Communication and Flexibility in Treasury with Luc Vlaminck

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 built their careers, where they are now and where they see both themselves and the treasury profession. Going to next and this week's show, delighted to be joined by Luke Vlumink, the group treasurer at Remy Cointreau. Obviously one of my favorite products. You know, loving the drink and things like that. We're going to really get into some of the industry. But for those of you who don't know, Remy Contreu is a French family run group whose origins date back to 1724 and they've been, you know, making some beautiful drinks ever since then. I've been to Luke's offices, we've seen some of the beautiful ones and I've sampled a few of them. But the group itself, a number of different partnerships and different things. 1800 employees around the group globally. But I'm going to get Luke to describe a bit more about the group itself. But what we're going to do is we're going to start off Luke is going to start at the beginning of his career a few years ago now about how he got his introduction to finance and then treasury all planned of course, as we always know and then bring it up to date and go from there. So Luke, enough from me sir, over to you.

If I just need to start from beginning, I accidentally started my career at Swift which is for treasurer kind of comic situation, but not in the Treasury Department. I started my career in the accounting department, was in charge of compiling the budget process of Swift. Then I moved to the real accounting world and especially in the accounts payable. Few months later they were creating kind of Treasury Department and I was asked to join the team to start the treasury adventure at Swift. Ironically I didn't have any implication in the operation of Swift, but like any other company, treasury needs to be managed. And so that's where I started my journey in the treasury world. And then I stayed there for 14 years. So I had plenty of time to contemplate the Swift development in the financial world because when I joined Swift they were not live yet, they were still in testing mode. And then I was just for, for the anecdote I was the employee number 120 and when I left Swift there was more than 3,000 employees. So wow, that was a n journey.

Luke, we spoke before the show and because we talked about the fact that you came from accounting background and then discovered treasury and the sort of having you gave this mirror analogy, which was amazing about, you know, knowing what was happening. What was that like?

That was a kind of revelation because as you may know, accountants are tend to look at the past and make sure that everything is properly registered in the right box and giving the right figures to the management. As treasury is more looking forward, so kind of looking in the future what's going on and what will happen in the to trying to anticipate any financial issues or financial needs that the company should have. So it's kind of, you know, being back to back to take a favorite expression in treasury world. Accountant and treasurer are kind of back to back, but doing, I would say that with the same objective of making sure that company is well managed in terms of finance.

And then as you say, you sort of did Swift, then you moved on. You know, talk about that.

I moved to a total different industry sector because I moved to the UCB company, which is a kind of mixed of. Of chemical and pharmaceutical company. For those who have some allergies, they probably know Zyrtec, which is a favorite molecule to cope with that. So I discovered what the real industry world was and once again the company was at the turning point of developing its international presence and mainly in the United States on the pharmaceutical department. I had to manage the European treasury, but also implementing the US treasury at the time. That was also a very nice experience because that was at the time time I was bringing in the treasury team. All the, the latest developments in the technology in terms of TMS and automation with bank relationship and those kind of things.

And you had your history at Swift and obviously you were internal at Swift rather than sort of sales and things. But did you. Did you find that helped you, you know, that exposure to sort of technology before or.

Yeah, for sure. There was a kind of development laboratory Swift. But the funny things at Swift was that our shareholders were our clients. That gives a little bit different approach in terms of treasury management for all the treasurers that would probably know what I mean when discussing about the bank relationship. When your shareholders are your clients and you need to have a banker on board. That's a little bit difficulter than I would say in the normal industry.

Yeah, very different. We'll come on to the margins chat in a minute. Because you then did ucb, but then to Ingram Micro and we again and we get to Remy Control, but you're all quite different industries. But then. So European treasurer, ucb, you got that in place and things and then you made a move after a number of years.

