Banking to Treasury: The Journey of a Treasury Professional with MERCK's Jörg Bermüller

Foreign to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I talk to treasurers about how they build their careers, where they are now, where they see both themselves and the treasury profession going to next. And a special thanks to Flywire, our fantastic sponsors. If you've ever wondered whether there was a way to ease your international transaction hassles, the guys to talk to. If you follow the link in our show Notes, you can see me talking to my mate Greg Levin, their senior BP of Sales. I get to ask Greg about who are Flywire and how they can help you and your treasury team with your cross border payment headaches. Just follow the link to the interview in today's show Notes. And now let's get on with the show. In this week's show, delighted to be joined by Joerg Biermuller, the head of cash and risk management at Merck. Founded in 1668 in Germany, Merck is the world's oldest pharmaceutical and chemicals company in the world. Amazing. Now if you actually do want to, we've got a previous episode where I interview a colleague of Jorgs Rando who I've known for many years, known York for many, many years. So it's great to have him on today's show. Again, just briefly, Merc has a passion for science, technology. 58000 employees, 66 countries. We'll put links to Merck. I mean everyone knows Merc anyway. But I want to talk to Jorg about his career and things like that. Take us back if you would. How did you first get started first in finance and Treasury? I know this because you and I have talked about it, but you know, this is for the listeners who haven't ever heard it before. Over to you sir.

Hello Mike. Thank you very much for the invitation. Happy to share my thoughts with you in the audience. I didn't start directly with Treasury. I first started after high school with the apprenticeship as a bank clerk. So here I learned really banking from the beginning, starting doing my work at a desk and this was the touching point. And after studying at university microeconomics, I started then working for Disset bank and Hyper for Einsbank and after some other multinational companies in Treasury, I ended up at Merck.

And with that, you know, just I know that a lot of my European guests, I was actually talking to someone the other day in the US and you know when in the UK most people fall into treasury by accident, finance and treasury and things, but it seems a lot of European treasurers and treasury professionals will get that first. You know, relationship management. You again as you've done, what was that like for you? Was that then you discovering treasury or how did treasury come onto the radar on finance and things?

Okay, first of all you have to say that and I know it for Germany you cannot study treasury at university. You can study finance in general, you can study accounting controlling. You can also do investment banking in types of financing and so on, but not treasury in particular. So normally German treasurers have a career in banking where they started. The same applies for me. And as you said, I ended up as being relationship manager for multinational corporates, Hyper foreign bank and DZ bank. And there I got to learn my clients the head of treasury of big German multinationals. And one day I thought they always look happy, they have an interesting job, they are truly international. And once I got the offer, if I would like to change the sites and this was the time when I moved from high performance bank to Shot at.

And who was shot you mean? And, and what did you take with you in your, in your satchel, in your, your business case if you like. What, what treasury skills did you have that then you added to shot and things? Who are shot and things?

Okay, first of all shot is a mid sized German hidden champion having 3 billion turnover, truly international. And what did I bring with me? The totally wrong view on, on what treasurer's life is, is really was a.

Smile false then when they came to you and they had happy smiley faces. They weren't that happy.

No, it was just my view on being a banker. You always think it's always about bank services. It's about that a treasurer spends 80% on on banking services and 20% for something else. And in fact it's the totally opposite. 80% are internal projects, are the financing internally are topics within the group and only 20% you spend with banks and financial partners and they just have to function. And this was my first experience and my first eye opener that as a treasurer it's not everything about the banks, right?

And Shot they as you say, glass, ceramics and different things. What was that like in treasury terms? What were things you got involved in?

I got lucky there. The treasury that I found there was already very involved. My task being head of corporate finance was bringing shot which is foundation company bringing them to capital market structures. So this was my first task to reshape the financing landscape. So we did the second private placement in the USA after class in Hase Winkle and therefore we did project financing. We prepared for Rating we prepared for IPO of Shot Solar at that time. So we really reorganized the reporting structure of the financials and set up the treasury team to be capable for the capital markets from Shot.

