Cash & Liquidity ManagementCash ManagementCash Management RegionalProgressing from print: Treasury in transition at Wolters Kluwer

Progressing from print: Treasury in transition at Wolters Kluwer

Dutch group Wolters Kluwer provides information services and solutions to customers including legal, business, tax, accounting, finance and healthcare professionals in over 180 countries. In this interview with GTNews, SVP for treasury and risk George Dessing outlines how the business has changed during his two decades with the group.

Wolters Kluwer, headquartered in the Netherlands, provides information services and solutions to customers including legal, business, tax, accounting, finance and healthcare professionals. The company reported 2015 annual revenues of €4.2 billion in over 180 countries. With responsibility for the company’s treasury and risk management functions, George Dessing has worked for Wolters Kluwer for 20 years – giving him a unique perspective on the changing role of treasury within the company.

GTNews: When did you begin working at Wolters Kluwer and how has your role evolved?

George Dessing: I started here as an assistant treasurer roughly 20 years ago, later becoming responsible for the treasury department. When you start your career, you may be planning to stay with the company for a certain number of years. Apparently, the company is doing something right in this case, because it has given me opportunities to grow both my role and the treasury function during the time I’ve been here.

As well as centralising the treasury department, my role has expanded beyond pure treasury over the period, which is why my function is currently senior vice president (SVP) treasury and risk. During this time, the organisation has also seen some considerable changes – most notably the move from print to digital.

How is treasury positioned at Wolters Kluwer?

I view treasury as a nexus of cash and managing risks, and within Wolters Kluwer that has always played an important part in determining our financial strategy. At the end of the day, liquidity is our key priority for this organisation. I often point out that companies don’t go bankrupt if they are not making any profit, but they do if they don’t have any cash lying in the bank any more. So, the role of cash is always a critical enabler for the execution of our 2016-18 strategy, Growing our Value. I think for every treasurer, it is always top of mind to think about cash and cash flow improvements.

We have three main uses of cash at Wolters Kluwer. First, we want to invest in our business, both by supporting growth and carrying out further acquisitions, such as last year’s purchase of Enablon, a provider for global software solutions for environmental, health and safety compliance. Secondly, we want to maintain our optimal leverage, which is supported by a strong cash flow. Tackling this area also involves investing our surplus cash in the right way. Finally, we want to give back some cash to our shareholders, which we do via progressive dividend as well as a share buyback programme of up to €600m between 2016 and 2018.

While much of this can be seen as the traditional role of the treasurer, the role is also expanding where risk management is concerned. Within risk management, we have a defined risk framework, which focuses on risk prevention, protection and response, leading to inspiring results through mindful risk taking. This covers different risks: strategic and operational risks, legal and compliance risks, financial risks and financial reporting risks. Most of the risks traditionally managed by the treasurer fall into the financial risk bucket: currency, interest rate, liquidity and counterparty risk.

A further extension of what we have set up is that both risk and the treasury function are part of the risk committee. The risk committee consists of a couple of disciplines – for example: IT, legal, internal audit, internal control, risk and treasury – chaired by our chief financial officer (CFO) Kevin Entricken, that come together to speak about different risks within the company and tries to take immediate action to tackle them.

A further adjacent role of the treasury is the transfer of our real estate department, reporting into treasury and risk, which also involves managing and preventing location risk through the use of business continuity management strategies.

What are the biggest changes you have seen in treasury since you started?

It is fair to say that we centralise more of our services, so we have taken away certain tasks that partly took place at the local level – these have now all been centralised. One of the main examples is that the treasury department acts as the internal bank for Wolters Kluwer. So, if a business unit is thinking about investing in growth and needs some cash, they need to go back to their internal bank – in other words, the treasury department.

The treasury department itself has been in transition over the past 20 years, and now includes three teams. Over 25 people work in treasury, risk and real estate, spread between the United States, Ireland and the Netherlands.

What’s driving change within the treasury?

One element is the continuous digital evolution of our business and products. In Q3 of 2016, during our trading update, we informed our investors that digital and services revenues now represent 86% of our total revenues. This represents a tremendous shift from the focus on traditional print products that we had in the past.

Another element is complexity: the increased regulatory and changing environment is also something that we need to react to. This includes the accounting changes that we are seeing, such as IFRS 9, which is relevant for most treasurers. We are also focused on IFRS 16, which is more related to real estate, i.e. leasing.

Meanwhile, the globalisation of our business units continues. We’ve seen operations popping up in new countries around the world, and these require action from treasury.

Finally, the world is getting more uncertain. Volatility has increased, bringing direct implications for our financials and hence for the active board-level discussions that we would have.

These challenges illustrate why we have everything centrally executed, with a transaction-focused approach. We want to be the point of excellence within the organisation, and hopefully that centralisation leads to a certain level of efficiency and lower cost as well as consistency in legal terms and conditions. At the end of the day, an effective treasury department can only function as a value-adding business if it has good support from all the other internal departments, such as tax, accounting and legal.

To what extent are treasurers in other companies adopting a similar approach?

In my network groups in the Netherlands, I see that most treasurers are making inroads when it comes to managing risk. I think we are a bit ahead of the curve – for example, in setting up a risk committee with treasury playing an important role. It is also worth mentioning that real estate is not normally perceived as a role that is already under the responsibility of the treasurer.

What do you see as the treasurer’s required skillset?

Treasurers need to have a transactional mind to make sure they get things done. They must also be capable of handling complex discussions with banks, while presenting these topics as clearly as possible so that the board can understand the issues easily and make the right decisions.

It also goes without saying that treasurers have to be incredibly accurate. If a transaction needs to be executed at a certain moment in time, you cannot think that the transaction is half right – you have to be certain. Rather like our tagline: ‘When you have to be right’. Likewise, within treasury you are handling probably a multiple of the total revenue of the group. You cannot say that it’s OK if only 1% of your transactions have errors, because you are still talking about a tremendously large number.

Finally, what projects will you be working on this year?

We’ll certainly have the usual discussions about what we have achieved and what we are going to do in 2017. Liquidity will remain relevant for us as always. Right now, we still have surplus cash on our books, which is a good problem to have.

We’ll be making sure we stay efficient from a cash management point of view. We will also be working to improve our forecasting even further, so that we can be more transparent on that front. So, I would say our main priorities for this year are liquidity, transparency, forecasting and our current cash management set up, making sure that we keep on adding value for the business by staying ahead of the curve.

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