Yeah, so I Stayed at UCB more than seven years. And then I was proposed an interesting move to a company called Ingram Micro, which is an IT first year distributor where I enter a totally different dimension because there was a group that at the time was making a $30 billion turnover. So the S bias was much huge, much more important than at ucb, but in different terms because the risk there for treasurer was that the margin in that industry is so, so low that any financial risk that is not covered has a main impact on the final result. And so I was in charge of the European treasury and also we had a look at the Asian currency risk of our colleagues in Asia and was reporting to the US headquarter in California. They were not that much concerned about dealing with the financial or the currency risk, I would say, but they were extremely demanding on the reporting of it. So that was a kind of relationship I had to develop there. Making sure that the financial risk and mainly the currency risk was under control and making sure that they clearly understand the games in Europe. So that was difficult time, I would say, because as I mentioned we were dealing with very low margins. So any currency loss had a huge impact. And of course that was a critical point of the job.

And it was wafer thin, as you say, with the sort of making sure, you know, just again, we spoke before the show, didn't we?

That's an industry where didn't feel a really bright future, I would say, because they were kind of sitting in between and they were squeezed once on the one side by the producer, like, you know, the big one, Apple, IBM and so forth. And on the other side they were squeezed by local distributor which want to keep their local margin alive. And so by being being squeezed on both sides that was letting a little space for margin development in the first year distributors. So that, that was a difficult time, I would say a turnaround of that industry. But in the meantime that was priceless of being trained and learned a lot of things on how to deal with critical situation and how to develop your ability to react quickly on any given situation.

Well, this Winer Spirits premium brand group, whatever attracted you to that?

Well, many things. The first one being the opportunity that was given because at the time the group treasury department was mainly focused on the upper side of the balance sheet. So on the financing there was a need to develop the whole spectrum of the balance sheet management because they decided at the time to quit a joint venture in terms of distribution and rebuild their own network work of distribution around the world. Which for treasures means that you increase your Financial risk in terms of currency, in terms of interest rate, because you need to finance all those things in terms of flows. And that was very challenging and that was what interested me in that project. On the other side, I would say that was probably the first time in my treasury career I could join my hobbies and my profession because I'm a wine lover. So I could really enjoy product of.

The group in the meantime and fascinating group. I've been out to your offices and everything El but when you started Remy Book Control was in one shape if you like. And then you've been through lots of transitions and lots of changes without getting into deep confidential information. Yeah, it's more you, you've evolved.

As I explained, I went through the first major turn on that was the rebuilding of the distribution network around the world. Which means that we create a lot of affiliates in different countries. And the second things was the change in the product portfolio because at the time I joined the group there was only two, two essential I would say category which was a cognac and champagne. Cointreau was a little bit below as at the time. So now that's almost 14 years that's been in Remy Cointreau group and we've divested in the champagne industry. We have raised the Cointreau brand as well. We've developed the portfolio with a new category like whiskeys, rum, brandy. And so that's also a very interesting journey for me because that entering different process that needs to be integrated and the business model is to totally different than the one I noted before. Just to give you an example, between Ingram Micro and Remy Cointreau, at Ingram Micro, the stock we had to manage and the working capital that we need to put on these stocks with a three to six months horizon as with Remy Cointreau for the cognac branch at least we have sometimes products that are more than 100 year old, which means that the working capital needs to follow that same periodicity, at least for part of it. But the main essence of the business is to age spirits. So it's not one to three months, it's an arisen of 10 to 100 years.

And we talked about this again when you're explaining that to some of your banking partners and things like that, that you know, sort of giving that understanding to them when they're perhaps looking at it and they're used to dealing with other industries, you know, how do you get over it with them? What's the sort of ethos there?