You were there four years, you then joined DI Star again. You and you and I know this. What was that like and who were they and things.

This was a totally different animal. First of all, I changed from being head of corporate finance reporting to the head of treasury at Shot and at Dice Die I became head of treasury reporting directly to the CFO. DyStar itself is the world's biggest textile dies manufacturer located in Frankfurt and it was under the ownership of private equity. And this was a totally different dynamic and speed. What I found there and when you.

Say that in what ways without diving too much into it, things that we can't say. But I had Julie Fabris on the show many, many years ago, good friend of the business. And I said to Julie she'd work for many private equity backed companies. And I said well, it's all about cash, right? And they don't really care about that. And yes, and she said yes, once you do the cash and sort that out, then you get to do all the other interesting stuff. You know, that was a key focus that, you know, that's one of the drivers of any business. Was it like that for you?

For sure, you don't need to work under private equity to know cash is king and P and L is opinion and all these buzzwords and so on. But if the main focus is to get cash out of the company, it will be hard and the company future will be maybe not as prosperous as it should be. And therefore exactly as you said. I learned again many, many things. So I truly did an asset based lending. So we really got through production sites and were waiting the barrels and looking for what kind of Ligurung it is. So what kind of metal is inside, how can you melt it and how much is the selling price of it. So this is really how deep it can get to cash out of everything.

I mean, fascinating experience relatively still relatively early in your career you're doing that. Would you recommend that to other treasurers, do you think?

It depends for sure on the company. The company itself was great, my colleagues were great for sure. When does private equity take over companies if something is not really perfect. So for sure the company itself, in terms of financial and expanding or going public, there's something going on and the learning curve is quite steep. But I can only recommend you and don't do this if you are going to raise a family. In the meantime, there can be only one of both. Working day and night for the company or raising family and having leisure time. But both will not work.

No. And then so what? Then it came about you. How come you then joined Merck? You know, again, it's quite weird because I'm asking you these questions. The audience don't know. I know because we've known each other for 20 plus years. So talk, explain to the audience if you will.

Quite fine. For sure. I was still young, as you mentioned, and ambitious to have the next step in carrier and for sure working for a mid sized company. There's limitations when it comes to products and yeah. And I have been asked by Merck to join the treasury team to become head of Cash and Risk Management and to shape the treasury future of a German truly big multinational DAX company. And so often you don't get the chance for this. And therefore I took the opportunity to work for a much bigger company and to grow even faster and bigger.

And when you say that you're joining as head of cash and to a global multinational and sometimes when I talk to candidates, they might have a nervousness how much are they going to become a tiny cog in a massive machine? How would you answer that about how you got into Mercury? I know it's not like that. You and I have talked about this and we talked to Rando about this as well, about the way that empowers people and things like that. But how would you characterize it?

First of all, the title Head of Cash and Risk Management might be misleading. So when I started for sure it was true. I started with seven employees. Now I'm heading five teams. Within the last 15 years, we grew dramatically in terms of product reach, span, processes and so on. This is the first pillar to be mentioned. Yeah. And therefore responsibility was growing. My job evolved every three years drastically. So you cannot compare my task and responsibility 15 years ago. Not even three years ago. And this is a nice thing. When I started with Merck 15 years ago, the turnover was 7 billion euros. 15 years later, now we are at 22 billion.

Wow.

And this already reflect the growth and my team and as I said, the task and also grow in the same way.

And when you've done that, when you've grown within a company like that, we have Patrick McCarten from Caterpillar even 30 years with Caterpillar and I was a very interesting, you know, is, you know, and we joked on that show that, you know, he come in and done the same job for 30 years. Obviously he hadn't every year. That's one of the things that large multinational corporates, if they can, you know, move you on every three years. Just looking back for a moment to when you were seven, you know, managing a team of seven to now five teams as you've transitioned as a leader. We'll have people listening today and they're thinking, wow, I'm, I'm running a team of five or seven now. How do I then transition? What, what steps did you make internally? Or was it something that they were saying, right, you need to do this, we want you to do this. How does it work?

