The Treasurer's Perspective - Part
11: Cash Management Challenges for
Treasury Managers
27 Oct 2009
Mustafa Kilic, treasury manager at Indesit, explains
some challenges facing treasury managers, such as
liquidity management and an expanding risk role.
Mustafa Kilic has more than 15 years of experience in
treasury management, corporate, trade and consumer
finance, credit and risk management, financial and business
planning areas, as well as senior management roles in the
finance departments of several Fortune 100 companies. He holds an undergraduate degree in
Business Administration from Istanbul University Faculty of Business Administration. As a treasury
manager at Indesit, he is responsible for the group level treasury functions of Argentina, China,
Russia and Turkey, as well as worldwide group insurance operations.
Indesit is a global household appliances manufacturer and marketer formed in 1975 in Fabriano,
Italy, and is Europe's second largest manufacturer of household appliances by market share. The
group posted sales of €3.2bn in 2008, having manufactured 15 million appliances. With Indesit,
Hotpoint-Ariston and Scholtès brands, and having 17,000 employees, 17 production plants and 24
commercial branches worldwide, the company has adopted a model of sustainable development
that favours social progress wherever it operates.
Q [gtnews]: Could you outline your organisation's global cash management
structure in terms of cash management techniques, treasury headquarters and
banking relationships, etc?
A [Mustafa Kilic, treasury manager, Indesit]: As an Italy-based multinational company most of
our treasury operations are managed directly from our treasury centre. Besides corporate finance,
corporate insurance management, corporate foreign exchange (FX) risk management and
financial capital market functions, we have a cash management platform in Switzerland with four
partially independent treasury units in Argentina, China, Russia and Turkey.
From our cash management toolbox, we mainly use the physical sweeping tool for most of the
account levels for zero balance account (ZBA), while we run the notional pooling instrument at the
master account level with payment factory facilities for centrally-managed entities inside our cash
management platform.
Our corporate relationship banks, which number fewer than a dozen, execute most of the treasury
activities, and all treasury activities are regulated by a treasury policy that is annually updated.
Q [gtnews]: What does your typical day as a treasury manager involve? Could you
describe some of your key responsibilities?
A [Kilic]: As a treasury manager, some parts of my day are pretty typical and similar, such as
balancing the cash position, managing liquidity risk, authorising payment orders, managing the
relationship with financial institutions and banks, fine-tuning working capital needs and efficiency,
and spending certain time on projects, while always keeping an eye on the treasury dashboard.
The rest of my day is very hectic now and I don’t think it will become quieter for a while, either.
Q [gtnews]: What are your main challenges? For example, what's on your treasury
wish list?
A [Kilic]: Currently, we see the new look of treasury management as being chastened by risk and
shaped by globalisation. As a treasurer in an increasingly sophisticated treasury world, I am
continuously seeking a better platform from which to strategically manage the entire cash
management process to improve our financial performance, while knowing that it is not feasible to
have one approach for all countries.
I face many challenges these days: the need to stay focused on liquidity management in tight
credit market conditions and an expanding risk role. It is important to retain treasury compliance
under difficult economic conditions and heightened regulatory oversight, with the changing
character of liquidity dynamics.
For a long time, the first thing I had on my treasury wish list was the concept of '
iTreasuryDashboard' - my customised treasury dashboard that would allow me to control overall
treasury performance in real time. The second wish is a fully-integrated mobile digital signature for
all types of transactions and activities.
Q [gtnews]: As a Swiss-based treasury for an Italian company and operating in the
home appliance industry in 24 countries, are there are any tax, legal or regulatory
issues that you need to be particularly mindful of when it comes to the company's
cash management?
A [Kilic]: Of course. In each country there are dozens of limitations and regulatory issues, but if I
have to emphasise specific issues I would like to underline the increased tax implications for shortterm funding activities and the higher withholding taxes for inter-company loans in Turkey, as well
as cash pooling limitations in eastern European countries - and the number of the entity limitations
for a cash pooling structure in Switzerland.
Q [gtnews]: What steps will you be taking in 2010 to make your treasury more
efficient?
A [Kilic]: Since we know there is no single solution that can be implemented in each country to
improve the efficiency of cash and liquidity management, we decided to focus on hybrid solutions
in treasury management. Therefore, we started to build new hybrid cash pooling solutions at the
corporate level. Also, we are focused on increasing the sharpness of our cash forecasting and
boosting our order-to-cash (O2C) speed by implementing innovative collection and payment tools
in emerging markets.
Q [gtnews]: If you weren't a treasurer, what would you be?
A [Kilic]: I would have balanced the money with more sport. I think I would have been a
professional golfer.
From GTNEWS.COM 28-10-09