First of all should say I'm very lucky with the bankers I used to see is that they know pretty well the spirit. They are quite specialized. So they know about what they talk and they know about what I'm talking to them in terms of constraints, needs and financing. On the other hand, I've got quite good relationship with the rating agency as well. I think on one particular side of the business, they've got a similar approach in terms of measuring the risk they take on Remy Cointreau when financing. The activity being for the rating agency, it addresses that to the investors and for the bank, of course, it address that to the credit committee of the bank. And the main fears, of course, when they invest something in the company is that the company do not bankrupt and they do not find back their money. How they measure the financial risk is a little bit standardized across corporates. But with Remy Cointreau, which is a very unique beast, I would say, where we have a lot of age stock of spirits and we've got a relative low debt level, we have an average of less than 500 million debt permanent base and the stock value of spirits, that is probably more than 5 to 6 billion euros. My reasoning is very simple. When they talk about financial risk for Remy Cointreau, okay, If I'm selling 10% of my stock, it means that tomorrow I have zero debt and still have 90% of my stock to sell. What is our profile of financial risk you would take on us if you financed the activity? And that's very clear. But that's something they could probably not put in a standard evaluation box because, well, I, I don't know on earth a lot of company that has such a profile.

It's very unique, isn't it? As well. And this is. We had some fantastic chat before this podcast about some of the challenges we faced throughout Covid, but actually more about the team. But to go back to when you first started in the group and how you established treasury and grew treasury, could you perhaps take us through that journey you guys have gone to and then we'll talk about treasury per se, you know, because for some of the listeners today, they'll be in a similar situation. There might be a new treasurer, you know, just walking in the door. What did you seek to establish established throughout that time and what's your ethos?

So at the time I joined Remy Cointreau, it was decided to move the treasury team from Paris to Brussels. The main reason was the one I mentioned is because the group was getting more and more internationalized with the new distribution network. And therefore the treasury team had to Be reinforced with people that has know to run an international treasury activity on different side like payments, but also risk hedging like currency or interest rate financing and those kind of things. So Brussels, where we are sitting here was chosen because of their potential very high noho of treasury management people. And also the fact that we're recognized as multilingual country which helps when you run international activities. And we had another advantage that in Belgium most of people also speak French. So for a French group that was much more easier to do so. And I would say that because of the history of the coordination center in Belgium, we have a very good stock of people that have the treasury management.

Again, if anyone looks at your LinkedIn profile, they'll see that you've got very much involved in ateb, the association of Treasurers in Belgium. But you were right there at the beginning of it, weren't you? And we discussed this maybe again I sometimes say to listeners on the podcast, get involved in your local association and things, but you were there and you wanted one and one wasn't really there.

No, that's true. So we started in 1991 in fact and I would say that it started with a kind of club of a few treasures, I would say not more than 15 treasures of big corporates in Belgium. They start to meet on a regular basis and exchanging information or best practice I would say. And then the club was growing slowly, 20, 30, 50 and at some point of time say, okay, now it's become too bigger to not structure that then that we took the decision to create the association officially as a non for profit organization. We established the bylaws of the association with a clear objective that we want to share as much as possible best practices and also the ethic of profession and make sure that we attract young talent to that branch. Because you know, treasury is not show or learned at university as a specific specialty. It's you know, one course amongst another long list of others. There is no clear path to treasury career. At least at that time that was not the case. Now we see that since a few years then we have in France, but it's also in uk I guess some real specific masters that address treasury management and that's a good thing. I guess that was the start of the AATEP and then it grows slowly with the time and we've seen now more than two or three generations of treasures coming on board. I quit the board of AATP a few years ago, leaving the seats to the youngsters and I think they do it pretty well.

Well, they do and they do a really good job and things like that. But I think the work that you did there was incredible. But that helped you obviously attract some really great talented to your team. So again, for the listeners, can you just describe briefly the structure of your treasury team in Brussels and where do you, you know, because what I wanted to talk was about that team and how you've coped with COVID And in this really weird world that we live.

In, the team in Belgium is quite limited. So we have a team of nine people with a kind of, I would say classical structure of treasury with a front, middle and back office. Because we are a juridical entity. We've also an accountant which is more specialized in treasury transaction. Since few years now, we' had two additional responsibilities to the treasury team. So we build up a payment factory for the group that has been integrated three years ago now. And we also since few years took in charge the credit management of the group. Because my philosophy is that when dealing with treasury issues, you need to tackle the whole cash cycle, including the credit management of clients. And that's why we integrated that into the team. And thanks to that, because that gives us the right view on how the finance of the company is around and how we can easily cap the cash that is needed for running the group.