The good thing was it was nearly like on a green field. At that time Merck was not known in finance in general to be a front runner. And this was a great opportunity. If you start at highly professional teams already, it's harder maybe to have this growth rate. But the good thing is there was the opportunity and I took it. And therefore I had, I don't know how you call it in English, not a bucket list. I had a concept list. What. How would I like to have the treasury to be operated? And therefore you have to have a long term view how to get there. For example, one of the first thing was that I introduced the Merck Financial Services GmbH entity for financing. It was the starting point. Not out of the biggest entity, the Merck gaa. We had, we created a truly financing entity and everything what happens is financial driven and has nothing to do with operational business. This was one of the first step. One of the other step was to introduce a Treasury management system which was not part of it. And running a Treasury management system you need some employees for it and to go on. There was always a project which generates benefit and to operate these benefits and maintain these benefits, you once in a while need resources. For sure, you be running externally hosted, but at the end you need one or two to run applications as a minimum and to roll them out.

And what were you aiming for? You had as you say, the features and the benefits. Was it clarity of cash? Was it clarity of risk? Combination of both. How did you set each of the goals?

The pillars if you like, one at each time. I believe that it's necessary to have a solid basis that you have transparency because you cannot work on risk if you don't see all positions near real time. You cannot cash if you don't have visibilities. The internal external cash flows or if you don't have access to the cash, one feeds into each other and it depends on the Company what to execute first, with which priority at that time for sure, when we had these acquisitions there was currency risk, the highest impact at that time and maybe not cash at that time. So for sure it was a combination of what is possible with your own resources. What is the company in general doing acquisitions, yes or no. And then you have to make the best out of it. There is no blueprint how to get to this stage.

At the end we touched on there you talked about going from seven to a team, you know, five teams and everything else. What's your ethos as a leader for that? You know, did you always have it and think right, that's where I want to be, I want to lead big teams or was it just a natural evolution or what happened?

No, there is no natural evolution. Nobody will come to you. And here you have another team and here the next one. Now it was a clear, a clear goal. I wanted to become a big team leader of departments and then I had the right ideas and the right employees to make it alive. And therefore one after the other idea evolved and then you have to justify that is a good idea and that it's not just a one time event and afterwards you don't need these project resources anymore. And then you have to make your business plan for all of these cases and then it grows. When I recall we started our regional Treasury center in 2018 in Manila and Montevideo with two project employees and now Manila is eight employees and Montevideo are four. Now we are taking over country operations so operational business within the region and this was the next level and there you have to involve and onboard every year. One employee here and there. Yeah, that's basically it.

I've talked to a couple of my treasurer clients and one in particular has, has some had some real challenges in regions like that about employees. They also had some real challenges in Latin America as well about getting the level of staff and, and things like that. As you say, you've sort of brought them on board and you've gradually grown the teams. Are there any tips you've got for those guys? If they're listening, say well, how did he do it? You know, that's what we, they want to do the same.

I had the same worries to find the right staff. Other multinationals, they go to New York, Miami or somewhere else or go to Singapore, Shanghai or whatsoever or Hong Kong in former times. So here you can hire again qualified ex bankers or other treasurers. The move to Montevideo and Manila was because who are our treasury biggest customers? These are the shared service centers and they are located in low cost countries. And yes, we are, are in Manila and we are in Montevideo. But when it comes to. If you think and believe in financial processes and the intra group financial processes are the most value ones in terms of risk and in terms of efficiencies. Therefore I set up the teams beside our customers, our internal customers. If I need banking services, the bankers fly from Singapore to Manila or anywhere around. So banking services I can get remotely on the phone or via teams. But to have a close interaction with shared survey centers. This was the rationale for establishing the regional treasury centers there. Yes, we started with experts. So two young professional of my team in Darmstadt became head of Manila and Montevideo and they hired a local person as the second project manager. And this was the starting point. It was like a test case at that time. I didn't know if we really make it to the state that. That we have now. It was digging in the dark or. And we didn't. You can't, you cannot foresee there was a starting point.

