About Dentsu Aegis Network:
Dentsu Aegis Network is one of the world’s largest media, digital and creative communication agencies with an annual turnover of over GPB 20 billion across a worldwide network covering more than 110 countries with over 35,000 employees. Formerly Aegis Group plc, it was acquired in March 2013 by Dentsu Inc., Japan’s leading media agency, a company whose history can be traced back to 1901. Post the 2013 acquisition, Aegis Group plc joined forces with the non-Japanese media businesses of Dentsu Inc. to form today’s group, Dentsu Aegis Network.

Treasury Profile

ADaily Cash Management

BCash Pooling

CPayment Processing

DPayment on Behalf of

ECollection on Behalf of

FSWIFT

GeBAM

HLiquidity Planning

IContract Management for Interest, Currencies

JManagement of Commodities

KTrade Finance Contracts

LCapital Markets

MRegulatory Requirements

NGeneral Risk Management

OTreasury Accounting

PStandard / Individualized Reporting

QNetting & Reconciliation

RInsurance

SMergers & Acquisitions

TInvestor Relations

 

Dentsu Aegis Network: most would not immediately associate this name with the enormous, global media group that stands behind it. Their business model is simple: help companies connect with their customers. They do this through utilizing their creative, media and digital expertise across multiple media channels to better engage with existing and target customers. The focus on innovation and the client has helped the company become the world’s fastest growing advertising and media agency holding group.

Customers and accounts around the globe

In line with their business model, Dentsu Aegis Network provides their services in markets where they’re needed – worldwide from Chile to Egypt or South Korea. This has a direct impact on the treasury department. For one, cash and liquidity issues are highly complex: the treasury team not only needs to track Dentsu Aegis’ incoming and outgoing cash flows into the center, but also manage liquidity across its vast network. The group has around 2,000 bank accounts with over 200 banks in more than 80 countries – the sort of volume that would be impossible to manage without a system.

Why does Dentsu Aegis have so many bank accounts and banking relationships? This fact is owed to the dynamic growth of the business. There have been over 60 acquisitions within the last 24 months alone, and they all came with accounts and bank connections. For Peter Pontidas and his treasury team, this means integrating each newly acquired company into the overall group and the centralized treasury setup. At the same time, they need to ensure sufficient liquidity is available to finance acquisitions.

"Essentially, this is a never-ending process: the more bank accounts you have, the less efficient the use of resources. This is why we try and focus on our key banks. But each time we’ve managed to consolidate this, there are new acquisitions and new banking partners – and we need to start all over again."

Remaining streamlined and efficient in a global network

Given the dynamic nature of the business and the large number of accounts and banks, Peter Pontidas’ maxim is to streamline banking communication processes. He adheres to the 80/20 Rule and aims to have firm control of at least 80% of the cash volume and movements. If they do have resources to spare, they continue working on further optimizing the treasury setup.

"Our internal objective, which we’ve of course communicated with the CFO, is to process 80% of the cash volume via our currently 17 main banks. At the moment, we’re at around 85% and are actually targeting 90%. There’s always room for improvement!"

By focusing on the main banks, Dentsu Aegis is able to cover most payments issues. Of course, there are exceptions and special cases. In China for example, they need to work with specific banks to process tax payments. Many banks are actually Dentsu Aegis customers, and Dentsu opens accounts with such banks to facilitate payments and enhance the client relationship. Despite all optimization efforts, the figures are still quite impressive: every day, Dentsu Aegis receives around 1,600 MT940-based account statements via their own SWIFT BIC. Some companies establish an in-house bank within the framework of their treasury in order to manage group-wide liquidity. Dentsu Aegis has taken this approach a step further: they’ve actually founded a specific entity for this very purpose. With Aegis Group Holding Limited, they don’t have a virtual in-house bank but a physical one – an independent legal personality managing group liquidity and FX risks. A mutli-currency notional cash pool also underpins liquidity management and needs to be monitored on a daily basis. This ensures net financing for all group entities and an optimal balance on the master account at all times.

