Customer story

Valmet Simplifying access to euro liquidity Valmet. Centralising its euro payments

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 opportunity programme to simplify payments in Valmet has a long history of providing euros. But not all parts of the business FURTHER business services to the pulp, paper were as prepared for SEPA as others. INFORMATION and energy industries — it’s been in operation for more than 200 years. Its “SEPA was well known in our Northern To find out how Nordea current incarnation is the result of a European units, but our Southern European can help your business demerger from Metso Group in 2013. units had not been that involved in SEPA manage its cash visit conversations,” says Westerholm. NORDEA.COM/CM Like many organisations, longevity had also given Valmet a degree of complexity, especially in Europe where it had more We estimate 95% SHORTCUTS than 20 operating units, some of which of our euro cash were responsible for their own payments Learn how Nordea can and reconciliation, while others used flows have now help you get ready for the group’s shared services centre. been concentrated SEPA at Following on from the demerger, Valmet “ NORDEA.COM/SEPA in the cash pool. recognised it needed to simplify its cash management to improve its visibility and Annika Westerholm, Director, access into liquidity across the group. Treasury Market Operations VALMET FACTS at Valmet A single cash pool for euros Complex, decentralised “We evaluated and decided at a corporate SEPA was intended to make it easier account and cash level that we needed three banks across for companies to make cross-border pooling structure Europe for our cash management business payments. But the changes have also and the flows would be allocated to the encouraged many businesses making Centralised all selected banks based on currencies,” payments in Europe to centralise accounts and says Annika Westerholm, Director, payments and collections. payments to currency- Treasury Market Operations at Valmet. based cash pools “In the past, each unit had its own for European units In the case of payments in euros, the cash management arrangements drive towards a simpler structure was so it was difficult to utilise the Increased automation, aided by the Single European Payment excess cash, even though we had gained central Area initiative, the European Union the visibility,” says Westerholm. access to liquidity

nordea.com 2/4 Valmet. Centralising its euro payments 2016/V1 Bringing all euro accounts and payments into one cash pool meant big changes for Valmet group companies that “We know that operated in euros — which includes units in eurozone and non-eurozone countries. Under the new structure, Nordea has always they would all have their euro accounts in Valmet’s cash pool in Finland. That cash pool was to be used for been very reliable, intra-company lending, with limits set for each unit, and interest rates of balances calculated automatically. and provides high quality support for Getting the right support The next step was to identify the right banking partner for our daily business.” the euro cash pool. Valmet created a team from across Annika Westerholm, Director, Treasury its business, including experts from its shared services Market Operations at Valmet 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 Two transitions, one shared aim services and products provided, Valmet chose Nordea “There were 20 units in Europe, and only a small proportion to be its banking partner for its euro cash pool. of those were covered by the shared service centre,” says Westerholm. So while the shared services centre “Daily transactions have to be reliable, and if there covers a big percentage of cash flows, a significant is a problem, we need it fixed fast. We knew we number of units handled payments themselves. could rely on Nordea,” says Westerholm. The transition was run as two separate programmes: Adding to the complexity, Valmet had a shared services one covering the shared services centre, the centre which handled payments and reconciliation other bringing in all other units. They were for its largest operating units in Finland, Sweden overseen by two distinct project teams. and a handful of other regions. But Valmet also had 15 other units that processed payments locally. The shared services centre project was highly IT driven,

nordea.com 3/4 Valmet. Centralising its euro payments 2016/V1 and the units involved had an established relationship Valmet’s group treasury can allocate limits to local units, with Nordea. So the focus was how to get Valmet’s and easily adjust them if needed. That’s removed the worry ERP systems to provide XML payment files via for local treasury teams about when large payments will hit SWIFTNet so that Nordea would be able to process their accounts. The euro cash pool also means each unit them. After extensive testing and planning, that group can run leanly, needing only two or three people to oversee went live on the cash pool on 2 November 2015. payments. And because they all use a common Nordea Netbank system, it’s easier for central treasury to provide The second part of the cash pooling project was run in support, for instance, when local staff are taking vacations. parallel, with 15 separate local units moving to the euro cash pool. And Nordea has also been able to provide support to local units, when needed. So if there’s a query over a Many of these units were new to Nordea, so more payment, or if there’s been a problem, Nordea’s cash onboarding was needed — including the gathering management team have the knowledge and expertise to of documentation needed for Know Your Customer ensure the issue is quickly resolved, says Westerholm. (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. About Valmet By February 2016, 14 out of the 15 units had successfully Valmet is the leading global the reliability and performance gone live. “Nordea provided really good support, developer and supplier of of our customers’ processes and helping us keep the project on track, co-ordinating process technologies, automation enhance the effective utilization all of the transitions at once,” says Westerholm. and services for the pulp, paper of raw materials and energy. and energy industries. We aim to Local units reap the benefits become the global champion in Valmet’s net sales in 2015 were The single cash pool is enabling Valmet’s central treasury serving our customers. approximately EUR 2.9 billion. to get full visibility and access to liquidity across its Our 12,000 professionals around euro business. Previously, it was difficult for the central Valmet’s strong technology the world work close to our treasury to get excess liquidity concentrated into one offering includes pulp mills, customers and are committed bank account, it didn’t have direct access, so had to ask tissue, board and paper to moving our customers’ each unit to deposit it with central treasury. The whole production lines, as well as power performance forward - every day. manual process was time consuming and costly. plants for bioenergy production. Valmet’s head office is in Espoo, Our advanced services and Finland and its shares are listed Today, each unit has its euro accounts in the same cash automation solutions improve on the Nasdaq Helsinki. pool, and all payments are centralised to these accounts, with the group treasury able to automatically access the With special thanks to liquidity. The euro cash pool enables Valmet to make Annika Westerholm, intra-group transfers free of charge and in real time. “The Director, Treasury Market difference for us is like night and day,” says Westerholm. Operations at Valmet

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 www.valmet.com pool means they have more flexibility. The local treasury Photos: Valmet.com teams tell us how happy they are with the change.”

nordea.com 4/4 Valmet. Centralising its euro payments 2016/V1