Yeah. Come back to the. You say you got the five teams. Is that regional? The five teams or you know, they're central teams. How do you structure yourselves again without going into information that we can't share with the audience?

In former times, I would say until we launched our latest treasury management system landscape, I have to say, which dates back to 2018. Until that time we have been totally centralized to down Darmstadt headquarters. No treasuries around the globe, only Darmstadt headquarters. The core teams is the cash management team, the risk management team and the treasury operations team which runs the system landscape. This has been the nucleus, the heart of our treasury processes worldwide. And then when Merck was growing in these regions and smaller countries, became big in terms of sales and more important in terms of risk, took the opportunity to establish regional treasury center to be closer to the task, closer to the time zones and. Yeah. And to the processes itself.

And then you've grown it and grown it and well, we. You tried to make me drink alcohol recently because you were celebrating an Adam Smith award. Can you tell us a bit more about that and being a winner and things I did. I've got to say I didn't drink with you because I know that's a bad place to go, but actually I did have to get a train home that night. Night. But yeah, it was, it was great to share a table with you and talk about some of your successes. Can you share that with the audience?

Yeah, for sure. It's not a secret. Luckily that my teams are regular Winners of Adam Smith awards, Triple A or German awards. One thing that was outstanding about the last award is the following. First thing is that we created a new process which was not there and we convinced financial institutions to work on it. What is it about? It's about the netting settlement process. So whenever you settle more FX deals and you pay net, you need to confirm the amount and the settlement instructions, the iban where to pay. And this is totally manual. On corporate side and on banking side, everybody knows that there is the confirmation matching tool from Finastra out there. All multinationals around the globe are using it. But it matches only single FX deals so far, or it did in the past. And I talked during Corona and two years to management of Finastra. Can you match my shoe size? Yes, no problem. Can you match if it's Adidas or Nike? Yes, no problem. And I said okay, now we exchange shoe size with net settlement amount and Adidas or Nike. The exchange with the iban.

Yeah.

Ah, difficult. Okay. And after. Yes, it could be possible, but. But is there a market? Why should we do. And it's not a miracle. It's not just programming big things, it's really adding fields in formats. So at the end I could confirm. On Finastra management, my team produced the respective files. It's also just a file formatting. It doesn't matter if you use Wall street, if you use Quantum, if you use SAP, it doesn't really matter. It's just a format that you send. And the bank, and this was the second surprise, then sends also the same file format and it matches in the matching system. Okay. I could convince Finastra. We did the testing, everything worked out and then I talked to the banks. Hey, you stop your manual process and you also send a file. Wow. And it took me another half a year to convince the first banks to get efficiency on the other side. They stick to their old manual processes that a back office called a dealer via phone or via email. And that you get no confirmation about the IBANS ever. And then I found the first banks and from there on all our Merck core banks are since last year on the process. It works perfectly automated. And if there is a mistake in the IBAN or in the amount, it sends immediately emails to the respective teams in the bank or in the corporate side. And so there's no more lost money around the globe. And it's matched immediately.

Actually, just so I was just looking at some of the. The benefits of this. You've got the risks mitigated, increased automation, everything else and visibility and the errors. Have you looked at some of the costs of the benefits cash wise or quantified any of that? Because. And then the follow up question. I'm good at these because I try not to ask follow up question but I will because if someone is listening and they say, well that's great for a big company like Merck, but we're a small corporate, you know, can they now piggyback on the fact that you've proved this concept and it works because you've done all the hard yards and stuff, you know, quantify it if you would.

