What the Future of Treasury Holds with Michael Spieler

Foreign 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 them about how they build their careers, where they are now, where they see both themselves and the treasury profession going to next. Let's get on with the show. This week's show, delighted to be joined by Michael Spieler, the senior Vice president of treasury at Uniper SE. Now Uniper are an international energy company with over 11,000 employees, balanced portfolio, asset classes, lots of different things and capabilities but all around energy, products and services. Now Michael, I have been trying to get this in the diary for a while, so I'm grateful for his time. So again, as always, I'm going to shut up and let him do the talking for a change. Michael, if you would take us well back into the dim distant past. How, how did you first come from your degree and then discover finance and Treasury? Give us a walk through of you and then we'll slowly bring ourselves up to date and then, then we'll dig into more about your current role. And we talked before the show about risk management, cash and all that stuff. But let's talk about you and your story. So how did you first ever get started? Sir, over to you.

Yes. And first of all, thanks for the invitation. Pleasure to be here. Yeah. How did I get in touch with finance? It all started and that is probably true for a lot of people who work in and treasury these days with a sort of classic way through a banking organization. Yeah. So I started my work life with Deutsche Bank. Yeah. I studied in a sort of collaborative model with them through that time, had various interns and then after my studies I picked up the topic around corporate banking and corporate finance with them at a time in Berlin which was quite a amazing time since it was still in the late 90s where there was a lot of growth and opportunities in the eastern part of Germany. So got in touch with several interesting projects, things like cargo lifter and stuff. At the time was very, very present and for me as a starter gave a very sound view on how banking, corporate banking works. With then an additional stint with Handels Hochschule Leipzig where I did my master studies. I specialized a little more around risk management and the sort of interconnection between corporate funding and that finally then led me to switch over and I joined up with E On then when was it? Back in 2003. And there I learned how really a corporate treasury works. E On at the time was one of the one of the biggest utilities in Europe with quite dynamic portfolio acquisitions and divestments all over the place. Lots of these things then also created huge tasks for the treasury team at the time. After that, I think corporate treasuries are always a very central function with central topics. Topics that are from a financial management point of view are very, I would say demanding. But you are at the same time also always a little bit distant of the real business. And then at that point I got the chance to basically at this point in time become a team of a venture within E On to centralize and rebuild basically the commodity trading in Dusseldorf in a separate legal entity and support it from a Treasury perspective. I took that challenge chance and from then I built a Treasury team, a sub team that was focused on commodity related treasury topics and that then also formed the sort of core of the team I'm still leading today. Because that entity was one of the core entities that when the split happened between then E On and the new company which was later on then called Uniba, formed the core of the new treasury operations on that side.

And Michael, when you came into that, you alluded to it earlier and we've spoken about it, but you came from banking into that sort of corporate treasury environment, if you like. You know, and I joke sometimes, you know, people have come from the dark side of banking and we joke around about it, but in a serious fashion having that background within banking, a lot of people have said, well, at least I then know what the, you know, my banking counterpart wants on the other side of the table. Now, as you came in and grew the treasury, did you find that was a real insight to what your banking partners wanted? Is that something that you really thought, oh, this is all right because I know what they want all the time. How did you find that was.

Yes, I mean, that's very true. It gives you at least a sense of what the person on the other side of the table is up to, what they in the end need to make a deal also from their point of view, with success. So this is clearly an advantage because that then often is also something that helps you to steer expectations within the corporate world when it comes to what can you expect from a bank in your relationship group? Where are the boundaries? And also what does it take to make banking relationships also in the long term successful? Because I think especially these days, it's probably not wise to only take a deal by deal, but also have looking at your banking partners as sort of a long term perspective to also make sure that they support you in an ongoing fashion and Also when times are a bit tough. So I think that that's important. Yeah. So it was for sure sort of a helpful ingredient for me to have the background when I entered the corporate treasury world.

And so as you come into the world of corporate treasury and you've grown and developed and you've brought up your team, we alluded to there at the beginning of the program, sometimes I talk to people and I said which areas do you want to cover? And they've got a real. I want to focus in on this. I want to in on this. You gave me risk and cash management, working capital management and then we'll come into the commodity trading. So basically the core of Treasury. So maybe you can explain for us how do you and how do the group approach Treasury? What's your treasury ethos, if you like.

