The following article was excerpted from the CTC Guide, Global Interconnectivity: Communications in a Global Treasury. DOWNLOADThe challenge
Coca-Cola has centralized its global treasury in Atlanta. Policy is executed through a network of three non-U.S. global shared services centers (SSCs) based in Manila, Buenos Aires and Drogheda, Ireland, and a U.S. SSC in Tampa, Fla. Given the complexity of the organization—Coca-Cola has over 300 legal entities and is present in every country except Cuba and North Korea—managing communications is a key condition for success, and something that is a constant work in progress.
Jim Aschmeyer, CTP, director of international treasury services, and his team leverage their significant relationship with their primary global cash management bank, Citibank, whenever possible. “Three years ago, we launched an initiative to better align key priorities between HQ treasury and the SSCs,” he said. “This is intended to ensure Citi is focused on key success priorities in terms of delivering greater effectiveness, efficiencies, and solutions to the Coca-Cola system globally.” The solution
Last year, Coca Cola and Citi aligned on three key objectives: an earnings credit rate (ECR) solution; instituting monthly check-in meetings; and explicitly explaining global strategy.
Once aligned at the global relationship manager (RM) level, the global RM and global treasury lead at Citi communicated these priorities to their regional account teams. “We want to make sure the local bank relationship managers are as focused and aligned on the chosen priorities as the global relationship management team, Aschmeyer said. “This alignment and coordination with the bank is an important foundational element to our global banking strategy: without a global approach from our global banking partner, the benefits of the global strategy would be diminished.”
For example, Coca Cola has worked with Citi to implement an earnings credit rate (ECR) solution that leverages its global footprint and recognizes the benefits to each geography are the same. “By extending the ECR strategy out to the SSCs—Europe in particular, but other locations as well—we managed to eliminate banking fees, with plans to extend this further as the opportunities are identified and exploited with Citi,” Aschmeyer said.
The Atlanta-based international treasury services team has also made a conscious decision to proactively improve communications with the SSCs—working with SSC treasury leads to establish regular monthly “touch base” meetings. There is also much more focus on explaining the broader global treasury strategy to the SSCs, and to collectively look for areas of mutual interest where, again, the global banking relationship with Citi can be fully leveraged.
The formal senior-level interaction between leadership in Atlanta and the managers in the SSCs sets the tone across treasury. On a daily basis there is plenty of informal communication between people in Atlanta and those in the regions, and this is based on personal relationships. “We have a new Asia-Pacific analyst starting in Atlanta soon. I will take him to the SSC in Manila so he can meet his key contacts there and gain a better understanding of our various business models in the region. Face-to-face interactions are the most effective way to quickly build these critical connections,” said Aschmeyer.
Treasury also has to market itself as a center of excellence. “We can effectively solve problems around the world, simply because of the broad view and experience we gain in our centralized positions,” Aschmeyer said. “We can identify similarities across different locations, whereas an SSC might only see a single incident related to a particular issue. Because of this exposure, and because of our broad strategic global banking partnerships, we can quickly vet an issue and come up with options/ strategies.”
Aschmeyer noted that treasury recently had an issue in Ethiopia which prevented its SSC from opening a bank account there. “By working with one of our global banking partners (global account team in New York), we quickly identified a good correspondent banking relationship in Ethiopia, and then leveraged the relationship between our global banking partner and the local Ethiopian bank to quickly get the solution into place,” he explained.
However, as much as the company focuses on communication, it can break down. When people leave, it’s easy to assume the replacement will carry on in the same manner as their predecessor. “We need to make sure HQ treasury leads in ensuring each region stays up-to-date with global policies, such as the company’s delegation of authority and the company’s standard procedures and practices. On the HQ treasury side, each treasury services analyst builds a game plan for each entity, which contains information on local rules such as whether intercompany loans are permitted, average/acceptable levels of cash on hand, etc. It is foundational by nature, but it allows new team members to build a brain quickly when they come on board,” explained Aschmeyer.
Improving communications within Coca-Cola’s treasury team, with its global banking partners, and with its SSC partners, is an ongoing process. “We are constantly trying to get better at everything we do,” said Aschmeyer. “But we have to work proactively to keep the lines of communication open—it’s not always convenient due to competing priorities and time zones but, in the end, it is a critical necessity to be effective.”
For more information on this topic, download the latest CTC Guide in a Series on Global Interconnectivity, Communications in a Global Treasury.