Okay. In, in terms of cash benefits at the first side, if everything also in the old work would run perfectly. There is no cash benefit itself. You have a transparency, you, you have process automation and you save resources on both ends on banking and on corporate side when it comes to cash. For sure. Big multinationals and we are having 18,000 FX deals. Not netting settlement but single FX deals. If you imagine once a month something goes wrong and you have to search for your money. If you paid Tomitsu instead of Sumitomo and who was wrong at the end and this is not funny, it's painful. And yes, here and there you lose some thousand euros of interest here and there. But this, this was not, not, not the rationale behind it. My biggest fear was to pay to the wrong amount and it might be a fraudster. If I have a settlement of 100 million, I don't care about the interest for one day maybe, but if it's on the wrong account, the wrong place. Yeah, exactly would make me a little bit more nervous. And now, yes, now you can leverage quite easy. Finastra offers this product as a standard and there's no additional cost to my knowledge. And the same thing for you, you just have to add these two fields in your file and send it to Fin. Quite easy. It doesn't matter. You don't have to be big in this case because there is no implementation costs involved. Really.

You proof of concept, implemented it done and got the award to prove it. Fantastic. And so I know it's not all about the awards. The awards are nice and things like that and you know, we joke about that but you know, what are you seeing as the, the challenges that are coming to you? You know, we're into, we're recording this beginning of 2024. We're looking at the rest of the year. What are the things that are you're thinking about? You need to improve and other Treasuries need to think about.

There's A couple of things. First of all, my assumption is the world will stay hectic and there will be turmoil here or there, I cannot tell you what. But the thing is we will be surprised also in the future by things popping up here and there. Therefore, what made my team being capable of getting through all these crisis? It was a euro crisis, financial crisis, Corona Energy, so on. You need a solid basis and solid processes. And here we go on working, rolling out processes to the countries, getting rid of e banking system to get rid of everything which is not standard and we are fraudster and everything could attack you where you don't have transparency. So it's really about still an IT and processes itself to have some stable running that you can concentrate on managing things, not on executing daily, daily tasks. So this will be the ongoing and I would say not only for 2024, this will not go away anymore.

And other things that, you know, when you're mentoring the team, you're leading those guys, coaching them and things, you know, what are you getting them to focus on? Is it just, you know, the automation, getting the errors reduced and visibility? What are you thinking?

It depends on the team for sure. Each team has different tasks and different targets for the next. For sure we are going to expand our scope still and treasury in the last year becomes more and more a business partner in terms of supporting sales, supporting risk diversity, but also entering into new fields. One example is a Treasury wants to evaluate or elaborate energy hedging strategy and this we are sitting down together with our production sites where we also have now solar plants, we have VPPAs, wind parks, some somewhere and we have procurement, purchasing the physical energy and Merck. Treasury wants to bring together all the stakeholders and we want to check if overlay hedging of energy prices could make sense and how it could be executed. And this is one example that each of the team can expand their scope and bring value to the Merc Group.

Taking it back a stage just for a moment. I've talked to a few people, Yourself included that 20 years ago treasury was like hey, with this specialist. And then, then you know, they sort of got away from the business to get a nice pay rise because you're the treasury specialist. And then I've often talked to people that they've treasuries then spent 20 years getting yourself back out the corner, you know, and being part of the business. And you've just given a great example there of getting involved with energy and everything else. But how do you perhaps persuade them to let you in that meeting? How do you let persuade them to let you in the room. Is it because again, you know, this is an advice show. If other people are listening, they're going well that's all very well, but you know my business controllers, they're not that really interested, you know, do you have to go to them with a, a paper that says by the way, if we do this, we can save you this? Or how, how have you done it?

The answer is it depends. It depends on the stakeholders themselves. By nature we are always talking not about, only about figures, we are talking about people. We are talking about feelings or, or responsibilities that they did something for way they did it. And now you are coming from, from treasury headquarter and say you know it better. No, first of all for sure make your solid groundwork, come up with a business plan, talk to the people. Not at the first stage, come up with an idea and, and with something they all can benefit for. For example here our overlay hedging strategy or treasury and we, we don't want to be responsible to buy physical energy somewhere in the USA or in Portugal. This is not my business. This combined and you have to take away the fear of the employees that you are taking their job or that they are not so important anymore. And in this case I'm pretty sure it will work out because it will be additional. It will be something on top for everybody.

