Building Up Treasury Infrastructures with Patrick Clarke

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 treasures about how they built their careers, where they are now, where they see both themselves and treasury profession. Going to next this week's show. Delighted. We're joined by Patrick Clark, the group treasurer. Excellence Logging Good mate of mine. We've put a few beers down and talked a lot about treasury over the years. So he's got some good war stories for some of you guys listening there. Excellence Logging itself is a specialist oil field services company. A get pat again to describe a little bit. Founded in sort of 2015, you know, benefits, experience, management teams, 35 countries, you know, across the world. So you can do all that stuff. Let's go back to the beginning. Let's take you back. He's now, again, I apologize, guys, he's in Australia and we'll, we'll let him off with this. But take us back to the dim, distant parts of Australia and how you first discovered maybe treasury finance. And over to you, sir.

Oh, hi, Mike. Thank you. Thank you for that. Yes. Lived here 15 years. Still haven't lost the accent, but I'll try my best to be coherent. I asked the interview question every time I'm hiring someone, how did you get into Treasury? And no one ever says they wanted to grow up being a treasurer. Most people aren't even aware of the profession. I don't think I actually started off. I did an economics degree in Adelaide, where I grew up. At the end of that, I hadn't really planned ahead of what I was actually going to do for a job. I think like most young people, I just assumed somebody would hire me. And because I'd done economics, I thought, well, I'll do the Australian version of the Civil Service exam. So I did that, did very well, and then got hired at the Australian Taxation Office in Adelaide. And my job for the first 18 months was data entry for tax returns. Oh, wow. So I learned the hard way. One of my first lessons is if you enter a job that you don't think it's what you're after, don't stick it out. The only upside I had was that's where I met my wife. So it had a beneficial side. After about two years, I'd had enough and I just decided, I just looked up, I'd done economics, I knew about foreign trade. I thought foreign exchange, that might be something. Maybe I'll apply for a job at a bank for an analyst job or something like that, which didn't go very well. And I saw an ad for a job in Sydney for a company called BOC Gases, traditional English company. I applied from IT in Adelaide and got the interview the following week. So I got in my Mitsubishi lancer and drove 2000km across Australia, stopping off somewhere in the middle of nowhere in a hotel overnight. Got into a state. What I learned later was a very dodgy area of North Sydney in a hotel. Got up the next morning, put on a suit, did the interview and got the job the next day. And that was as Treasury Analyst at BOC Gases in Sydney. And I've pretty much been in and out of treasury for the last 25 years.

Awesome. So that was your first introduction. What was that sort of role like? Good all round treasury manager role just in ego is Treasury.

Yeah, I mean it was analyst. I mean two weeks into the job the treasurer actually said he felt sorry for me because he got me for about £5,000 cheaper than I probably should have asked for. So I learned a bit about salary negotiation there. Yeah, very much. Treasury analysts then up to treasury manager. The Australian office dealt with the Asian and Far east operations of boc, which is the global industrial gases firm. So we did all sorts of cool stuff for a young treasurer. We issued our first MTN program, we had commercial paper, lot of foreign exchange risk going around. Even just doing the accounts with the statutory accounts was quite interesting just because of all the different businesses. I learned very early on about very clever tax schemes that companies put in place and that we'd done a sudden lease back on all of the gas cylinders for Southeast Asia and that was seven years ago and someone had just forgotten to make a lease payment because nobody who did the trade was actually still there. So technically for about three days until we settled, there was some poor leasing company that owned about 45 million gas cylinders in places as easy to obtain as Malaysia, China, Japan and so forth. So yeah, I mean those were the days when I think regional Treasuries had a lot more power than they probably do these days, which is good and a bad thing. But it was, yeah, it was, it was a great introduction to treasury and that, yeah, that, that sort of took to my fancy and made me sort of fall in love with what we do.

And then you moved on. So then joined C and H. A.

Sign of things to come in that BoC decided to centralize their treasury operations in to the UK. So I've sort of been the branch guy and the head office guy and I'll be honest, I, as the head office Guy, you always want more control, you want to manage all of those tasks. And I mean, let's face it, in 2021 that is the generally the ideal model. But it did also mean that there's a lot of good treasurers around different parts of the globe who suddenly found their jobs were essentially cash management reporting. Now C and H. I'll be honest, it spoiled me. It was Case Corporation, which is a tractor manufacturer. They compete with John Deere and Caterpillar. And because those are two brands most people know, in case you probably never heard of, I joined when it was a single A credit and left when it was double B plus. Wow. Yeah, those are interesting days. It actually ended up being bought by Fiat, which we thought at the time not necessarily the best parent for a company that's struggling.

