In 2015, Newell Rubbermaid sold consumer goods under a long listof leading brand names such as Rubbermaid, Sharpie, Calphalon,Paper Mate, and Elmer's. The following year, when the companymerged with Jarden Corporation—owner of Yankee Candle, Oster,Rival, Marmot, Crock-Pot, and many others—it formed aconsumer-goods powerhouse.

Headquartered in Hoboken, New Jersey, Newell Brands now sellsnearly $15 billion of products around the world each year. Itsglobal reach means it generates complex cash flows and substantialforeign exchange (FX) risk. Prior to the merger, both Newell andJarden relied predominantly on outdated, manual treasury processes.Post-merger, the treasury teams found themselves grappling witheven broader and more complex processes.

The company had a currency hedging program for cash flows, butit did not have a comprehensive balance sheet hedging program. “Wedid place some hedges, but they were one-off, for balance sheetitems that were large enough and were brought to treasury'sattention,” explains Carmelina Myers, treasury manager with NewellBrands. “Big intercompany loans were usually hedged because we werepart of that process, but currency risks around our cash, A/P[accounts payable], and A/R [accounts receivable] usually wentunder the radar because we didn't have appropriate tools forgathering that data.”

Worse, when Newell did hedge FX risks, the process was largelymanual. Multiple staff members worked to consolidate risk data inspreadsheets, and then executed trades by phone. Cash managementwas similarly out-of-date. Once a week, treasury operations staffwould download prior-week data from each of the company's bankingportals and export to Microsoft Excel for evaluation. From thespreadsheets, the team would generate a weekly cash report anddetermine each business unit's appropriate net cash sweep.

The inefficient cash reporting process consumed more than 40hours a week of staff time, and the end result was still subparglobal cash visibility. Senior management had a precise,strategic-level view of corporate cash only at quarter-end.Moreover, FX was a source of perpetual concern. “We saw an FXimpact on P&L month after month,” Myers says. “There was adisconnect from the underlying items being remeasured due to theexchange rate volatility, and we didn't have the hedges to offsetthat.”

Newell Brands decided that end-to-end automation of treasuryactivities would be critical in the future. The treasurer at thetime, Amit Singh, initiated a modernization project that woulddeploy a new treasury management system, currency risk managementplatform, and FX trading solution. The goals of the project were toreduce risk, improve efficiency, and provide better visibility intothe organization's global risks and cash flows. To achieve thesegoals, the company deployed—and tightly integrated—a Kyribatreasury management system, FiREapps for currency management, andFXall trading platform.

The project team established a straight-through SWIFT connectionfor the majority of their bank balances. For the rest, they set upweekly reporting into the treasury management system. Newell builta weekly “push” process for cash reporting through which bankactivity automatically loads into the treasury management system,where an analyst can conduct journal entry coding and quicklyestimate each business unit's liquidity needs. All this automationhas had a dramatic impact on efficiency. The weekly cash reportingprocess takes 55 percent less staff time now.

More important, though, is the impact on visibility intocorporate cash flows. Business units receive a weekly report ontheir cash sweeps; the process of creating these reports iscompletely automated. And automation of bank reporting has enabledthe company to receive balance updates twice a day. “At theaggregate level, we can see which entities have cash, whichentities need cash, whether there are loans to be paid down, etc.,”Myers says. “Getting that visibility into cash flows across all ourbusinesses with one press of a button is pretty amazing.”

At the same time Newell was transforming cash management,Singh's project team also developed a balance sheet hedgingprogram. The FiREapps solution automatically pulls FX exposure datafrom 25 business units' 38 different legacy enterprise resourceplanning (ERP) systems. “All their exposures—across cash, A/P, A/R,and loans—comes through completely seamlessly,” Myers says. “Everysingle day we get a snapshot of what our FX risks look like acrossthe company.”

Newell treasury uses that information to place external hedgesonce a month. “We hedge all our FX exposures under Jarden LLC,”Myers explains. “Every month, we adjust our positions by placing aninternal hedge where needed and then hedging externally with abank. For example, if a euro-functional entity had its dollar cashreduced that month, we'll reduce the hedge. We're still not hedging100 percent of our exposures because there are some places, likeBrazil and Argentina, where hedging is very difficult. But our newprocess has eliminated the vast majority of FX risk we used tocarry on our balance sheet.”

The process efficiencies haven't reduced staff time spent onhedging, Myers says. Instead, they've dramatically expanded thescope of FX risks that Newell can mitigate. “Before, we had around10 business units in our balance sheet hedging program,” Myerssays. “Now, we have around 75. This volume of hedging, coveringthis much of our risk, wouldn't even have been possible in ourprior environment.”

Myers says one more major benefitof the technology project is that Newell treasury gained muchbetter visibility into where its risks actually lie. “There wereentities that were holding a lot of cash that treasury wasn'talways aware of,” she says. “Bringing that information to thesurface enabled us to learn something from the business units. Nowwe can hedge those risks if we need to. We can also see naturaloffsets that we weren't aware of before, where one business unitmight be long on a currency but another business is short. We canlook at eliminating those risks without putting a hedge on.”

By rebuilding its treasury technology infrastructure from theground up, Newell achieved results that Singh calls “staggering.”Among them: Balance sheet losses fell from $49 million in 2014 toless than $2 million in 2017. Fees on FX trades dropped by $1.3million in a single year. Newell gained the ability to activelymanage 14 additional currency pairs. And the management team'svisibility jumped from only 50 percent of global cash flows to 95percent, increasing their confidence in decisions about strategicinvestments.

See also:

• Center of Excellence for Millions of ConsumerPayments
• “How to Build an Innovative TreasuryFunction”: On-demand webcast honoring 2018 Alexander Hamilton Overall ExcellenceAward winner—Microsoft
• 2018 Alexander Hamilton Awards in LiquidityManagement
• 2018 Alexander Hamilton Awards in Operational RiskManagement & Insurance
• 2018 Alexander Hamilton Awards in TreasuryTransformation