And how do you do that when you're walking in the room and these guys are going yeah, but who is this treasury guy?

Yeah, no, first of all I'm looking for the person I contact. If it's colleagues in headquarter, for sure I meet them in their office or go for lunch or whatsoever. On the other hand, for sure if they are sitting in Portugal, a teams meeting might be helpful to get a starting point and not just an email. I would like to learn about your job. So you need an introduction, a personal interaction will help. Not for all cases. So if somebody doesn't want, you need to come up with a rationale behind in the worst case you need to include the superiors of the other stakeholders and to formulate a common target. And this is the best thing. And I would recommend all these cross functional projects they become alive and successful. If all team members see it as a common goal and if each department has it in the goal setting for the next year. If only one department has it in the goal setting, it will be difficult. Difficult because it will be not the priority in the same direction of others.

Okay, well, you've been very generous with your time and everything else I wanted to. We'll put your LinkedIn details in the show notes. And this is sort of where we wrap up each, you know, show and, you know, we'll. We'll meet you and I'll see you at various conferences and you've got some great views and some great advice for people and things. But as takeaways from today, if you're. Or think about other treasury professionals, they're listening today, they're going, that's great advice. But what are the takeaways you may be given for their careers if they're early on or if they're a bit more senior? What are you things that you think that people need to think about?

Maybe also younger generations are listening. I'm still of the opinion that hard work pays back and solid education is key. So it starts with the basic. Not just managing anything. The person needs to have knowledge, to be accepted by stakeholders, by employees, by peers, whatever it is. So a solid knowledge is king in this regard and from this basis you can work on and for sure, I still believe that hard work pays back to a certain level of hierarchy that you can achieve. For the rest, you need luck and to be on the right time, at the right position and so on, but certain levels, you can for sure achieve, achieve.

And for the more experienced treasurers out there, you know, what are the. What's the advice again? If you're at one of these conferences, as you and I, we share a stage a lot of the time and we're sitting there and people saying, yeah, but what are you thinking about? What are you not worried about? But what are your. What's on your radar? What are you thinking that other treasurers should be. You mentioned there earlier about, you know, all different events and it's quite a different world. You know, five years ago there was, you know, pre Covid and. And everything else, and then we, you know, zero inflation and everything. And now I know that's come back on the radar, but is that something that you guys are thinking about? All the financial risks, challenges that come along, or what do you think other people should be, other treasury professionals should think about?

The thing is, as I said, work hard, solid knowledge. You cannot know everything yourself. You need a team of knowledge, people with different backgrounds, and we don't know which will be the next challenge. The thing is, and this was also the success of Merck treasury, we have knowledgeable people and I rely on their opinion, I rely on their decisions, and we have a proper, honest, hard and straight exchange on what to do. And how to act. For sure, at the end there are hierarchies and decisions have to be made but we couldn't have achieved. And to overcome all these challenges in such a good way, you need the team and the team needs to be experienced at the end. And you have to keep your team somehow not, I wouldn't say happy, motivated and passionate about what they are doing. And then you can master all of these things and it pays back to their career and your career and of the reputation of the department.

Build it through the team. Amazing. So again, get lots of knowledge and build an amazing team around you. Nice takeaways. There you go, sir. We'll put your LinkedIn details in the show notes and yeah, look forward to seeing you once again in, in this next year. Look forward to it.

Thank you, Mike. What a pleasure.

Thank you, sir. Hello, treasury professionals. Before you dive into the next episode, could you please help me continue to grow the world's only global treasury salary survey? That's right, our one. So you know your compensation is constantly benchmarked against the market. It's amazing, isn't it? Just go to treasury salary takes less than two minutes to complete, start to finish. You then gain exclusive, regular, updated access to our salary survey, keeping you ahead of the curve. The survey is an evolving breathing entity that constantly tracks the salaries of treasury professionals on a global basis. Currently, we have over 1100 participants taking part@treasurysalary.com thank you for being such amazing loyalists listeners. Your support is incredible. Couldn't do it without you. Thank you. Go to treasurysalary.

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