HOW WE CENTRALISED CASH AND TRANSFORMED GLOBAL TREASURY REPORTING WITH SALMON TMS The company Dechra is an international specialist veterinary pharmaceutical and related products business, with expertise in the research, development, manufacture, sales and marketing of high quality products exclusively for veterinarians worldwide. Dechra has sales and marketing operations in 24 countries and sells into over 50 countries globally. Much of the growth of the Group, geographically, has arisen as a result of acquisitions made in the past four years. During this period, Group revenues have grown from £194m to slightly over £400m, with the number of business units increasing from 16 to 36. The challenge In 2014, Dechra did not have any formalised Treasury operations, no Intercompany Netting system, no formal Intercompany Loans reporting, and no Cash Pooling arrangements. Essentially, the Group operated as 14 autonomous businesses from a cash perspective. However, with an increasing need for cash within the Group’s Head Office (to fund both acquisitions and an increasing Group dividend), a growing number of bank accounts across the globe which required more disciplined control and reporting, a greater volume of Intercompany trading that was resulting in increased bank charges and adverse FX charges, and a complex network of intercompany lending, it was necessary that the Group implemented central control. 20 TREASURY SOLUTIONS 2019 The major obstacles to creating an effective Intercompany system, without using a TMS solution, were: The volume of transactions needed to be captured and reported (presumably by using some form of Excel system); Intercompany activity in different systems, i.e. ZBAs from all the different banks and all other activity in the Netting system; The volume of multi-currency movements and positions, and the desire to report only in the functional currency of the business unit; Calculating interest accurately on moving positions; Handling the different taxation regimes in different jurisdictions; Combining and collating these disparate activities. This process was further complicated by the growth of the Group, introducing both new acquisitions and new geographic jurisdictions into the process. The solution Having established a central Group Treasury, the Group initially reaped the benefits of ‘low-hanging fruit’ by implementing a group-wide Netting system and a Notional Cash Pool in Europe, which covered the majority of the Group’s cash operations. The next objectives were to implement a cash pool in the USA, introduce Zero Balancing in Europe and formalise the Intercompany Loan positions, effectively by expanding Group Treasury into an in-house bank.
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