Changes to the banking landscape influence treasury

Next to the in-house bank, external banks are also key business partners for Dentsu Aegis. This involves transaction banking, i.e. “typical” payments, as well as interest and FX hedging worth over GBP 9 billion a year. An increase of regulatory requirements for banks has made the day-to-day business more complicated and bureaucratic, and banks are often not as flexible. However, Peter Pontidas needs his banking partners to be agile, so they can help him conquer the increased complexity – both internally and externally. He also follows developments in the FinTech sector, and the growing influence of such companies in the traditional banking landscape, very closely. At the same time, he’s witnessed that more and more banks have withdrawn from the international scene and focus on local operations.

"Banks need to invest heavily in order to remain competitive on an international level when it comes to technology. This is where FinTechs come in – I would consider these developments to be positive."

Either way, the trend has an impact on the treasury team’s daily work. Their overall objective is to consolidate the banking landscape despite and because of their growth. However, the dynamic nature of the business means they often have to find innovative solutions in order to work efficiently with a great number of banks.

It pays to be a pioneer!

Many other businesses are just getting started with global banking via SWIFT. Dentsu Aegis on the other hand is a real SWIFT pioneer. Peter Pontidas and his team were one of the first treasury departments to opt for using the SWIFT Network via the BELLIN SWIFT Service. They’ve long since become “old hands” at this: most banks are connected, and payments for holding and group companies have been processed via this channel for a while. What’s more, integrating new banks following an acquisition or the tapping of new markets – including the creation of the corresponding formats and transfers via FileAct to the selected partner – has become routine.

At a rate of 10-20% per year and with a business volume that has doubled in the last 5 years, Dentsu Aegis has been growing steadily. This comes with a number of challenges. Growth is not necessarily matched with increased resources when it comes to administration, and this holds especially true for the treasury department. The existing team now needs to cope with double the business volume. Yet, it is less increased business volume, and more changed requirements that necessitate efficiency gains.

"More and more often, customers expect central billing for global projects. In the same way, payments processing has become more centralized."

Other associated departments simply assume that the treasury department takes these requirements on board and provides support. Procurement, transfer pricing, FX risks – the treasury team has many interfaces to all of them, but overall requests and requirements from other departments make an already highly complex and diversified group even more complicated – and considerably so. It is obvious that using a system to support efficient treasury management is indispensible here and very important for the treasury department.

Highly involved and always in demand

Being so well connected has given the treasury department much more clout within the group. Treasury is now invited to meetings on many different issues concerning the business: questions concerning the core business, taxes, and potential M&A activities – the treasury team is consulted and literally plays a decisive role. This is a position other treasury departments are still aspiring to. The downside of being so heavily involved is that the team spends more time in meetings or being consulted about various financial issues. This comes on top of day-to-day treasury activities and the relationships with currently over 17 main banks, which often require a lot of communication.

At this point in the interview we nearly start having a guilty conscience about stealing even more of Peter’s time! His commitment to this book is all the more appreciated! He stays relaxed and loves talking about his everyday business and his strong team that always has his support. Including one person in Singapore and two people in New York to have all the time zones covered, a total of 15 people are specifically responsible for treasury issues at Dentsu Aegis. Given the size of the group, the highly complex issues and the speed at which things are changing, this is actually a relatively small team. Support from the entire organization and the use of suitable technologies are what enables the treasury to work efficiently. In fact, the treasury team has hired an expert specifically for this purpose whose responsibility it is to analyze and optimize technological potential on an ongoing basis.

This reflects what the whole treasury team pursues: they’re constantly on the lookout for new or better ways to handle processes and workflows. This requires long-term thinking and a constant change of perspective – so that you don’t get stuck in the same old routines. This clear approach has made the treasury team much more than the mere “custodian” of Dentsu Aegis’ money or the managers of liquidity. Others in the group welcome the team’s expert advice, and they’re valued internal business partners – even in matters that aren’t technically treasury issues. Peter Pontidas and his team are more than a treasury department – their active role and invaluable input make them key players throughout the group. 

 

We love treasury and we love technology. Treasury and technology go hand in hand. We need technological tools, so our treasury can meet the exact requirements of our business, and so we can ensure efficient treasury management.

Peter Pontidas | Corporate Treasurer, Dentsu Aegis Network