Collaboration and Getting Advice in Treasury with Jesper Nielsen-Terp

Foreign so welcome 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've built their careers, where they are now, where they see both themselves and the treasury profession. Going to next this week's show, I'm delighted to be joined by Jesper Nielsen Terp. Jesper is a an experienced treasury professional, internationally experienced, right the way across the world from Denmark. He's done a number of positions going from treasury analyst right through to corporate treasurer for a Fortune 500 and more recently an international trading group. But we will get Jesper to go through his background more recently and within those roles he's designed corporate treasury functions starting from literally a blank sheet of paper. And that's a nice segue into. He's actually just written an article which we're going to be putting into the show Notes which talks to people about and talks to treasury professionals listening today about how you do blank sheet treasury, what he's seen and some of the mistakes he's made along the way and how he's corrected those and things like that. But as always, it's not my show, it's our guest show and I hate the sound of my own voice. Yes. But maybe if you would take us back from your early start and we talked about military service just before the show today and an interesting one, you started with that and then discovered the world of finance and Treasury. So over to you sir.

Thank you for having me here. As you mentioned before, I went into finance and into Treasury. I had a number of years in the Danish military where I was a tank commander, had a squad of approximately 10 people and I believe that time of my life at least have given me some experience within people management. I have used afterwards it didn't became a long career within the Danish military. I was never sent out but it was a great time and I believe that I grew myself within that time. Back around 2000, I started my career within the banking industry here in Denmark. I worked seven, eight years for one of the big banks here in Denmark, held different positions. In 2007 I moved what you can say to the other side of the table. I went into the treasury industry.

I was going to say how did you discover Treasury? About that you were working in banking and you just came upon it as you were walking down the street. Oh, treasury. That'll do me. How did you hear about it?

I think that it started around that time that Danish corporates figured out that they needed people to do treasury stuff, it was not that common in Denmark. And also after I started and when I talked to people and told them now I have started within treasury, people actually ask, what is treasury, what are they doing? And why is it that corporates want to bring in people to do Treasury? Can't they just have their banks to do that? So I think it's something that have emerged in denmark from beginning 2000 and then the year ahead. A lot of Danish corporates have treasury people today, but it was not that common back in around 2000 or at least. But I believe that the experience I had from the banking industry actually have given me some benefits because when I moved to the other side of the table, I already had some knowledge within cash management, fx, risk capital structures, balance sheet management, working capital management. So it was an easy move because I have seen how it worked in the banking side and now I suddenly was on the other side of the table talking to the banking people. So I knew how they would look into the company. What was it they were looking on the balance sheet? Because I have did that in the past when I was working in the bank. So it was quite an easy move. It's a lot of the functions you have in a bank is pretty similar to what you actually do in the Treasury Department. I usually say to people when they ask, what is it actually treasury is doing? I used to say it's the internal bank for the company. Look at treasury like you look on your own bank. So you can go to your bank and ask them for a bank account, you can ask them to do some payments, you can ask them to do some FX for you. Exactly in the same way when a subsidiary, other people in the company come and ask you for a bank account, or can you help me with some FX risk, or can you help me with some trade, finance, et cetera, you're.

Sort of there to help them. Something.

Yeah. So it's pretty similar. Instead of dialing the bank, you just dial the Treasury Department.

Yeah. Yes. But you joined, as you said, you moved into treasury, but you joined Brightpoint and who are Brightpoint and things.

Brightpoint was a huge company within the cell phone business. So the distribution of cell phones in they were acquired by Ingram Micro, which is a very large company today. And at that same time, 2012, 2013, my family and I, we have lived approximately four years in Barcelona while I worked for Brightpoint and we thought it was time maybe to moving back to Denmark. And then I took a position within Payne Europe Commodity trading House, which has the headquarter in Denmark.

So before you made that move to Denmark, you, as you say, you made that move with your family to Spain from Denmark. If I'm listening today, I'm thinking, wow, that's, that's actually quite a big move to actually up sticks move Denmark. Barcelona is a wonderful city. So anyone listening from there? We love it a number of times and. But it's quite small for treasury in some, some ways. You know, it's not a big treasury scene per se. What was that like?