And if I take you back in time just a year or so, just over a year or so ago, should we go back to January 2020? There was some chat, if you like, going on about there might be this little pandemic coming along, along. You guys are all in the office, you're working together, you're very close knit team, you were sharing ideas over a coff. Things like that roll on three to six months later. It's a whole different world. This is totally loaded because we had a really interesting chat, Luke and I, about coping with COVID and coping with this world. What was it like? How did you go through it?

Well, first of all, I would say that in the office we are working in an open space, which means that there is a natural exchange of information without being specific on each one. But when someone has a problem or some issues with a file or whatever, or discussing on the phone, everyone is hearing what he's talking about. And so it's a whereab the issues or the problem. Of course, with the COVID coming, we had to work remotely from home. I saw that this natural exchange of information tend to diminish when working each one on this private home. Just to give you an example, the first week we were in Teleworking, that was natural that everyone was calling each other to make sure that they were aware about the things going on and so on. And then after a few weeks there was one call, one hour the second day, or one call a week, whatever, and suddenly there was no call anymore. So this natural communication had disappeared. So I had to reinstall, I would say virtual meetings just to share information, not to deal a specific point, but in order to have everyone to exchange what they did, how they did, and then what are the concerns for the others and what the implication for each other. That's something that needs to be maintained over the time because things we will probably not get back fully to the previous world. World has changed and things changed forever. And that's we need to pay attention to. So I'm organizing also some, you know, teams meeting and these kind of things, even if there is no real topic on it, but just to have this dialogue, this exchange process going on. That's the way I think we will have to manage the future, even if we don't get back to the office on full time. But that's one of the learning of the COVID crisis. The second learning is that of course we had the unique opportunity to test our catastrophe plan as everyone was working from home with different technology. I would say no one has a performance WI fi or so we had to put that at the right level. Should say that the IT department did a fantastic job on that to make sure that everyone was aligned in terms of technology and capacity. But that's also something you need to pay attention to. And the recovery plan we had imagined and that we had tested from time to time, but you know, in small pieces that was giving us the opportunity to test it in full and for a long period. Period. That that's something valuable for us.

Another point on this as well, which I'd like to bring out as well. I was recently on an ACT panel session with a couple of other recruiters. We were saying, what had I seen throughout it? And I'd been talking to a couple of treasurers, one in particular, they'd implemented a new treasury system throughout the pandemic. This treasurer was, yeah, we did a great job. We did a great job. And I actually said, I'm not sure he did. Because the thing is, I think he was a bit oblivious to the fact that RT really pulled through and everything else. He didn't. He actually broke some of his team. They were just, you know, because I know some of the team members and they found it so tough to get through. They did it, but it's left them, you know, really struggling. You and I talked about this, that the fact that different people having different working cycles, you know, coping with kids. But you've really shown a real, I think a real empathy, you know, not just that sort of those open meetings. But you also expressed to me about how as long as people get the job done, you didn't mind.

You know, that's my philosophy exactly. That's. I think everyone in the team as a specific job and some objectives. And as long as these objectives are met and the job is done, I don't really care about the way they organize themselves. These are responsible people, they know what their responsibility in the team is. Of course we still have to cope with some deadlines like everyone, you know, treasures are animated by the cut of time and these kind of things. But besides that, I guess that's also something the COVID has put in the light is that we can organize the work a bit more to adjust pace and our requirements, but still keeping the high level of performance even if we're done, if we're not in the office on a permanent base. But of course I'm expecting from my team that they perform their job correctly and at the highest level possible as well.

Yeah, but you've given that flexibility and we discussed the fact that you were different people, different times, different locations, but you've come through it. So. And where do you see it then going to start to look towards the future of that? Do you see everyone back in your open office straight away or what's your planning for the future? Future?