From my point of view, treasury always starts with making sure that the financial resources you are managing or the group fit to what the business needs and that you also as a partner to the business try to think and be a bit ahead and make sure that you can bring to the party is then in line what is needed for the business and for the business growth. That's for me the core of Treasury. But I would say also especially over the last couple of years, the sort of number of topics you should, if you will, as a modern and proactive treasury team cover goes beyond that. Get the financing and the cash provision right. That's I think the sort of basic topic. It's not always easy and also creates challenges in itself. But on top, I think risk management, making sure that the financial risks are under control and managed in a cost efficient manner is important. But even more so in the, in the recent past, working capital management, looking at the balance sheet, making sure that you have an efficient approach towards working capital in the company and also being there a partner to the business and helping them to make the right decisions. And also take risk and working capital management into account when it comes to investment decisions because often that's sometimes still the case. There's a lot of discussion around what a project might bring P and L wise and find a sort of an average organization. And I think there's also a view at risks but what it entails for working capital and financial resources which are not directly connected to the project like things, trade, finance and so on, these are often ignored or not focused on right from the start. And I think that's the job that you then today also have as a treasurer to make the organization aware of that working capital is not costless any anymore. And that an efficient approach is I think today one of the ingredients for becoming really a successful company. Also from an investor point of view.

How do you sell that to the internal relationship? So treasury over the years has moved from when I first started. We talked about this on a podcast recently that treasury, well, we're specialists, look at us. And they then became. And the treasury was sat in an ivory tow and it was very much, yeah, just give us your money, we look after it, we'll de risk it for you. Just give it over here. And then they started to realize, well, okay, we've got an enhanced salary for doing all this but actually not much of the business talks to us. We don't get really get involved in the business per se. How did you. On the flip side now, and I know you and I have spoken about this Michael, that you're really a core part of the business. How do you convince them? We've got listeners today that are listening, going well, that's all very well, but my FP and A guys really talk to me. Some of my project consultants, they don't really get out there. Do you go out and meet them or how do you earn your place at the table if you like?

Yeah. I think the first thing I think which is core is that you make basically clear to the organization that the treasury job doesn't start with just collecting money and getting financing lines from the banks, that it starts earlier and that you are involved in discussions around investment decisions, around decisions for commercial relationships early on so that you have a say there and also make people aware of certain topics. The second point I think that is important is that you are open and proactive regarding solutions to overcome certain of these challenges. So also provide active advice and being part of deal teams when it comes to the negotiation of certain contracts. That makes sense. And then the third thing I guess that is important is to proactively approach the business, ask them what their needs are, what their business plans are, what financial implications could be and by that then become sort of a partner that is also frequently talked to. I think there is no sense in just sitting somewhere waiting for someone in the business to call. You should be a sort of a proactive approach. And we saw also over the last couple of years the very moment you have done and created solutions that are also then to the mutual benefit within the organization. Things that get, I don't know, certain balance sheet items off the balance sheet, things that provide a sort of a liquidity goodie that is then also in the end appreciated by the board of management that creates and then trust. It shows that you are not only sitting there, as you call it, in your ivory tower and asking banks for lines and money, but that you are also active and try to shape to an extent the business and find solutions to reduce their footprint when it comes to working capital, which for us as an asset player and as a company with a strong commercial function around commodities is very important. So I think that is probably what modern treasury takes that you have that sort of connection to the business.

Why bother? You've semi answered that I would say Michael, I think but if someone is they're really busy in their day jobs and they're really. Why should I get involved? I just need to get on with this. I've just got stuff to do. What advantage inherently is there for those guys to be talking to you? Are you going to save them cash or are you going to save them effort? Or what would you say your interest Treasury, Some treasury guys are real salespeople, blah blah, blah. But why should they bother? Is it really going to make that much of a difference in the end.

