Seeing the Bigger Picture in Treasury with Ramon Tolk

Foreign.

Welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week talk to treasures about how they built their careers, where they are now, where they see both themselves and the treasury profession. Going to next this week's show, joined by Ramon Tolk, the senior Director of Treasury, Avery Dennison. Now, Avery Denison are a global materials science and manufacturing company. Well, basically a world leader in labeling. So used by businesses to add branding to products such as drinks, food, personal care, pharmaceuticals, the company actually gets over 75% of its revenue from international customers. So a truly international group. But as always, I'll get Ramon to explain a bit more about the Avery Denison business a bit further on in the show because as always, whilst the company's massive, I don't want to focus so much on them. I want to focus on Ramon and his background. Now, we've known each other for many years, meeting at conferences, I've seen somebody speaking, which is really great, but you know, I was going to take us back to the dim distant past. Ramon, when you first ever started in finance and ah, the world of treasury, that's for me. How did you first ever get involved in, well, finance and then treasury and where did it all start for you back in the day?

Well, it started already quite long time ago, over 25 years ago when I started in auditing. Actually I started auditing straight from high school, starting with one of the big four audit firms, Deloitte. And then besides my work, I was doing my master's in economics and then became charged accountant as well. And during my audit work, at some point I was auditing quite a lot of housing associations. As you know, they are quite capital intensive, they have quite large amount of loans outstanding. So I got more and more in discussions with the finance directors or some even had a separate person doing the treasury for the Housing association, talking about how they do this, how do they determine, for instance the tenor of the loans, what to do with the interest rate, fixing it, floating, what tenant for the interest. So during my audit work, I got more and more in touch with the treasury side at my clients, which I found very interesting. And then after I graduated as Chartered Accountant, I was looking at, okay, what do I want to do next? And at that point in time, coincidentally, we acquired a small treasury boutique consulting firm within Deloitte and I started having conversations with them and then I switched to that part of the business and became a Treasury consultant. That's how my career in treasury started.

And with the switch from as you say, capital intensive housing associations to then the transition, if you like, to commercial treasury, if you like. I know that housing associations have become far more commercially organized and things like that, but obviously the reasons for doing things a lot the time are different. We work with a number of housing associations and they've said the reason for they want to make profit is not to give back to shareholders, but the shareholders are actually their residents and their, you know, give back to the organization. How did you find that transition into more commercial and then talk us through? Because you were then in that role for sort of seven years and running a team. What was it like making that move?

Well, at first I was more advising, let's say treasury or housing associations on a variety of treasury topics on treasury policies, but also sometimes with local municipalities. But then within that treasury consulting firm, I was the only one with an audit background. And at that point in time, ifrs and Sarbus Oxley became important topics for quite a lot of companies. And with my audit background I started developing interest in that area. Of course, the hedge accounting was a topic that a lot of companies were dealing with and were having challenges with how to do that. And then for companies that had a listing in the US as well, which had to comply with Sarmus Oxley, they had to set up the whole Cyrus Oxley treasury control frameworks. And I was helping out these kind of companies and in these kind of activities. My auditing background came as a huge plus because I was also understanding, let's say, the views of the ways the people were dealing with things like control. With financial reporting. I was able to, to sort of bridge the gap between financial controllers and the treasury folks in those companies.

I mean, the translator, as you were. That's what I've heard actually a couple of times. People have said all the time people say, oh, you're the auditor, you know, the big bad stick and stuff. And they said, actually no, it's much more. They sort of translate the business needs with the treasury needs and sort of sit in the middle. So I think. Was that the sort of role, do you think?

Yeah, no, that's. That's exactly correct, yes.

Yeah. But then the. So you were there, you're doing that and you're sort of leading a team again, you're in consulting. People sort of say, you know, well, consulting, it's about going in, giving some advice, walking out the door and things like that. Or, you know, how did you find that consulting environment? And maybe also sometimes you have a sales aspect to it as well. How did you balance those off with the sort of core treasury stuff.

No, that became more and more difficult, I would say. I mean, of course as a professional, you always want to be involved in the content and, and of course in such a role, sales is part of it. But what I did find at that point in time, in being in a big four audit firm, is that the regulatory framework of what you can do or can't do as a consultant got more and more limited. And indeed, as you said, as a consultant, you're always with the client, you provide your advice, but then before they get to implement the advice, you're already out of the door onto your next client.

Yeah.

Which is something I was missing, that you really become part of, let's say stricting the solution, really end to end. So that was one of the main reasons why at some point I decided that I wanted to switch to the corporate side.