I don't know yet. Because we're working in the group, so we need to follow groups rules as well. Cannot set rules in my own yards and don't. Or ignore the rest of the group, of course. But I would at least advocate for a more flexible approach. The way certain functions are fulfilled. Sometimes it's difficult would say, but. But for some other jobs, and certainly if you have kids with very young kids and these kind of things where you need to have a more flexible timing because of the means. If I can compare the old approach, I would say where you need to be in the office eight hours a day at least to perform your job. Say more the Nordic approach where say okay, the society is turned to the family first and you work for living and you don't live for working. If I can say so that's something we need to kind of meet in the middle and say, okay, of course you need to be devoted to your Job and your responsibility, but as part of your entire body, your family is probably also as important as that as your job. And so you need to find the right mix, the right balance on that approach. I think for me, the right approach is when you get educated people that know what responsibility means. They can organize their work themselves, some freedom on that space to get them happy in their job and then make sure that they fulfill their role correctly.

We spoke before about downside of this way of working as well, and that sort of links into it. And you said that open way of working, someone comes up with an idea and then it bounces off someone and everything else. You said that there were. You set up the Zoom meetings, but there was less of them. You know, they started because problem solving, you know, if you've got a problem before, yeah, all jump on a Zoom call and four or five people work at it and great. But then over time, that sort of diminished. And that's something that you've sort of tried to keep an eye on what's happening, like.

Yeah, that's why I'm now doing more and more meeting without any topics, just making sure the contact stays. I'm not sure this is the perfect answer to that change. I think we still need to work on it to find. Find the best way to perform in the future, because I hope and cross fingers that we can get out of that Covid crisis and then we'll be able to adjust a little bit the way we work. I don't have the perfect answer today, but I'm thinking of it and I think at least we'll have to rearrange the way we work. I was talking about flexibility, but I was also talking about communication in the team. That's something we need to find what is the ideal way of communicating? Because there's probably more answer than one single one. But things have to change versus the past, that's for sure.

Previously you were regularly traveling a lot of the time when we've met at conferences and we both love to meet people. You're very outgoing as a treasurer and like to sort of interrelate with people, but you were doing a lot of travel to your Paris office on a regular basis. Overnight, that virtually stopped. I know that we both talked about, we can't wait for this to be over to actually get to meet people face to face. Why do you think that's so important?

I think it's even more important if you're really removed from the heart of the activity. If I take, for example, I was used to get to Paris at least once a week to meet my boss and the rest of the central services of the group. But I was also used to visit our main affiliates at least once a year and the smallest one at least once every two years. I consider that the physical contact is also important and it's probably even more important with people that are very remote. We are covering the whole planet. So I have my team here in Brussels, but I've also part of local treasury teams in China, in Singapore, in the US and York in Geneva for our European Center. I think that you can work remotely with those guys from time to time, but at a certain point in time you need a physical contact because that moment that you share real things. So your philosophy, your approach of the job, how they perform, why they do so, and also the exchange of experience. It's much more natural when you are face to face with people than rather through a screen and a camera.

Also, it's a very enjoyable part of your role as well. Said to. Luke's got these amazing backdrops in his videos too. You know, he's got a lovely genoba there. And you said it showed all the barrels and stuff, which is incredible. And as you said, Mike, you actually get to see the physical product. What was that like? As well as connecting to it.

Just to get back to the previous thought, one of the important things also is to meet people locally because you are facing different culture. And for me, it's essential to understand these differences to make sure I can dialogue correctly with these guys. I'm not talking to my Chinese treasurer the same way I'm talking to my US treasurer, for example. And no discrimination at that point of time, but it's the way you approach things in a different way and you present things and you exchange things with these guys with a very different dialogue. This, you cannot learn that through a screen. That's something you need to learn on the field. So that's why I consider this is important that from time to time you visit them or you let them coming to you and visit your office as well, because that's where you have the most productive exchange and also where you build the trust amongst the team for.

