ValmetSimplifying access to euro liquidity

Customer story

FURTHER INFORMATION

To find out how Nordea can help your business manage its cash visit NORDEA.COM/CM

VALMET FACTS

Complex, decentralised account and cash pooling structure

Centralised all accounts and payments to currency-based cash pools for European units

Increased automation, gained central access to liquidity

SHORTCUTS

Learn how Nordea can help you get ready for SEPA at NORDEA.COM/SEPA

The Single European Payment Area (SEPA) initiative helped Valmet drive forward with its cash pooling initiative, which has dramatically improved its direct access into liquidity across its European units.

New company, new opportunityValmet has a long history of providing business services to the pulp, paper and energy industries — it’s been in operation for more than 200 years. Its current incarnation is the result of a demerger from Metso Group in 2013.

Like many organisations, longevity had also given Valmet a degree of complexity, especially in Europe where it had more than 20 operating units, some of which were responsible for their own payments and reconciliation, while others used the group’s shared services centre. Following on from the demerger, Valmet recognised it needed to simplify its cash management to improve its visibility and access into liquidity across the group.

A single cash pool for euros“We evaluated and decided at a corporate level that we needed three banks across Europe for our cash management business and the flows would be allocated to the selected banks based on currencies,” says Annika Westerholm, Director, Treasury Market Operations at Valmet.

In the case of payments in euros, the drive towards a simpler structure was aided by the Single European Payment Area initiative, the European Union

programme to simplify payments in euros. But not all parts of the business were as prepared for SEPA as others.

“SEPA was well known in our Northern European units, but our Southern European units had not been that involved in SEPA conversations,” says Westerholm.

SEPA was intended to make it easier for companies to make cross-border payments. But the changes have also encouraged many businesses making payments in Europe to centralise payments and collections.

“In the past, each unit had its own cash management arrangements so it was difficult to utilise the excess cash, even though we had the visibility,” says Westerholm.

We estimate 95% of our euro cash flows have now been concentrated in the cash pool.Annika Westerholm, Director, Treasury Market Operations at Valmet

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Valmet. Centralising its euro payments

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Valmet. Centralising its euro payments

Bringing all euro accounts and payments into one cash pool meant big changes for Valmet group companies that operated in euros — which includes units in eurozone and non-eurozone countries. Under the new structure, they would all have their euro accounts in Valmet’s cash pool in Finland. That cash pool was to be used for intra-company lending, with limits set for each unit, and interest rates of balances calculated automatically.

Getting the right supportThe next step was to identify the right banking partner for the euro cash pool. Valmet created a team from across its business, including experts from its shared services centre, its IT department — including specialist payment infrastructure professionals — and its central treasury team.

This group evaluated proposals from a shortlist of three banks. Based on analysis of fee structures, the quality of daily support, technical reliability, and the services and products provided, Valmet chose Nordea to be its banking partner for its euro cash pool.

“Daily transactions have to be reliable, and if there is a problem, we need it fixed fast. We knew we could rely on Nordea,” says Westerholm.

Adding to the complexity, Valmet had a shared services centre which handled payments and reconciliation for its largest operating units in Finland, Sweden and a handful of other regions. But Valmet also had 15 other units that processed payments locally.

Two transitions, one shared aim“There were 20 units in Europe, and only a small proportion of those were covered by the shared service centre,” says Westerholm. So while the shared services centre covers a big percentage of cash flows, a significant number of units handled payments themselves.

The transition was run as two separate programmes: one covering the shared services centre, the other bringing in all other units. They were overseen by two distinct project teams.

The shared services centre project was highly IT driven,

“We know that Nordea has always been very reliable, and provides high quality support for our daily business.”Annika Westerholm, Director, Treasury Market Operations at Valmet

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Valmet. Centralising its euro payments

and the units involved had an established relationship with Nordea. So the focus was how to get Valmet’s ERP systems to provide XML payment files via SWIFTNet so that Nordea would be able to process them. After extensive testing and planning, that group went live on the cash pool on 2 November 2015.

The second part of the cash pooling project was run in parallel, with 15 separate local units moving to the eurocash pool.

Many of these units were new to Nordea, so more onboarding was needed — including the gatheringof documentation needed for Know Your Customer(KYC) procedures.

To make the transition to the cash pool simple, Nordea provided Valmet with a detailed questionnaire for each unit to establish the services and products they would need — such as debit cards to replace petty cash, or SEPA Direct Debits. The questionnaire also captured information about payment files, ensuring a smooth transition to Nordea’s Corporate Netbank. Nordea also provided Netbank training for Valmet’s users.

By February 2016, 14 out of the 15 units had successfully gone live. “Nordea provided really good support, helping us keep the project on track, co-ordinating all of the transitions at once,” says Westerholm.

Local units reap the benefitsThe single cash pool is enabling Valmet’s central treasury to get full visibility and access to liquidity across its euro business. Previously, it was difficult for the central treasury to get excess liquidity concentrated into one bank account, it didn’t have direct access, so had to ask each unit to deposit it with central treasury. The whole manual process was time consuming and costly.

Today, each unit has its euro accounts in the same cash pool, and all payments are centralised to these accounts, with the group treasury able to automatically access the liquidity. The euro cash pool enables Valmet to make intra-group transfers free of charge and in real time. “The difference for us is like night and day,” says Westerholm.

While there have been clear benefits for the central treasury department, the unified cash pool has also been well received across the European business units. “Before, if local units needed extra cash to make payments, they had to come to us in the central treasury. Now, the single cash pool means they have more flexibility. The local treasury teams tell us how happy they are with the change.”

Valmet’s group treasury can allocate limits to local units, and easily adjust them if needed. That’s removed the worry for local treasury teams about when large payments will hit their accounts. The euro cash pool also means each unit can run leanly, needing only two or three people to oversee payments. And because they all use a common Nordea Netbank system, it’s easier for central treasury to provide support, for instance, when local staff are taking vacations.

And Nordea has also been able to provide support to local units, when needed. So if there’s a query over a payment, or if there’s been a problem, Nordea’s cash management team have the knowledge and expertise to ensure the issue is quickly resolved, says Westerholm.

www.valmet.com

Photos: Valmet.com

With special thanks to

Annika Westerholm,

Director, Treasury Market

Operations at Valmet

About Valmet

Valmet is the leading global

developer and supplier of

process technologies, automation

and services for the pulp, paper

and energy industries. We aim to

become the global champion in

serving our customers.

Valmet’s strong technology

offering includes pulp mills,

tissue, board and paper

production lines, as well as power

plants for bioenergy production.

Our advanced services and

automation solutions improve

the reliability and performance

of our customers’ processes and

enhance the effective utilization

of raw materials and energy.

Valmet’s net sales in 2015 were

approximately EUR 2.9 billion.

Our 12,000 professionals around

the world work close to our

customers and are committed

to moving our customers’

performance forward - every day.

Valmet’s head office is in Espoo,

Finland and its shares are listed

on the Nasdaq Helsinki.

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Valmet. Centralising its euro payments