Right. And how did you make that move or what then happened?

So I went to a company called Nummico, which was a Dutch listed company for baby and medical nutrition.

Okay.

And joined their team as a Treasury accountant. And then a couple of months after I joined, there was a press announcement that Danone, the French food company, acquired Numeco. So and of course that was also an interesting period because besides being responsible for the accounting of the treasury entity, we also were responsible for the accounting of a couple of holding entities. So as you can imagine, there was a huge change in the financial flows throughout the company with all of the stock options being exercised. We had a convertible bond that had to be was being exercised. And to manage all of that from an accounting and cash flow perspective was an interesting exercise. But then thereafter, of course, Danone had a huge treasury team in France, in Paris. So basically the trash activities in the Netherlands got dismantled and I went out to search for new opportunities in my career.

Okay, and you made the move and you were looking around for a couple of different things. I know you did some consultancy for different companies and things. And then Vimpelcom came along. Is that the right way to describe it?

Yeah, indeed. And the Vimpelcom journey was a very interesting one.

Well, talk us through that. So again, for the people that don't know it outside of the company, we got listeners west coast USA and they're like vimple who? So maybe explain them and how then that sort of filtered into treasury and how you joined.

Sure. So Simplecom is a mobile telecom operator and they were focusing mostly on emerging markets countries. So by that time they just had moved their headquarters to The Netherlands, after a merger of the old finpocom, which was predominantly Russia based with presence in some of the other former Soviet republics like Kazakhstan, Uzbekistan, Georgia, to name a few. And then they had merged with Kiev Star in Ukraine. And right after that they did a huge acquisition with what by that time was called Orascom Telekom, which had presence in Egypt, in Algeria, Pakistan, Bangladesh, and they also had a huge stake in Wind in Italy. And so when I joined the company, it was a newly formed position of treasury controller. At that point in time, headquarters was just being pulled together. We were with about 100 people, which grew to about 140 initially. And basically you get to set up treasury control from scratch because it was newly formed position while still managing, let's say a company of. By then we had about 20 billion of revenues, I believe. So it was a huge company. Also a very complex company with complex ownership structure. Because of that Oriscom Telecom holding entity, we didn't own 100% of the shares, but only some 52% I believe. And then with Wind in Italy, because of high leverage, it was ring fence. So that got special treatment as well. And then of course the complexity that all the emerging market countries bring. So that put quite some challenges on us as a team.

And what about you, as you say within treasury, when you're dealing with all those emerging markets? And people sometimes say, well, my job in Treasury, I just look after the money, help to look after this and everything else. But how did it sort of cascade into your role? How did you have to deal with emerging markets? I deal with a couple of companies which we're currently recruiting for at the moment, and they focus on emerging markets. And people have sort of said, look, a lot of the time, let's take an example, people said about Brexit and everything else and they say, oh no, that's an orderly exit. We don't mind about that. It's a planned time frame, it's easy. So we're dealing in some countries in Africa that will devalue their currency overnight by 20%. That's my issue. It's not the day to day stuff within Western Europe. It's perhaps the more out there companies that are throwing the challenges up. How did you deal with that within Treasury? What was the. Do you find yourself affected by it or you just try to manage it?

So because of the structure of the company and the way it was organized, the company was quite decentralized. So in each and every country we did have a couple of people dealing with treasury, which was mostly, let's say, the local operational Treasury. And in those countries, we really felt that we needed to have people on the ground dealing with that. Also each or most of those companies, the business units, they had to some extent an own debt portfolio to manage, because that was in. In that case, for most of those countries, the only way you could have some debt in local currency to sort of balance the FX risk that you are facing when you're investing in these emerging market countries. So in that sense, let's say from our perspective from the headquarters, it was just being able to give them strategic advice, give them directions on how to do this, make clear what treasury policies are. We got them all included in one treasury management system that we implemented back then, which helped us a lot to gain insight in their actual positions and get efficiency in place from a reporting perspective.

But then you.

Sorry.

And then also the company, although it was listed, you said that it sort of had some different elements to it in terms of equity investments. It was quite an exciting period for yourself and your career. Again, maybe for the audience, explain why that was so much fun. Why was that interesting to you as a Treasury guy in a company that was a listed plc? So it's just boring, turn the handle. But instead you said, no, it's actually incredible stuff. And you were doing lots of activities that perhaps people wouldn't get to do. Maybe talk us through that part of the journey as well, if you would.