Then also depends a little bit on the governance you have established around working capital and risk management. Working capital we try now for a number of years to work to manage really tight so there is certain budgets, internal costs in the end apply for usage. That helps to get the partners in the business also to the table and think about how to manage that. But even without that, I would say if you have a sort of a professional approach and you try to diligently manage your balance sheet and financial assets, that this is then something the very moment you can offer help and a proactive approach then should give you the sort of entrance and that is at least the sort of experience I made so far. But one thing I would say is for sure if you don't do that from your end, people won't approach you. And the worst thing that could happen is that they make up their own minds and approach banks and other financial institutions independently from you. And that is then also regarding a sort of consolidated and organized approach to your investors and banks and I think the smartest thing to do. So yeah, that is how I experienced.

And I touched on it earlier and before we get towards the end of today's show, I wanted to explore a bit more been at Uniper a number of years but commodity trading, which is a massive part of your treasury focus, if you like, can you talk us through what that's been like? Obviously we've been through Pandemic and a few other situations. How do you support them from a Treasury perspective?

Commodity trading, I have to say is as such one of the most exciting things I got exposure to over the last couple of years because markets are so diverse. Each of the commodities has its own, if you will, particularies with regards to how they are managed settled, the sort of physical connection is always there and most of them are globally traded or at least there's always a connection to globally traded commodities. Even it's only a local product. So that makes it, I would say very, very exciting area. At the same time it's very, very demanding from a Treasury perspective because for most of the commodities as a European based entity, there are several risks and financial risks involved. That starts with managing the FX exposure that's on a lot of the trades we are doing looking at the working capital impact when it comes to physical commodities. We are one of the biggest gas midstream companies in Europe. Storage capacity around that there's a lot of flow and also a working capital cycle to be managed every year which can get very exciting, especially around winter time. Not at least. Trading always means you have either to provide credit or you have to margin your positions which regarding liquidity risk is an area of its own but it requires a lot of thinking around the risks you are taking with your positions, the potential cash requirements and the way you want to finance then and the way you want to build cushion or for unexpected scenarios. So challenging, demanding but at the same time for me also sort of a thrill. I very much learned to like over the years.

And Michael, I'll let you talk because I just enjoyed listening to you talk about treasury and things like that. I know one of the other facets to you if you like and I've seen you speak briefly as well before about treasury management systems and helping that optimize and things. Why do you think that is sort of key if you like? Well, I know that's a driver for you. How would you know when people are listening say well yeah, well treasury management says I was talking about this and someone say oh my goodness, it really drives things. But the problem is sometimes they're saying well that's just being told to us by the treasury management system providers. You've got to have one, you've got to have one because they want you to use their solution. Why do you think from your corporate treasury perspective that sort of important if you like?

Yeah, I think it always starts with the size and the business you are in with a company. But I would say especially for Companies with a sort of an international footprint with other exposures to manage at a certain point in time. I think you can't do that with Excel or other tools which are not really specialized treasury aspects. So just basically remembering the situation we were in one and half years ago when had to do all our business from a certain point in time on from home, I was so glad that we just were through with our review and new setup of the treasury system we use. So it really enabled us together with the landscape our IT colleagues put in place and they great job half a year before the pandemic came in to really make us digital in that respect. So we were rather seamlessly in a position where we could basically do all our business from home front and through the system. We were connected workflow wise with our back office, with our risk management people, in the end also with our payment systems. And that was a great relief and a great help in managing the situation at the time. To be honest, no idea how we would have managed that situation without a system. But even apart from such rather extreme situations, I think ability through such a system and then always, always depends on the vendor. But I think the more advanced ones these days all provide a sort of a cash management function that you can do completely front to end in the system. A risk management capability that allows you to really steer the treasury book, have your P and L, your risk positions, real time under control, the sort of ability to connect to other systems that is for us, for instance, important to get all the exposure from the trading business rather automatically into our book. These things really enable you in a very efficient way and then also with a rather small team to be on top what's happening in the company and manage cash and risks. And without a system, I think it's much harder to get that consolidated view, that sort of consolidated management ability of risks and cash. So I think therefore, given we are talking about a certain size and complexity and also geographical span of the business, there's I think no way around the system that's helping you there.