Well, what we'll do is actually we. Andrea Paulus, the executive VP and group treasurer at cnh, I interviewed him what, three months ago. So I'll put a link to his because he sort of, he's been through it as well. So as you say, it was a challenging group.

It was. But I mean again that was, you know, I was the Australian treasurer or I think Director of Australian treasury was the official title. And yeah, we had commercial paper programs, we had bonds. I mean most of business was. Or the treasury activity was there was a leasing arm called Case Credit which had sort of taken the GE credit model which had its issues as well. And essentially leasing tractors to farmers, which is generally a good business because you can, if you need to repossess a tractor, you generally know where it is, it's not easy to move and you know where the, where the farmer is. So we actually did the first asset backed securitization in Australia for leases and that was back in the late 90s when things like asset backed securitization and mortgage backed securitization were actually good things. I can see how it got corrupted. It's a pity because it was a really good method of financing and it's extremely interesting task for a treasurer to do. I mean there's a lot of documentation and paperwork and so forth. It was good to sort of get your name on a new type of deal. And given the time zones there was a lot of autonomy. And I met some really great people, spend a lot of time in the States with them. I'm still friends with quite a few of them. It was a little bit Wild West. You wake up in the morning and all of a sudden you're Triple B. And the CP markets dried up a bit and then a couple of months later you're double B and it's gone and you're hitting your backup revolver lines and then all of a sudden you're trying to negotiate with your auditors who were Arthur Anderson and fairly easy to negotiate with in terms of loss levels. And then yeah, one day you wake up and you're junk and you've hit all your lines, your covenants are under task. But the thing is we got through it. I mean it did help that Fiat bought us, but it's one of those. You went through the full credit spectrum, you learned all the different ways you can finance, different ways of finding out how bankers relationship managers will with you when one day you're an A and next day you're a double B and just built up some friendships there that last long time with the bankers. I do remember, it's one of my prouder moments is that when I eventually left and the main reason of that is Fiat bought it, Fiat with then running the treasury, they basically said the only reason they stuck with this was because they could trust what was coming out of my mouth. I think that's a key thing for a lot of treasurers, is that you're representing the company to the banks and often you could think in the short term you might get away with fudging a bit, but these relationships can last for years and if you're not trusted, then you really can't be a treasurer.

And then you did sort of two more roles before coming to the uk. How did that sort of pan out? Because you finished there because we had taken over. Were they some more short term or, you know, what was the situation where you then came to our Sunnyshaws?

Okay, so the first one was career mistake one. Yeah. And I'll be honest, I don't think it's the same in 2021 in the, in the UK, but I work for a supermarket retailer called Woolworths, which wasn't connected to the one over here. Treasury in a supermarket is very boring. Essentially all the cash comes in on the weekend. You have to organize the armored trucks for the collections and so forth, but you generally know what the cash is going to be. And in a country like Australia, not a lot of your products that are coming in are imports. Most of the stuff you're selling is in local currency. So you got limited foreign exchange risk. You're a very good credit. Cash management is essentially money gets banked into branches at a single bank. You count it in the morning, you send a report off and that's pretty much it. So I'd gone from almost the Wild west of treasury doing absolutely everything to the sort of Deputy treasurer. And I'll be honest, just. You'd wake up in the morning and say, well, what special things can I do today to improve the business? And there just wasn't any. So I did a project with them, they called it Project Refresh, which I think was sort of a copy from Walmart, where we would go through the business and just look at the P and L line by line on how we could save expenses or costs out of the business. And I did a project on insurance, which sort of opened my eyes onto how that world works. So I learned a lot about the retail industry and it was a worthwhile experience. But, yeah, if you like variety in your job. I'm not sure a supermarket's really necessary the chain you want to do. From that point, I was just finishing my MBA and I sort of got this notion to go to the uk. Yeah. Try to think why. I mean, I just. I think Australia is a great place to grow up. I really, really, you know, I miss aspects of it, but it's just so far from anywhere. So growing up in Adelaide, which is the middle of nowhere, and Sydney's fairly, you know, relatively exotic, but if you want to go on a holiday to just Bali or Indonesia or New Zealand, you're talking six, seven, nine hours in a plane. So I think it was all about the travel. I think my wife. I wanted to do that. So I decided to do a year at a company called Charles Parsons, which was a privately held firm owned by the Parsons family, who. The last four CEOs were named Charles Parsons.