So the ownership of the company was. There was only about 10 to 20% free float of the company, and the majority of the shares were owned by a Russian investor. And then the other part, about 30%, maybe a bit more, was owned by Telenor, the Norwegian telecom operator. So that gave, let's say, quite interesting dynamic at that level. And it basically meant that with these people being involved in shareholders and as well in the supervisory board, that the company, although of course the primary business was telecom, it was managed sort of as a private equity firm with a clear presence from the shareholders, clear directions on whether they want to go. And sometimes that also caused challenges because at one point you were thinking like, okay, they probably will go left, and then they went right. And so that. That also made life in treasury very interesting because you had to deal with these dynamics and that was an interesting period of time.

And when you said you had to deal with them in treasury, again, people saying, well, you know, what challenges did it throw to you guys? What were the. And how did you deal with them? You know, was it about the sort of entrepreneurial side of things versus PLC and reporting or what was the impact.

There was a continuous focus on Capital Financing. FinPocom as a group was quite high leveraged. So there was always that gives a specific dynamic. You also had to monitor your confidence very tightly and especially with some of these currencies making for depreciating quite rapidly at some point in time really put us to sort of the stress levels of what confidence would allow. So that also brought, from a Treasury perspective, a lot of focus on the corporate finance side. We had to restructure quite frequently debt elements of our balance sheet. So we have done several restructuring exercises also with revolvers, revolver credit facilities involved. And at some point we also got to sell part of our business in Algeria to the Algeria, as a result of which we got about 4 billion of sale proceeds in our bank accounts, which we had to find, let's say, a good application for. And that was applied partly by just repaying some debt elements, but doing a tender for part of the bonds that we had outstanding. So at some point within treasury, jokingly we were saying, like, this is not a telecom operator, this is a corporate finance house with a bit of telecom.

Presence, telecoms added in sort of thing. And again, if there are other people out there, you know, operating those corporate finance houses with a bit of telecoms or a bit of this product in it, you know, in treasury, how did you, you know, what was the attitude to the treasury guys? How do you face that sort of every day? Do you get involved in like, yeah, come on, we're a corporate finance house, or what do you tell the guys in treasury when you're leading them and things like that to focus on what's the, you know, what do they get out of it, as it were?

Well, for the people in the Treasury Department, of course, everyone involved within the treasury team got very excited. All of the activities that were going on and the huge responsibilities that were put on us to manage this in the right way. So we every day it was getting in early, rolling up the sleeves and putting in a lot of hard work to get things done. And besides all of these activities, you still wanted to look at other elements of treasury as well, where you are looking for improving the way you do your work, improving the way you use your tms, get more automation in place, looking for other opportunities like ethics strategies that you may want to improve. Besides all of these interesting corporate finance things that you could work on, there were also other elements we still wanted to focus on as well. And also where we want to improve.

Yeah. And then how did your time with those guys sort of finish up? Because then you made a move to, as we said at the beginning, explain Avery Denison for some of the listeners, if you would. But you know, how did that sort of time, you know, wind up? Because you were there for sort of four years or so, four or five years. So, you know, give us the whistle stop tour into the role at Avery Denison.

Well, I've been with Simplecom for about five years indeed. So by the time I said like, okay, this was enough, I've seen so much, I've done so many interesting things. But still now it's time to look ahead and see what other companies are out there with challenging, interesting or trash. And then I got in touch with Afri Denison and also av. Denison is very interesting company. Maybe not so much on the corporate finance side that is quite steady, but more on the treasury operational side where we get to improve a lot of things. So treasury within eifredence is set up in three regional Treasuries. So we have a Treasury team in the US taking care of the Americas, we have a Treasury team in Hong Kong taking care of Asia Pacific. And my team here in the Netherlands takes care of emea. But besides the responsibility for treasury for emea, there are also several activities centralized in my team. So we do everything FX related, which initially was only the transaction execution part, but now more the end to end process. We do out of my team, we do all of the intercompany loans within my team, which makes sense because most of those loans flow through Dutch holding company or through the Dutch treasury entity anyway. And then also the responsibility for the treasury management system is embedded in my team. And being in three different regions, we still operate really as one team where we have very regular calls with a group treasurer who's based in the Americas with all of the three treasury leads to look as well at what do we want to do at the global level? Where can we better partner with our business, provide solutions for them, for instance on working capital improvements, but also where can we contribute to being cost effective? And one of the things we did last year was we went out for a tender with our Global Cash Management, which project I got to lead. And now at the start of the year, let's say the allocation was decided upon and we are now going through the implementation part of that project, which is a huge project because we have selected various banks in various geographies. So to manage all of that, it is basically not one big project, it's actually a Multitude of projects that we're going through, moving from one bank to another bank, announcing our cash pool structures and also setting up interest optimization, especially in the Asia Pacific countries where we have idle cash that you cannot always freely transfer out of the countries that brings huge benefits to the companies from a cost and savings perspective.