It was great moving to Barcelona. Of course, at the day I came home and told my wife that the group Treasure, who was based in the headquart headquarter in the US told that Brightpoint would like to move their European headquarter from Denmark to Barcelona. And they would like me to head up and build up the Treasury Department in Barcelona together with the people that should build up the financial shared service center for the entire EMEA region. My wife was not that happy at that time, but. And so we agreed that it should only be for two years. And then when we have been there for two years, we looked at each other and then we said, okay, let's stay. It's a fantastic place, a lot of great people. There's a lot of international people in Barcelona and the weather, but it's on its own and a great soccer team there as well. So it was a fantastic place, a great town. But then in 2013, we suddenly had three kids when we moved to Barcelona, we had only had one and we thought it would be great for them maybe to be a little bit closer to the grandparents. And at the same time, Brightpoint was acquired by Ingram Micro, moving some positions within the treasury to somewhere else in Europe. And we were actually asked, would we like to move together with Ingr Migrate from Barcelona to Brussels. And we looked at each other and said, okay, we have to move no matter what, so why don't we move back to Denmark so the kids can get a bit closer to their grandparents. And then I took this position as a group treasurer for this commodity trading house. I was made responsible for setting up the entire Treasury. It was fun, but it was also a hard time because starting on a blank sheet and figuring out what is it actually we want to do, where we want to go, where is it actually the leadership want us to go? And can we agree on how we go there?

Was there any advice around at the time or where did you look to for. Did you go to consultancies or did you, you know, was there much out there to help you do that stuff?

No. So the CEO for the company at that time, he had some experience within treasury, so he knew how treasury worked. At the same time he was also now the CEO of the company and a fast growing company. I believe the first year I worked for the company we increased the workforce with approximately 30% going from 300 to 450. So of course he didn't have a lot of time to assist me on how he thought that treasury should look like. So we were a little bit on our own. And then I took some advice from my former boss from the Brightpoint time because he had been in the same situation building up the Treasury Department for Brightpoint, scaling it. So I looked in that direction and had some good talks with him. And I also think that is also what people should do. Look at your surroundings. It's actually people that have some experience you can utilize and then don't be afraid for asking questions over and over again. In my world, and also what I always say to my people, there's no dumb questions because I want you to make sure that you 100% understand where we are going, why we are going there and when we are going there. I think it's important when people start building up or if they need to reshape, ask people in your surroundings. Buildings have the experience and nowadays it's very common to use treasury consultancy firms and I think it is the way to go. They know a lot of stuff, they have seen a lot of systems, they have seen a lot of processes, they have been in a lot of companies. So just because you have been in treasury or just because you have been a treasurer for a number of years or maybe many years, then you most likely only have seen a couple of systems or you have used exactly same workflow process over and over again. And if you want to change something, you most likely end up doing in the same way as it did in the past because it worked for you. But that is not the same as it will work for the future. So I believe it's very important to ask questions and get the experience from the people actually has it. And don't be afraid for ask those questions because again, there's no dumb questions. People are there to assist you. Of course they will take or send you an invoice for it, but of course that is what they should do.

And so Jesper, you made that sort of Dansker itself as a commodities house. Again, some people listening today, they'll be working with different industries and things like that. We've covered a bit about consultancy and helping you establish the treasury there. But what was the treasury like? What is Dansker Commodities about? It's a trading house as you described earlier. But give us a bit more about how that affects the treasury setup if you like.

Danske Commodities commodity trading house, mainly trading two commodities, power and gas. It's quite funny when I look back in my career, the Treasury Departments I have been in because it has been in low margin companies, because the cell phone industry in the days with Brightpoint and Ingram Micro was also very low margin and commodity trading is also very low margin but very high revenues. So Danske Commodities is close to have a revenue of approximately 10 billion euro or so. So there is a lot of money flowing through the Treasury Department and that of course make CA and liquidity management very crucial for the company. And then of course trading in 40 countries or so, then of course your FX risk is also very high on the agenda. And that was the two main areas we started at when we started building up the Treasury Department. It was to make sure that we on the day to day business had visibility on the cash throughout Europe, having bank accounts in 35, 40 different countries in different currencies. And then people of course will say, why should you have so many different bank accounts? We are living in Europe, we have a CPA set up. So you can just have a euro account in Finland for your incoming funds and you can have an account in Germany for your outgoing funds. Then you have a very cheap setup for you, cash management setup. And then of course you will need to have a number of currency accounts for your FX risk. But why bank accounts in a lot of countries throughout Europe? And that is the funny setup here in Europe, even though that the European Commission says, okay, we need to have CPA so we can assist companies having low costs to do their liquidity business. But at the same time then the people sitting in the commission, when they go back home, they also take care of of their own banks. So example could be that if we wanted to do trading in Spain, then the authorities down there, they would say, okay, if you need to have money back from tax, or if you want to pay tax, or the people owning the grid down there, when you need to pay them, it need to happen from a Spanish bank account. So then you need to set up a Spanish bank account. And that is how that work throughout Europe in the commodity industry. That all countries, the grid owners says, or the majority of them says, if you want to pay us and if you want to have access to the grid, then the Money need to come from a local bank account, so it ends up having a number of bank accounts, even though it's a fairly straightforward business.