So it was.

But, yeah, it imported fabric and textiles for women's fashion. So that was a sort of an interesting bit. And so that was my first group treasurer role of actually being the guy in charge. And I think they gave me. You're on the pension fund trustees board, you're actually talking with the owner owners and the CFO and the controller and all those things. And I think that gave me the rounding I needed to be able to come try my hand in the UK and see how a newly minted MBA with various treasury experience would go.

And you, you did that. And then you came to the uk. You started off with GE Insurance, but then went into consulting. Give us a walk through those roles.

Okay, so GE consulting. Look, when I first landed on these shores, I put on my. My shirt and tie and suit and I started talking to recruiters because I hadn't Actually made contacts beforehand, which is not necessarily the cleverest thing, but, you know, when you're young, you. You always believe in your ability to. Just to get through.

Yeah, yeah.

And I think I've told you this many a time, Mike, most of the recruiters I met basically said, what are you thinking? You've come from the colonies, there's no chance that you'll ever get a. The sort of job that you're expecting. And, yeah, it was discouraging and I think it was that the one day I met you, I'm trying to remember where your office was.

Always been more to do.

So you're a revelation. You actually. Well, you know, you've done this and you've done this and yeah, these, these might not be within reach, but, you know, there's definitely opportunities to do. To do things. So, yeah, I think rather than tucking tail, I pressed on again. The GE job, it was a contract job, it was their insurance. Yeah, that was kind of interesting. Met some good people, but it was essentially a cash management job, just sort of being used to pay the bills whilst I looked around for what was going on in the UK and it lasted longer than planned. I mean, I got a little bit discouraged again in terms of just getting back to a group treasurer level job or getting back to a sort of more senior job. I mean, I was. I was 30 at the time, going to 31, and I had two master degrees and six or seven years experience in Treasury. I just sort of thought, you know, that these sort of roles would come along and there's reasons why they do and they don't. The EY consulting job, I'll be honest, I was four weeks away from giving up and we were just going to pack up and head back to Australia, tail between our legs. This didn't work all as planned, but, yeah, fortunately that came along and, yeah, through them and then moving on to Accenture, I did four years of treasury consulting, which I learned a lot. There's up and downs with consulting which we'll probably touch on later on.

Now, listen, what were the.

What's.

What's good about consulting somebody? And some of the listeners there, relatively junior. A lady who was asking me the other day, oh, I'm thinking about consulting. I was like, well, it would have been her first move, actually, out of a blue chip. And I said, what, so you've done one blue chip and then you're going to go out after four and a half, five years and go into consulting? Maybe? She's like, yeah. I said, I'm A bit nervous. You had a, you know, range of different experiences for different treasury teams and stuff. She just had one. I said, look, the problem with that is people will say, well, so what have you experienced? What have you seen? And well, in the one place I've worked, this is how we did it. And I said, oh, you know, so you know that I said I felt she needs to do some more experience. That was for her. But what did you find about consulting? Was it about sales or what was it about and stuff.

I think the big four consultants, they all have different models and different focuses and they do change over time. I mean I was brought in as an industry expert, so essentially brought in on a slightly different pay scale. And it's part of the good thing is you've got all this knowledge and experience and you've actually got people who will listen. So you, you know, you can put, you know, you've got business development time that you can actually put together spreadsheets, PowerPoints and consulting teaches you all about presentation. The quality of PowerPoints I put together when I have time, you know, a lot of them I still use the same taglines and formats that I learned from, from those two companies. And yeah, going out and talking to clients, I mean you're often, I think the Americans call it the color man. Like you've got the commentator who calls the plays, who's the person, the partner or the director selling and you're the person who says, look, we've actually got a real life treasury here, so we're not just trying to sell you some expensive product that you don't actually need. We've got someone who can sit down with you and actually go through the nitty gritty and will understand your business better and the trusted advisor and all those sort of things. So I mean, I always thought I was a useless salesman and I'd never want to go in sales. But then I spent four years consultant and it's like I'm not a great salesman but I know what I'm doing and I all the things about getting down to what the needs are and those sort of things. And it also helps when you're the buyer, you know exactly what triggers the salesman needs to hear and you can just, you can make a two hour presentation, get cut to 30 minutes by just you answer the questions that they're getting around to asking and yeah, a great camaraderie and you're traveling to different places. And when I worked in Munich and Geneva and Paris, I did a nine month job there. I Had a weird one. I worked for Standard Life up in Edinburgh as an assistant, the chief Actuary, despite never having any actuarial background or insurance background or worked in Scotland. But it was, it was, it was a fun three months, you know, it was quite good. So getting that variety and not sort of being stuck in an area. I mean, I think if you, and I think you're giving the right advice there, you need to have seen a few things yourself and you need to see when things are going well and things are going badly because a company there, the treasury is going well, they're not going to buy any consulting services. You need to see things that are broken that you can actually fix.