You touched there on Covid and getting through the things as we now we're moving out of that. Where do you see the future? We've got lots of different things coming at us. We've got all the digital assets things and those things coming up. But more basically, where do you see treasury moving from here and, and what are the key things you reflect on and think, right, this is what we need to be planning for.

Looking at the challenges, also looking at the discussions we have in various forums with peers in the industry or in the corporate world next years ahead. I think optimizing cash and liquidity planning is a topic and remains one that needs to be tackled by treasury organizations. Being a partner to the business when it comes to recognizing external challenges and the way we want to manage them is equally important for treasury because we are getting either directly through capital markets but also through the banks. Very often early indicators how the external world is looking at your company and what you are doing. That starts with ESG topics and ends with good governance and and reputational topics. Translating this then also into inputs, how a company should develop and where it should focus to is important I think comes even more important in the future. And then all digital topics which starts with the system that we just touched on but goes beyond that. I think a lot of what we are still doing, be it in trade, finance, but also in the way we deal with banks and with these day to day processes are still regarding their core design from the latest century. In a lot of cases I think this will completely change and that will be one of the sort of things you have to be on top of. And it will probably also require a little bit of a different skill set than at least for parts of the team. So these days if we do hire someone then we most of the time also check what's the sort of digital exposure that person had. What can it also bring to the party with respect to that to have a good mixture between people who are there with the banking background but also others with a more of a digital and native style. I think that combination is the one that probably makes you better prepared what is going to come. And then finally I guess people as such will become one of the focus areas also in the treasury world world if it isn't already there. Because new way of work. The ability to do most of your stuff remotely will also be a challenge in the way you handle and lead your business and in the end and also you manage your team. And treasury teams are usually rather, rather small ones these days there it's even more important that you keep up a team spirit and a sort of a joint vision in a world where then then probably you work two to three days outside the office. And I think that's what comes to my mind to think about the future of Treasury.

Amazing. I shut up there because I thought you were giving some amazing nuggets for people listening today that I think exactly as you say. I think people are still struggling to get to know this new world of treasury and this new way of doing things if you like, and how treasury will operate with only a couple of days in the office. And what are you then going to collaborate? What are you going to do face to face? Yeah, it's a whole new world I think, going forward. So amazing advice there, Michael. Any final wrap up pieces? I mean that sounded like a good wrap up to me. We'll put your LinkedIn details in the show notes or anything else you wanted to sign off with today because I think people can just take this away and it's great advice.

In the end, I still have to say from my point of view, treasury and all the topics that are involved there, they are fun people who are interested in doing it. They shouldn't be too scared about sometimes a sort of technical appearance that that area has. It really involves a lot of fun topics and I think is a great way also to get to know a company and a good starting point for a career in a company if you are are open minded, not only interested in your core topics, but also in what, what the business and how the business is doing. And so I can only recommend everyone who starts a career probably to pick that area.

Yeah, yeah, me too. And well, that's why we host this, to tell people about the wonderful world of treasury and I. Yeah, I totally agree and thank you for some amazing advice there. It was just brilliant as always and I look forward to seeing you in the real world, you know, over for a beer or, you know, maybe just a coffee, I don't know, one day soon, you know, to talk more about Treasury. So thank you very much.

Likewise. Yeah, and really let's do that and hopefully soon we can rely on other communication channels again, not only zoom.

Yeah, yeah, that'd be lovely. Yeah, not to just do zoom like this, but actually that real world thing. So no, look forward to it, sir. Thanks. Thanks very much, Michael.

Cool. Thank you, Mike.

Thank you, sir. Hello, it's Mike here again. I hope you enjoyed this week's show. If you did, then maybe you want to follow the show or subscribe, depending on where you listen, whether that's itunes, Spotify or another great place to listen to the show from. It's totally free and means that you'll be the first to see each and every week when we release a new show. And maybe whilst you're there, you could even leave a quick review. Review. Reviews and ratings are among the most important metrics for a podcast to effectively rank. And as you can probably appreciate, the podcast is a lot of hard work to produce every week. It'd be amazing. Just take, say, 20 seconds, leave a quick review of my amazing guests and their great career stories. We'd really appreciate it. Thanks very much and I can't wait to see you soon.