Yeah, yeah, yeah. Does that mean that you then really deep dived into your technology to make sure you have visibility or how did you manage that yourself? Because that's obviously when I talk to treasurers. Oh, my God. You know, we had 50 bank accounts in that country. So immediately that, you know, that's one of the things to simplify the structure. But then, then they get down to a certain level and they say, do you know what? Some of the times we have to leave, leave that in place, because that's what suits the structure, as it were. That's what we should do. We should leave that in place. What was the sort of ethos for you guys? Get it as simple as possible, or had to be sympathetic to that. What happened?

Oh, yeah. So from the beginning, we actually, together with IT house built up an internal liquidity system. So we on a daily basis got data from the banks through a simple FTP set up into this internal build liquidity system. So when we come in in the morning, then we had a visibility maybe for 80, 90% of the bank accounts. Because working with the banks on Balkan maybe eight years ago, it was difficult for them to sending you statements on a daily basis through FTP setup. And then some years ago, we figured out now we need to have a proper system. So we actually went through a process with a consultancy company having them looking into our internal processes actually from A to Z, going through all workflows, looking into what systems did we use. And then they came with a recommendation and then we made RFP shortlisted a number of companies, had days where the companies come and presented their treasury management systems and then end of day we find the system and then implement it.

Just looking at that process and just someone from a system provider might be listening today. And you were sitting there, sitting back, not from the actual presentation itself, but more. What would you have wished they'd asked you? What was the thing that they were, you know, maybe they were missing? I was listening to a podcast last night with recruitment sales podcast. This lady was talking about selling a house and she was reflecting on the poor sales process of one of the estate agents. One was doing all right, one was just out of this world. And some of the things he did and said and, you know, the way that he conducted himself going back to those system providers. Well, again, what was the thing that some of the guys were missing or what made others stand out just from your point of view as a treasurer.

I think it's very important to state that is also something I have learned. And if I go into a process again where I need to do similar setup having companies coming in, presenting their systems, then I want to make sure that it's not the sales guy that do the presentation. Because the sales guys, they do not know everything around the system. They know a lot of stuff about the system, but they cannot do the deep dive. So I think, and also what I would like to say to people that is in this process, make sure that you bring in the techie guys from the company and not only the sales guys, because maybe it's not fair to say, but of course the sales guys is there to sell a system. But it's not always that you get the systems you actually need. So make sure that you bring in the tech guys and make them show how the system actually work. Make sure that you have make some tests, give them some test examples and tell them this is how I want to see it it, show me it. I think that was one of the failures I have made in the past. Have too much believe or confidence in the sales guys, I would say bring in. So as we talked about earlier in this podcast, bring in people with expertise. Make sure that you have money in your budget for some external consultants that can assist you. They have seen a lot of systems. Just because you have seen a number of systems, then they have seen tenfold them.

Yeah.

And they know exactly what works for your company and what does not work. And they can also ask all the right questions to the sales guys and to the techies from the company because they have been in the process before. They know what questions need to ask. I would say that is at least as important as getting the system. Make sure it's the right system.

And so then things changed at Dansker and you became part of Equinor and we'll discuss that. But before we do that, just team wise, what was the structure and what we like as a boss? Obviously perfect.

I'm imagining so the team and the treasury team was five people. And then we also in 2018, we merged the credit risk department together with the Treasury Department. So I became responsible for both the treasury side and the credit side. And I have seen that in a number of companies that the treasury and credit sits together because there's a lot of synergies within those different workflows. So I think it was a good way to do it. Also for Danske Commodities that emerge the credit department and the Treasury Department but becoming a part of a huge company like Ekinor. Of course, the day it was announced that we were acquired, people of course got a little bit maybe scared or frustrated what would happen to my work. We have seen a number of times when big companies acquire another company, then they bring in all all the middle and back office functions from the company have acquired. They move that into the parent company, the new parent company. So people actually got a little bit scared and nervous what will happen to my job? From the very beginning, Aquino was very keen on stating that they wanted dental commodities to be independent within the group. So also today treasury and credit work as it did before the acquisition. But of course there's some interactions and very good interactions with the people in Aquino. There's a lot of great people within the group of Equinox and they have a lot of experience. So again back to use the experience you have in your surroundings because just because you have done treasury work or credit risk work for a number of years, there will be people that have some experience you can leverage on. So use that. And that is also what we did. I had a lot of good conversation with both the treasury and the credit side in Ecuinor on how to do things. And it also turned out that some of the things we did in Dansky Commodities was better compared to what they did in Equinor. So they actually wanted to implement some of the workflows we had and vice versa. We also looked into what did they do better in Equinor treasury or Credit Risk compared to what we did in Dansky Commodities. And then of course we wanted to implement those workflows. So it was to make sure getting the best of everything instead of just keep on doing what you thought was the best.

