant on ‘bricks and mortar’ retail, but over the past 3 years has been transitioning to being a hybrid retailer, investing in strengthening its core through people, processes and platforms, utilising eCommerce and many other digital channels, for example, WhatsApp. This transformation has borne many fruits and has seen further acceleration and the creation of 20+ websites across the Group.
Do you think these changes will be adopted after we go back to ‘normal’?
These changes are here to stay and the Group will see further acceleration through its investments in eCommerce, data, tech, customer experience fulfilment and automation, which I am excited to be a part of.
How has treasury been impacted by these changes?
Treasury along with the digital team have seen growth throughout this period and have reinforced the view that they are trusted advisors and indispensable to the Group
Are you still in crisis mode, or have things settled now?
Thankfully crisis mode is behind us and we are returning to a new normal, much stronger for the experience. Countries across the middle east have been opening up for the last few weeks, with Dubai fully open and actively encouraging tourism and normal leisure activities across the city which has been great news for our retail stores (all whilst observing social distancing and wearing the appropriate PPE). If there is a second wave, we not only have a very well-rehearsed action plan, but have implemented a number of new procedures into our daily activities that will speed up our transition back into crisis mode. These include weekly forecasting and funding reporting and regional finance meetings focused on business performance, funding & operational efficiencies. Our new normal in treasury is going well, but we hope that we won’t have to call on our crisis mode playbook again anytime soon!
For information on the Future Leaders in Treasury group please visit www.treasurers.org/futureleaders.