And then you made the move. You done, you did two different consultancies, ey, Accenture, two good moves. But then you were like back to hardcore treasury and then you were suddenly, well, Reid, but then emi, which I know was a challenging time. Should we say over to you?

Yeah, I mean, I suppose just in finishing off on the consulting point, the only trouble, and I think a lot of treasurers will find is within sort of a big consulting organization is you're selling to the cfo, not the treasurer. Because most treasurers, and I'm the same, you don't want to come a consultant coming in to show you up. Now, it's the wrong attitude to take, but essential you need to. It needs to be accepted that you're doing a good job. But there's an area that you need some help on or a project or something like that. So I think the people who do particularly well in treasury consulting, they have the relationships with the CFOs and in many cases that's because they're an accountant or they worked in banking or something like that. So you find there's very few treasury partners in consulting. They're generally from the banking lead or from the county or an audit lead. And so your career path is fairly restricted and you're sort of dealing with someone who's putting you out to sell things that they don't necessarily understand themselves. So I recommend everyone should potentially do it. But if you're looking at a long term career in treasury, plan on it being just a sort of interlude and I think that was it. I sort of missed the fact that I was going to organizations and fixing things or I'd do some audit support or I'd identify problems and I couldn't really take the credit for it. I was just a helper. I wasn't the ultimate decision maker. And the person who could say Look, I didn't that.

And I think also treasury, being a specialist smaller area, you're never going to get the wallet share. You know, I know that some guys used to do quite well when they used to get sort of bigger remits from say, big banks and big reviews. But you come into a Treasury and, you know, we, you know, you're small and perfectly shaped, you know, like sort of, you've got some, maybe they come in, do a review and fix your treasury management system or do some controls or do this, but the scale of the, the wallet is just. Isn't big enough a lot of the time sort of thing, so.

Well, yeah, you're often the tip of the spear. You're bought in to sell some management consulting for 30 or 50,000, but the actual money is implementing SAP or putting in a system or some large risk management tool or something like that. And yeah, and that's generally got specialists who do that. You're sort of on the edge helping it be done. But that doesn't pay the partners. They don't make their income from small treasury consulting.

Yeah, small gigs. So then you return to core corporate treasury with a couple of interesting moves. Give us a quick run through of those.

Okay. I mean, just the REIT job, it was essentially they were just, they were going to spin off one of their divisions and that was setting up a Treasury. And it's interesting to me because that gave me a taste for how interesting and how exciting I find in starting from a blank piece of paper and building up what structure a Treasury should have from simple things like where the treasury company's going to sit to, what system would you get, how many people would you hire and job descriptions. And that was going really well for six weeks until the spinoff got cancelled. So, yeah, I mean, I had a fun trip to Boston out of it. That was a nice visit. But yeah, then EMI came along and EMI was my first exposure to private equity, my first exposure to, I think the banks call it distressed assets. The owner had bought it in 2008 at the peak. And I don't think it's a secret that pretty much from day one, the liabilities exceeded the assets. The company was probably technically insolvent from day one, but there was a good three, four years of just trying to keep it going and trying to find a way to get through. So that was, you know, I'd sort of had a break of about six years from being a group treasurer. So I was back to being a group treasurer again. We had a team of three people, cash manager, an analyst, and I think we settled on risk manager. But essentially it was everything else and project and it and so forth. That's where I really learned about cash management. I'd never heard of a clean down before, didn't understand how it'll work, but very quickly worked out those sort of requirements. And it was a global group. There was a Treasury system.

Sorry, explain, Pat. Was a clean down then, in a.

Lot of revolving credit facilities, there'll be a requirement that, well, in the old days, you had to pay off the RCF for the revolver for a period of 10 business days. So you're basically proving that you were using the facility as a working capital facility, not as permanent debt. I mean, we have one of my current firm, the better one.