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To be the best corporate treasury department: monthly boot camp process reviews are essential

Patricia Greenfield, Treasury Operations Manager, at AstraZeneca the global pharmaceutical company, is a lovely, kind lady, but she has zero tolerance for manual creep, use of spreadsheets, and any breach of treasury policy. This is part of her drive to be the best corporate treasury department in the world, in which they aim to pro-actively support the AZ business units around the world with specialist Treasury expertise.

Continuous Improvement Programme throughout AZ
In 2008, AstraZeneca embarked on an ambitious programme of restructuring its Global finance function with the stated ambition of becoming the best finance function in Pharma. This project set about reviewing and identifying what constituted a great finance function and set key annual objectives to deliver this vision by 2014. This meant a re-engineering of all processes and activities throughout the group, coupled with an ongoing drive to change the mindset and introduce an ethos of continual improvement.

They adopted the mantra of Creative, Collaborative and Courageous in all interactions embedding this in each individual's annual objectives. One of the major changes in Finance was the creation of a Global Transactional Finance organization responsible for managing all Global transactional activities, e.g. Cash and Banking and T E, and the creation of a Group Finance Function, encompassing all specialist finance activities, i.e. Tax, Insurance, Treasury, Controllers.

As part of this re-engineering process, Corporate Treasury developed a strategy of how to convert their process into best in class. This strategy was supported at the very highest level within AZ.

AZ Treasury 'End-Game Vision
As part of this programme, the corporate treasury department developed an 'End Game Vision' - see figure below - of what was needed to provide the services that the AZ business units needed. This was approved by senior management and is the objective that the department has been working to ever since.

'End game' Vision Structure


The Programme
They then set about re-engineering all processes and cutting out duplication to achieve this vision. By mapping end to end processes and what steps were involved in doing the daily banking, they identified blockers to efficiencies. Some of the issues were caused by the old Treasury Mangement system which could not support the ongoing Treasury activities in the model. This required a change in TMS to meet the deficiencies of the previous system and could support the continuous improvement process.

Savings include improved efficiencies saving between 5-6 hours a day just in the processing of banking items. In addition, to minimise risk, the TMS is hosted by the supplier, plus they a have services contract to support the automated links between the banking systems. and the TMS as well as password controls managed by the AZ Systems team. And they have also outsourced back office to a third party.

Nevertheless, this was only the start; a continuous process improvement programme in the corporate treasury department has been going on ever since.

Monthly Boot Camps
AZ treasury team handles of Front Office, Middle office Operations and Middle office Reporting and Control. The back-office settlements and reconciliations are managed by BAML, while the transaction processing of millions of payments and collections is outsourced to GEMPAC.

The AZ treasury team handles significant volumes. Each year they: deal around £USD80 bn FX, have £USD6-10 bn under investment, manage USD110 bn debt portfolio, maintain a USD 1-3bn US Commercial Paper Programme, and process 3-4k corporate treasury transactions. There is a team of three in front office, three in middle office for reporting and compliance control, and three for middle office operations.

AZ corporate treasury department's process improvement programme is based on a culture of continual self-analysis and ongoing improvement. A good example of this is how they realised that the gap between annual reviews of progress against objectives was too long and allowed slacking and sliding back into bad habits. Instead, they have monthly boot camp where all the department sits down and reviews their progress to achieving their vision. They review looks at three areas:

  • the good, the STP processes that are working well
  • the bad, e.g. the manual processes
  • the downright ugly, e.g. manual, spreadsheet, manual postings, etc.

Team members are not allowed just to point out a bad or ugly process, they also have to suggest a solution using this process:

  • Situation (what's the problem)
  • Target (what would you like it to be? What is the ideal?) • Proposal (how do you think we should solve this, what is your suggestion? Do you know of how an external company has dealt with this before? Have you used a better way of working?)
  • Action (What are you/we going to do? By when? How? Who will do it?)

The team will then discuss the proposal. Examples of current issues being worked on are:

  • the single un-reconciled item last week in the daily 250 ZBA sweeps. It is unacceptable just to post a manual entry. The reason for the un-reconciled item must be understood and identified as to whether it is a true one off, the first of many, e.g. the counterparty has changed correspondent so the M940 message mapping into the TMS needs to be amended, or it a truly unexpected receipt, etc.
  • review of the balance of in-sourced and out-sourced processes.

AZ corporate treasury department drive their cash management banks and system supplier very hard, insisting on continual improvement and attention to minute detail to achieve their vision. There is no let up; the work is never finished.

It's not enough for the corporate treasury department to develop a superb vision and understand their business model. Corporate treasury also needs to have a continuos improvement programme including the unforgiving monthly boot camps and zero tolerance in vital areas.

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