Measuring the benefits to the business.
The Al Tayer Group operates over 200 stores in the Middle East and has successfully introduced more than 80 brands to the region. When I joined Al Tayer in November last year, a Treasury Management System (TMS) provider had already been identified through an RFP process. My predecessor had done a thorough job with this, ensuring that the chosen software provider was well suited for the Group’s requirements. I cannot stress enough the importance of this – if you meet your company’s specific needs, you can avoid unwarranted costs and ensure a much smoother implementation process.
With the TMS provider already selected, the focus was therefore on implementation and ensuring that the system was a value-add. Technology should always be a business enabler, not a detractor.
Al Tayer’s first priority – as is the case with most corporates - was on cash visibility and within 3 to 4 months we had solid visibility across the Group. I am pleased to say that we currently have 100% cash visibility across Al Tayer’s diversified portfolio, which includes multiple companies and relationship banks.
This visibility led to the implementation of cash concentration and a Zero Balance Account (ZBA) Service, more commonly known as cash pooling. ZBA is used to automatically concentrate and disburse cash, so that subsidiary accounts always maintain a zero balance, minimising overdraft charges and improving liquidity management. In Al Tayer’s case this is presently limited to the UAE, but we are in the advanced stage of implementing cross border pooling.
Our TMS has given us the ability to effectively calculate the intercompany transfer fee, allowing us to function as an in-house bank, and lend internally at rates appropriate for each business. With top-level intercompany loan agreements in place, we also reduce the operational burden required by individual loan agreements.
Many large corporates tend to ignore the implication of trade finance and the associated commercial aspects. Through the combining of banking facilities, greater insight to overall exposure and a robust alert allowed us to increase commercial efficiency. With a conglomerate the size of Al Tayer, banking charges on trade finance products reduced by more than half, and we are presently working towards greater efficiencies in supply chain management.
Additionally, we directly support the business in FX risk management. Our TMS has again been an enabler on this, allowing us to automate capturing various FX bid and ask rates, such as the point of sale rate, market rate, accounting rate and budget rate.
Considering the above, my key piece of advice is to focus on the basics first. For most treasury teams, the most important function is cash management. Once this has been implemented to a high standard, you can focus on additional benefits such as POBO /ROBO, cash planning and FX management.
Yes, there will always be some challenges. Employees are not only used to certain analytical processes, but they are also used to receiving data in a particular format, so a certain degree of change management is required. However, as long as all involved parties are receptive to feedback and committed to continuous improvement, then the focus can be on the intention – that treasury technology serves as an enabler.
You can hear more from Girish Viswanathan at the ACT Middle East Annual Conference
Girish Viswanathan, Group Treasurer, Al Tayer Group