And Ramon, a lot of the time again some of the listeners in UK and Europe it tends to be treasury analyst managers coming up the curve and things like that. But I've definitely heard from our US listenership, a lot of those are US treasurers and actually want to hear other people's war stories and how they've dealt with different things and their approaches to different things like this working capital project and things. So how do you project plan that? You said there's sort of a series of different projects within this one overall project. Are you using project planning tools or how are you structuring each of these? Is there specific tips you might give to people? What's the reason for doing what's the nugget if you like and how do you deal with each of these? Or is it just try and cope with all of them at once? How do you do it?

We do use project planning tools. Our company uses all the Google functionalities as much as possible. So we use Smartsheet as a solution to be able to create a Gantt chart for all of the the project steps that we have and then we have one person in the team who is really managing that Gantt chart, following up with the relevant people involved on actions that are due or getting due close time. Yeah. And then there's a lot of interaction with this project. It is really sometimes difficult because there are so many areas that are developing all at the same time. So you can't do it all on your own. You really have to rely on the team that you're working with. So we have, let's say for the implementation of the cash management in asiafacific. I'm closely working with my aspecific colleagues and of course at the other side of the pond with my colleagues in the us.

And how do you manage workload? Because obviously this is on top of your day to day jobs as well. Or do you put some of that, try and automate some of that so that it gives you gaps in your day where you can actually approach this or how do you balance the two? Because obviously you've got team to run, they're really busy doing the day to day dealing, they're doing other things as well. And yet Then this project comes along, you just say, right, you're just going to have to work another three hours a day or how do you balance that out?

Yeah, sometimes you do have to put in the three extra hours a day to get things done. That's quite obvious and I think everyone has that which is okay of course if it is for a certain time and not continuously every day throughout the year. Well, the way we are set we do tend to have focused on some of the, let's say getting some efficiencies on board at an earlier stage so that we were able to free up time from people to be able to put in the extra hours on these kind of activities. And then to some extent we always had part of the day job was already project related. So then it is more let's say shifting from one project to another project. So let's say globally we are internationally within a few Denison with 16 people. So I would say maybe if you really look only at the operational activities we could do maybe with 12 people. So basically on average we probably have four people available to focus on all kind of project related work. And of course these are not four people, let's say separate persons. It just allocates, basically allocates one fourth of one person's time to projects and for one person it might be a bit higher, another person might be a bit lower. But you also want to have flexibility within the team so that if one person at some point doesn't have time that you're able to switch to another person to help out on the projects and thereby rebalancing the activities.

And I persuaded, cajoled or nudged Ramon hard enough when we recently met at the group Treasuries Exchange in Germany. Great event, really enjoyed it. Caught some great people including Ramon. And one of the key things we did was I talked to him and said please come on the podcast. Which I'm glad he's done today. But I noticed within your, your background you tend to talk at a lot of these conferences. A lot of people, oh, do I have to talk at another conference? Whereas you seem to embrace it much more. What sort of topics do you go out there and talk about and why do you think it's important perhaps to put yourself out there and get on stage? Because you know, I know firsthand because I've known him for a number of years, he's not like this publicity hungry machine that I am, you know. But going round. I'm joking, I'm not. I just do it because I love talking to You Treas guys. But joking aside, why do you put yourself out there? Why do you think it's important?

I always like it because at one point it's sort of being proud of the things you have done with your team at the company that you want to, let's say, share with the audience because you think it could be of interest to them. And I think that's really the main thing, sharing knowledge. And that's also what I do. Like if I go to a conference as a visitor, then you want to hear from other treasury folks like what are they busy with, what are they doing, what are developments that you see that other Treasuries are working on and because it may give you good ideas on what maybe your next project will be on the horizon. And that's why I also like to share my knowledge with the audience. And over time I've done presentations on a variety of topics on treasury management system, on let's say the business intelligence reporting layer that we had developed around that in my previous company on FX Risk Management. So that was for instance on Group Treasures Exchange I was leading a roundtable discussion on the balance sheet hedging that we do, which was always 100% hedging all of the balance sheet exposures. And now we have applied a value at risk efficient frontier methodology that drives the hedging ratios that we do, which allows us to save on the fourth points without taking additional or significant additional risk. In the past I've also done presentations on the intercompany capital structure that we have where we have been working on a reduction of our intercompany loans. So about three years ago we had intercompany loan portfolio in excess of about 21 billion US dollar, more than three times our total revenues. And over time we have brought that down to below 10 billion. And that was also a very interesting multi year project where we had to closely corporate with tax. So yeah, these are projects that you have worked on what you're very proud of and you want to share with the audience and give them tips and tricks on how to deal with these.

