About Dussmann Group:
When you’re in Berlin, you could easily get the impression that Dussmann, founded by Peter Dussmann, only consists of “Kulturkaufhaus” (a retail complex focused on culture). It features in various travel guides and is right in the city center next to the many sights on Berlin’s Friedrichstrasse. But Dussmann Group is much more than that! Company “chronicles” leave us in the dark as to whether Peter Dussmann, when he founded the business in 1963, dreamed of a multinational organization such as Dussmann is today: over EUR 2 billion in turnover and more than 64,000 employees in 16 countries in Europe, the Baltic States, China, Vietnam and the United Arab Emirates. It seems pretty safe to assume that today’s portfolio of building cleaning services, catering, security services and building technology (lift construction, cooling technology and air conditioning), care homes, launderettes and bilingual kindergartens with a focus on culture would’ve been beyond his wildest dreams when he founded the business in Munich. Today, Dussmann Stiftung & Co. KGaA is based in Europe, the UAE and Asia and represents a successful multiservice company.

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

 

The Berlin Kulturkaufhaus (literally “culture store”) next to Berlin Friedrichstrasse Station has more to offer than a simple shopping experience: since 1997, five floors and 7,300 square meters boast a unique atmosphere with everything the world of culture has to offer. Those interested in classical music can lose themselves in the world’s largest collection of recordings. Book enthusiasts can enjoy readings and book signings. However, Kulturkaufhaus is but one small part of Dussmann, and the organization has much more to offer: they’re a multiservice company with a diverse portfolio of business activities and an equally broad country portfolio. This wide context often comes with specific challenges relating to both culture and contents: for example cleaning services in mosques, the preparation of food complying with dietary requirements in different religions, the highly sensitive issue of cleanroom cleaning or the specifics of working with public organizations. The many different services, as well as the cultural diversity and country-specific aspects, make incorporating and organizing all operations under one roof quite a challenge – not least when it comes to treasury.

Dussmann’s corporate treasury has been an integral part of the business ever since responsibility for the finance section changed in 2011. Having realized that a key issue such as treasury could not be relegated to the sidelines of other finance departments, Dussmann set up a dedicated treasury department with the authority to issue guidelines and the necessary expertise, reporting directly to financial management.

Optimizing processes hand in hand with local entities

The newly established corporate treasury department’s first task was to restructure corporate funding, which meant taking some banks out of their portfolio (in particular local banks and institutions) or at least consolidating existing banking relationships and centralizing funding. Integrating local banking connections into a centralized structure wasn’t popular with everyone. The change called for internal lobbying and a very delicate handling of the situation. After all, a close and trusted relationship with all local entities is of great importance to Dussmann – as is decentralized entrepreneurship. The treasury department considers itself an internal service provider, echoing the maxim of the group. Catherine von Fürstenberg-Dussmann, who heads the Foundation Board, once said, “We serve people.” For the corporate treasury department this translates to the clear goal of supporting the group companies with anything from working capital financing to optimizing cash management, guarantees in connection with facilities or renting premises for care homes. Give and take – this is what good cooperation within the group is all about!

Dussmann requires accurate liquidity planning to be able to provide economical and practical financing group-wide. This is something that was introduced when the treasury department was created. The treasury team quickly got to work and created some spreadsheets that were distributed group-wide. They aimed to receive the figures they needed for a confident assessment of medium and long-term developments, in turn providing a sound footing for setting up optimized external financing. They’d taken the first step and made contact with the operative units and their financial setup. The project quickly increased in scale and formed the basis of an area of responsibility that is now the driving force behind the group’s strategic financial management.

Waking up dormant potential with receivables management

Achieving efficient and optimized working capital management is the second area of responsibility for Dussmann’s treasury team. working capital management encompasses many different activities, reducing the need for financing and the corresponding costs. Inventory and other comparable factors that lead to tied up capital are not of great relevance to the Dussmann Group. Receivables on the other hand present great potential. Moreover, it pays to check the credit rating and payment behavior of customers more closely, in particular when it comes to new contracting parties internationally. Payment behavior and in turn the required receivables management differ as customers differ. In cases where Dussmann can detect that a customer might be facing cash shortages or even be in danger of insolvency, they might still be able to put in place measures to safeguard accounts receivable and minimize risks. Dussmann’s service offering (the group’s largest business segment) with long-term and trusted business relationships allows for the possibility of adapting service provision or payment conditions if need be to match the customer’s current situation, finding fair solutions. If a receivable goes unpaid, they need to establish the reasons behind this. Monitoring receivables management in operating units enables corporate treasury to optimize company funding. At the same time, this is a means of quality control in case being behind on payments is a sign of the customer’s unhappiness. As “custodians,” the department covers the entire order-to-pay management cycle, including dunning levels, escalation or the required approvals. Together with cash management and payment responsibilities, this complements the overall liquidity management process.

