In line with ABB’s wider vision to ‘outrun’, the group’s Corporate Treasury team has been working to become leaner and more efficient in recent years. In the words of Jan Hausin, ABB’s Cash Management Workstream Lead Europe, the focus has been “all about automation, centralising control and reducing risk”.
In recent years, ABB has been proactive in modernising its treasury structures, including a project launch to roll out its in-house bank (IHB) globally. The group implemented a global payments on-behalf-of (POBO) concept, where the IHB legal entity executes accounts payables, salary and tax payments for group companies around the world where legally permitted. This effort has been very successful. Whereas five years ago hundreds of bank accounts were used to carry out payments locally, today more than 60% of ABB’s global payables are made from less than 10 bank accounts. POBO is in use for 16 currencies globally. Direct debit collections (collections on-behalf-of, aka COBO) are also carried out via the IHB legal entity.
The transition to an IHB model stems in part from the finance leadership’s move to a centralised corporate treasury function; a departure from the devolved structure that previously existed. This shift, which began in 2019, has seen ABB move from a country-specific treasury model – whereby country organisations such as Germany, the US, China and India had their own treasury function – to regional, process-led teams.
The regional centres, known internally as ‘Cash Management Centres of Expertise’ (CAM CoE), now report into ABB’s central treasury engine in Zurich. Hausin heads up the CAM CoE Europe, reporting to Jean-François Carter, Global Head of Cash Management, who oversees the group’s corporate Cash Management function from its Zurich headquarters.
Hausin cites technology as a key enabler for the transition. This took the form of the group’s migration, also started in 2019, to SAP S/4HANA – the strategic project being undertaken by SAP customers to modernise their core enterprise resource planning (ERP) systems – as outlined in Figure 1.
“The migration to SAP S/4HANA was a major collaborative team effort between the Treasury, Information Systems and the Finance teams, who were the key enablers on this journey, and we now operate on a very powerful system,” he says. The move away from regional systems to a global platform gave ABB the scalability and functionalities it needed to operate a global IHB and its core concepts: payments, collections and receipts on-behalf-of as well as book transfers for internal flows.
“Without this sophisticated technology we wouldn’t be where we are right now,” continues Hausin. “Over the past three years we’ve gone from a country-by-country set-up to a truly global workstream and a process-led, scalable organisation.”
Carter agrees, noting that standardisation was integral in the transition from “spokes of the wheel in different countries into one global hub”.