And so then more recently you've finished with Danske, but now you're focusing on this blank sheet treasury maybe before the next challenge comes up and things like that, what elicited that or give us a quick run through of the more recent history if you like.

After almost eight years in the position as a Treasury and Credit Risk Director, I thought it was good. Now I should move on figuring out what should be next in my career. And then it also, at the same time it turned out to be be a perfect time because we now also have homeschooling for the kids during this COVID 19 and now I have the possibility to look into what will be my next move. Should it be within a corporate Again, of course I would like to do treasury and credit risk, but should it be within A corporate or should I move to the other side of the table and maybe do more consultancy work? Because I have seen over the last couple of years that is actually where I have some, some great experience actually building up something and see it from a more strategic point of view. And that is also why I now have starting working on this article named Blank Sheet Treasury a guideline answering the how, when and why. Because it was something I actually needed when I should build up a Treasury Department. It's not a golden rule book, it's more a guidance for how you should structure your work in the initial phase of setting up your Treasury Department.

And when you say that you and I, we spoke on our pre podcast call before. What can you add from Blank Sheet Treasury? You talked about some of the mistakes maybe you'd made and things you wanted other people to avoid.

What did that focus on the Blank Sheet Treasury? This guideline I'm working on it actually. So the initial process will be for the Blank Sheet treasury is to look into your objectives and your future state and not look too much where you are today. Make sure you don't end up try to use what actually worked in the past, but look into what will work in the future. And of course it can be that the system you used in the past can be the system you should use in the future. But I think it's very important that you look into what is the future state and what is best practice for future state. And then you of course need to look into the entire puzzle. It will be a journ that can take a number of years because you can't implement everything at the same time. So make sure that you lay the entire puzzle from the beginning. So you also is very clear when you talk to your surroundings and talk to your CFO or the people there give you the budget, make sure that they also can see the entire puzzle. Okay, now we start here and we want to go there and then we end up here. And I think that is very crucial that you do that so you don't just say, okay, now we want to change our cash management because we believe that the cash management we do today is no longer best practice. Best practice will be something else. And then when you have implemented that, then you're figuring out, okay, some of the processes we changed actually now have impact on my FX risk. So now I also need to change my FX risk. And then you end up in a situation where you need to go back to your CFO a number of times and say, okay, we forgot, forgot to talk about that and we forgot to talk about this so. And then people get ignored. When you have made your blank sheet treasury then also make sure that you get the mandate. Not only on a piece of paper or in a, in a meeting room where the CFO or other people from leadership say of of course you have the mandate to build the treasury you want but also make sure that the actually what I will call walk the talk. So when you end up in situation, when you have established your Treasury Department and you have agreed that okay, we do cash management in this way or we do FX risk in this way, then it also will be the entire policy for the company and you don't up in discussing with your subsidiaries or other stakeholders that maybe has another idea of doing how to do cash management or FX risk or working capital management. You need to have the mandate and then the people in leadership need to also make sure you have the mandate when you go out in the organization. And then finally when you have made your blank sheet treasury, when you have got the mandate then you sit down and do your guidelines on your procedures. What I would like to pinpoint here, if we should talk a little bit about mistakes and learning points, again very important, get the mandate. Make sure that you, you have the mandate all the way. And then again the entire puzzle both from a Turner point of view but also from an external point of view. And when I say external then they said when you talk to your subsidiaries and stakeholders, make sure that they also understand why is it you handle your cash management in this way or your FX risk? Why is it you have on balance sheet hedging procedures and not doing off balance sheet hedging procedures or why is it you want to, to change your working capital setup. Make sure that you, you have discussions with your stakeholders so you also understand where you want to go. Then it's very important keep on asking questions because there is people in your surroundings in the company. It could also be external, it can be in the banks or it can be in your peer group. It could be consultants. Ask them questions all the time because a lot of people see a lot of stuff and I believe that you can use that that down the road.