A real business that both you and I, really, well, we really love. I love your product, you love the services. Luke, we could keep talking and we did before and things like that, but, you know, as we approach the end of today's show, you know, we'll put in your details in the show notes and LinkedIn and things, and lots of people I know will look at it and say, wow, What a great 30 years plus experience in Treasury. But also some of the different things you've done. One of the things I would want to mention as well, actually, Luke and I talked about that you're a board member of Goods to Give and we'll put the details about that. Can we just touch on that briefly? Because I think, you know, I'd like people to look at it and, you know, maybe contribute or at least get maybe involved in things. If. Could you just describe that for us before we move on to your final tips for people in Treasury?

First of all, I think we are quite lucky guys in Treasury. I think at a certain point of your career you need to, to give back to the, to the society. And I was quite astonished by looking at the number of people that live under this level of poverty in Belgium. But I guess it's the same in many countries. And my question was, what can I do to diminish that in my position of treasurer? And so I met quite interesting people that has a concept of all the unsold products of first necessity were destroyed because that's the, that was at the time the cheapest way to do so. Say, okay, but if we collect these products and we that to the people in need, maybe that will be a good thing. And what can I do to do that? Well, I've got only a finance expertise, but if I bring other people with different expertise around the table, we can probably build a team that could address that in this globality. And so I brought some people having experience in the logistics in the juridical sector, my experience in finance, other experience, or people that has a very huge network of contact in the digital industrial sphere. All those people were put together and we developed a logistic model, kind of B2B but for people in need, where we do not ask any subsidies from the States, but we build up a model where products were given and we redistribute that through a webshop to the social organization. And so we started that adventure in 2012, building up the model, testing it and making sure it was a good model for the future. And that was the case. So Goods to Give is an organization that now distribute about 6 million euro value of product per year to people in need in Belgium. We have a similar organization in France and Spain also, and probably in other countries. But I think that's one way to give back to the society, is to make your expertise available for those who need them.

Fantastic. And we'll put the link to that to the organization in the show notes. So I'd like people to look at it because I think it's invaluable when we discussed it as well.

Yeah. And if there are companies that have unsold product, excess product, they can still contact us. One thing also is that now more than ever people are concerned by CSR and not only as a, as a nice greenwashing on their balance sheet, but also all their employees are concerned by what is their company doing for the planet. So I think this is also nice motivation to join the Goods to Give organization.

We're just going to wrap up today's episode but as we do that, as I say, we'll put your LinkedIn details in the show show notes. Looking back over this and if someone looks and said, you know what, I want his job not just because of the wines and spirits, you know, which is a good motivator.

It might be.

But I think, you know, you've done a fantastic job there. Really great organization and group and things. What tips would you give? Maybe the tips you give to your team or to colleagues. What are the things that you think people should think about?

For those that do not know treasury well, come and see us. The treasury is very modern and trendy. So no more. Seriously. I think that the key here is also to keep your critical sense. That's first that one key, stay curious of all the business aspect, not only the finance or treasury one, but be curious to all the aspects of your company. And by knowing every aspect of the company, you will be much more richer and your career will probably evolve in a good way if you're involved in that this discussion. And also never be afraid of change. That the change is the, that's the things that keeps me awake because I'm curious but because I don't want to lose the last train. That's something that is motivating me. And treasury is a perfect place to do so because it's a never ending evolving story. Technology, regulation, whatever. Treasury is composed of a lot of things that change on a permanent basis. So coming back to my first words on this interview, I say that accounting has probably evolved a little bit, but not as fast as treasury because treasury is always looking for future.

Luke, amazing words. Thank you sir. As I said, we could just keep talking, you know, and we did before and it was, it was a fascinating pre podcast call that went on for you know, an hour plus and but you're a busy treasurer so I'm going to respect that you've got team to manage everything else so thank you very much for your time today, and we'll put your details in the show notes so people can connect to you and you look forward to seeing you physically.

Okay. Well, welcome, Mike, and thank you very much.

Thank you, sir.