Kind of projects with your peers. And as we approach the end of today's show, because we try and keep this to half an hour, I know that you and I could talk for hours and we do at conferences and things like that, but with yourself, where do you see then your front end? You're meeting lots of these people at these conferences and other places, but where do you see the future of trending? And we're not talking automation. There's all those different things, but there's people, there's everything else involved. What are you seeing as the key facets before we give your top tips for treasury guys, but with yourself, where do you see treasury going to? What's the evolution of treasury for you, if you like?

I do see still, let's say, a big move towards automation. So everyone these days is talking about robotics and so on and I do believe that will help in getting rid of the repetitive activities that still, maybe every trash department has. No doubt we still have within our team and some area that we are looking into. And you always want to look at these kind of things so that you can automate as much as possible, get efficiencies in your treasury process, so, so that you can free up the time for the more strategic work. And that's where you still need to have your treasury professionals, the team to work on business, partnering with the business teams, getting a good understanding of what they are working on and then translate that to how could that impact our Treasury Department, treasury activities that we have to do? What kind of support would they need from a Treasury perspective? And that's of course still a people's business and therefore it is very important that you have to have good, qualified treasury professionals in your team. So I would say automation is there, but it won't, definitely won't wipe out, let's say, the need for treasury professionals. That's still very much needed and will require a higher level of treasury professionals more at strategic level.

And I agree, and this is one of the things that I think a lot of people made a mistake over the past few days when, the past few years, rather, when they sort of said, oh, the, you know, is going to replace robots, replace jobs. They don't, they make jobs more interesting, they supplement the work to make you be able to spend more time doing the higher level activity, you know, the junior stuff, the, you know, the junior activity, the stuff that's really, you know, repetitive. Boring. Yeah, that gets rid of it because it's boring, you know, so it's, as you say, it's sort of the, the future is, is, is getting rid of the boring stuff.

Indeed, indeed.

And so, so, you know, as we come towards the end of today's show, as always, we'll put Ramon's details in the show notes. You can connect to me on LinkedIn if it's good to have as part of the treasury network. But just with yourself, what are the things, you know, looking back and, you know, maybe looking back to the past, the Present and the future and your career. If someone says, actually that's great, you know, the Wimpel. Com experience more recently. And then Avery Denison and I'd like to replicate that, what would you sort of suggest to them or what are the tips that you would give to people, you know, maybe that you've given speeches and things like that to say, look, this is what you guys need to do.

What I believe, what always is important is that you keep, let's say, a broad scope. I've seen in the past, treasuries that really operate sort of from an ivory tower. And that's not what you should be doing as treasury, go out to your business partners, get to understand what keeps them awake at night and try to think like, okay, what can we do to, let's say to deal with that, to help them out? And so you really have to have a proactive mindset. And I would say another important element is that you continuously have to look for ways to improve. Whether it's your own work, the systems you operate with, the way maybe the team is structured, there's always elements that you can improve and that's what you should be looking for. I believe for me, if I look back at myself, that has helped me throughout my career hugely. Because already as an, as an auditor was still being, studying for, for to become chartered accountant, I was taking on everything that I learned during the studies and right at that point in time, already see how I can, let's say, incorporate that knowledge into the work I'm doing. And also later in the year when I was in treasury, all the knowledge you obtained through conferences and so on, through literature, through your studies, directly try to translate that in how can I use this knowledge to improve my work? The team I'm working in, I think that's, that's very helpful.

Yeah, bring it to bear. So I think, well, amazing to chat this early. I mean this is. We're doing this early on a Monday morning. So thank you for your time and you'd had your first strong coffee and I'd done the same. So it was great to chat. Looking forward to seeing some of the other conferences that we'll be doing. Thank you very much for your time today. And guys, if you want to connect with him, you'll have his details in the show notes. Connect with Ramon. Great guy to have in your network and look forward to seeing you at the next conference or two.

Thanks for having me.

Thanks, sir.