Yeah. With you. You know, let's do a little bit of a sales pitch for you. Why do you stand out? I think I know some of the reasons, but in your own words got some of the consultants out there and a lot of them, they're, they're pushing the sales angle if you like and they're trying to sell their services for their Company, you know, they've got overheads and you go to some of the big, big consultancies and they'll pitch an assignment, they'll get the assignment and they'll, they'll bring in the sort of junior staff member to try and deliver some of it and they'll supervise them and charge them out these high rates and things like that. What are you focusing on, you know, with this sort of this consultancy type service? What's your ethos if you like?

I think it's again looking at the company and make sure that you understand the company because no company is the same. They have different processes, different workflows. So make sure that you understand the company. And also you need to actually just not seeing the top of the iceberg, but you also need to see below. I actually worked with one consultant in the past. It was heavily the work he did behind the scenes. And we had some meetings with him and then he came back and then he showed us what he thought was our processes and it was top notch. He really had did his homework. And then he could sit down and say, okay, if we agree this is your processes and this is your workflows, then I believe you need to go for system A, B or C. Definitely not D or E. Because, because he understood the processes. He had seen something similar in the past and he could see what kind of systems we should use. But I think a lot of the times I come back to this, if I again should build up something or if people sitting out there start building treasury or reshaping that treasury, don't be afraid to go out and ask questions because there are people in your surroundings and know a lot of stuff.

Yeah. So we're approaching the end of today's episode and as always, I think, you know, we'll put your details in the show notes. We'll also put, put the link to the blank sheet, treasury article or paper if you like, in the, in the show notes, people can look at that. Don't want to deep dive too much in that because I think actually you'll get a lot out of it. You know, I've had a read through myself, I thought, yeah, excellent piece of work. And I think people can use it as a guideline, a map if you like. So I think that's definitely going to help them. But yes, but coming back to you and someone looks at your background and said, you know what, I want to follow in his footsteps. What are the things you would say to them? What are the recommendations you would make before we wrap up Today's show, I.

Believe that if people would like to walk in my footsteps and try to do something similar, one of the things I could have needed back in the days was maybe some more advice and maybe also look, if I look on myself, I maybe not have been too good asking questions or asking for advice. I most likely was something I did not understand. Then I most likely went home, did some study to figure out, okay, how does things work? But it also take time because there is people in the company and it actually know what is happening. So ask them instead. And also people actually would like to talk and people would like to talk about their area. So don't be afraid of asking questions. As I also have said, at least in my world, there's no dumb questions.

Yeah, excellent. Be curious, as a lot of our treasurers say, you know, get, get involved in it and stuff. Yes. But it's been amazing talking to you today. Thank you for your time. And again, we'll put your LinkedIn details in the show notes. So people are interested and they want to sort of talk to you about, you know, what, some of the services you might be able to offer. Again, you know, look at the, the background, some of your recommendations, please, you know, follow the links in the show notes. So, thank you very much, sir, and.

Thank you for having me. It was a pleasure.

Thank you, sir.

You have in your surroundings because, just because you have done treasury work or credit risk work for a number of years, there will be people that have some experience you can leverage on. So use that. And that is also what we did. I had a lot of good conversation with both the treasury and the credit side in Equin on how to do things. And it also turned out that some of the things we did in Dansky Commodities was better compared to what we did in Equinor. So they actually wanted to implement some of the workflows we had and vice versa. We also looked into what did they do better in Equinox treasury or Credit Risk compared to what we did in Dansky Commodities. And then of course we wanted to implement those workflows. So it was to make sure you're getting the best of everything instead of just keep on doing what you thought was the best.

And so then more recently you've finished with Danske, but now you're focusing on this blank sheet treasury, maybe before the next challenge comes up and things like that, what elicited that. Or give us a quick run through of the more recent history, if you.

Like, after almost eight years in the position as a Treasury and credit risk director. I thought it was was good. Now I should move on figuring out what should be next in my career. And then it also at the same time it turned out to be a perfect time because we now also have homeschooling for the kids doing this. Covid19 and now I have the possibilities to look into what will be my next move. Should it be within a corporate Again, of course I would like to do treasury and credit risk, but should it be within a corporate? Or should I move to the other side of the table and maybe do more consultancy work? Because I have seen over the last couple of years that is actually where I have some great experience.