Cash is king: why revenue alone won’t pay the salaries

Kerstin Schwabe is head of a 4-person, very potent treasury team. She started her career in cash management and has gained great experience in a number of large businesses under very different market conditions. This background enables her to clearly define treasury strategies and to ensure working capital management – something that she considers particularly important – is powerful and effective. For Kerstin Schwabe, another key issue is to get people throughout the organization to focus on cash, rather than only using revenue, contribution margin and result as parameters. Getting people to adopt this new way of thinking is a real challenge. She needs to raise awareness in each group entity that revenue alone will not pay the salaries or suppliers. Conversely, company liquidity and daily cash management are the decisive factors that ensure solvency and survival of the business. Consequently, cash management activities and the corresponding operative issues regarding financial status and financial result play a key role for the Dussmann Group.

Automating, digitalizing and optimizing processes

Process optimization by means of the new treasury management system is a main focus of the treasury department and it comes with a number of challenges. Within only a few weeks of the first login, process speed in the department had been improved significantly, and security had been lifted to a whole new level. First, payments in Germany were integrated in the system and standardized, boosting security and drastically reducing the risk of payment manipulation. Electronic account statements for 90% of Dussmann’s approx. 200 bank accounts at around 40 banks are collected centrally on a daily basis, transferred to Dussmann’s headquarters in Berlin Friedrichstrasse and processed automatically. Financial management is no longer limited to having access to the necessary figures once a month but there is a daily and online overview of key liquidity status data. The next step will be integrating all group companies and rolling out the platform to all other group companies. The 12-months’ liquidity planning spreadsheets were also replaced by integrated web technology.

Working capital management should also not be neglected, and one member of staff is mainly responsible for monitoring accounts payable and accounts receivable management. This involves reviewing performance indicators (DSO/DPO) and identifying potential for optimizing lead times. It also involves monitoring open items lists and managing working capital with the relevant indicators. The treasury team can draw important conclusions from the comments on open items provided by the operating units, including on service quality and customer satisfaction. Additional measures to limit credit risks are also highlighted.

One for all – and all for one

Separation of duties in the treasury team makes for more efficient work; at the same time, cooperation with other departments is particularly important at Dussmann. In principle, each of the four team members should be able to take care of any routine responsibilities or specific issues. “One for all, and all for one” – this quite aptly describes the way the workload is distributed and the team works together. Active in 16 countries, Dussmann always has been and still is a family- run business. Openness is championed, and the treasury team has quite some flexibility and opportunities to actively contribute. Founder Peter Dussmann expanded and refined the portfolio of his company step by step. He revolutionized the retail sector in Germany when he opened “Kulturkaufhaus” in 1997, offering  shopping until midnight. Dussmann continues to pursue innovation to advance the business. This also means that all departments – especially treasury – are encouraged to question every one of their activities. What does the organization really need? What is a “must”, a “could do” or a “nice-to-have”? Which responsibilities lie with centralized departments, and what competencies and rights should be with the group companies who work closely with the customers?

IT and software serve people and the company

Software tools are becoming increasingly important, and this raises the question of how heavily IT should be involved. It is not just the treasury department that profits from technology: this concerns the whole business with all its processes. Digitalization speeds up the sharing of information along the entire value chain, and this has far-reaching consequences for invoicing, payment receipt and the ensuing working capital management. Dussmann’s treasury team welcomed the continuous support from the IT team. They were also grateful to receive advice and consulting from internal and external experts who know all about the existing systems on the market. For Dussmann, it is important to not just have a system for the system’s sake. It is a tool that is meant to serve the business and its objectives, enabling Dussmann to adapt to changes in the market or in connection with customer requirements, to act more efficiently and to make the right decisions. Kerstin Schwabe knows from experience that anything is possible and that everything needs to be questioned if you want to have an effective risk management.

Having built up an international treasury organization and made such great progress (in particular thanks to the system approach) motivates Dussmann’s treasury every day.

 

The introduction of the treasury management system has been a real leap in terms of visibility of the financial situation and the efficiency of our work, with new flexibility for analyses, planning and risk management. Introducing this system in such a short time frame, next to the many other responsibilities of the employees in the company’s financial sections, was a huge challenge. I would like to thank Kerstin Schwabe and the whole team who have made this leap possible with their immense creative drive and impressive perseverance.

Dr. Hans-Jürgen Meyer | Finanzvorstand, Dussmann Group