 About the Organisation

AB SKF (Swedish: Svenska Kullagerfabriken; 'Swedish Ball Bearing Factory') is a

Swedish bearing and seal manufacturing company founded in Gothenburg, Sweden, in 1907.
The company manufactures and supplies bearings, seals, lubrication and lubrication systems,
maintenance products, mechatronics products, power transmission products, condition
monitoring systems and related services globally.

Jonas Falk : Group Treasure of the Company

Jonas Falk is the Acting Group Treasurer of SKF Group and Head of Market Operations.
Jonas is based at the HQ in Gothenburg, Sweden, since last summer (2020) after spending the
prior 5 years in Singapore as Managing Director for SKF Treasury Asia & Pacific Pte Ltd.
Before re-joining SKF in 2015 he worked six years for Nordea Bank as FX-sales/advisory
and three years as Head of Derivatives at Ekman & Co (one of the world’s oldest trading
firm). Jonas first joined SKF in 2000 and spend a few years in Singapore as a FX-trader
within his first period (-2006) with SKF.

 Introduction

Jonas started by telling how did the need for Treasury came which was basically the business
transformed from linear to a circular pattern which changed the pattern of cash flows and
required different invest strategies.

The benefits of Treasury Centralisation which were

 Economies of scale ,
 Lower cost ,
 Diversification
 Reduced work staff

 The Financial Operational Centre (FOCs)

Share service centre were established with the official name being Financial Operational
Centre (FOC).

SKF has seven FOCs where they streamlined, harmonised and uniformed major treasury
processes like netting , dividend, capital injection, loan & debt dues etc .
The whole treasury function was automated since SKF capitalised on digitalization in order to
reduce the manual work which actually was one of their objective at the first place . The best
tools were introduced to reduce manual work and hence the errors.

In addition , instead of having contact with all the treasury units such as cash management ,
Foreign Exchange , Investment and funding or financial supply chain , an employee just need
to contact through FOCs.
  Impact of Reducing Staffs.

SKF reduced 25-30% of their staff after the introduction of this fully automated new system
, which eventually did speed the processes .

Looking at the same from treasury perspective , earlier they used to have various deals ,
request for loans from the banks , FX dealers etc but with FOCs coming into the picture the
concerned parties could request the same through the centralised system which obviously
reduced the risk of human error and the havoc of going from one system to another or
copying pasting from excel.
In addition they made a module connected to FOC centre quantum doing all the netting
system. The same resulted in reduction of number of FX traders , they have 3 traders
globally now compared to 12 , 7-8 years ago.

 The role of Centralization in Better Decision Making.

Looking into treasury perspective instead of running two internal banks one of them in
Singapore they now have a single global book which made netting easier , getting loans from
the banks easier , reduced confusion and if they lack in one unit they can cover it up with the
another .

One major advantage of the same was in analysing the data in a better way.

The SKF group plan to set up payments factories across the globe , they already have 2 in
Sweden and one was launched in May 2021 in United States. Thus emphasising mainly on
ability to take better decision with good data analyses , Jonas said that with the help of the
same more fact based decisions are now taken instead of guessing and making decisions. Also
going forward , since they work with number of banks they can have more of a live data
access rather than collecting day before balances

 The Challenges SKF faced.

The biggest challenge anticipated by SKF was the fact of not being in same time zones , they
had always provided good services to all the units globally specifically the Asian continent
prior to the new system ,as they were always a call away but now as the system changed,
Asian unit had to make requests a day before or wait till afternoon. They dealt with the same
by involving everyone globally in transition process , regularly taking feedbacks from them
and that too way before starting the process.

Another challenge faced by SKF was that they didn’t know how to use the new technology or
basically accepting the change which is never easy . Quick Adaptability , reduced manual
work helped them in dealing with the same as time was saved from manual works and hence
more emphasis could be laid down on value creating decision or strategical decisions to be
precise.
 Digitalisation , Innovation & API

Jonas talked about 2014 cash pooling incident in China which was one the biggest hurdle
they faced as they had to reroute the function from Singapore to Europe , return all the funds
to China , apply with PBOC for opening up a new setup in Europe instead. The same was set
up in Paris, France with the help of HSBC , PBOC accepted the same. The whole process
without digitalisation was cumbersome including the calculation of interests.

In future digitalisation , Innovation and API would play a key role in handling the issue
described above.

 SKF Future plans.

Handling Payments

SKF plan to set up a Global Payment factory changing their netting system from standalone
to more integrative one, including the quantum. After doing the same they would introduce
another process into the system, trying to automate , streamline and keep things simple at the
same time .

Rotation Equipment Performance (RAP)

With the objective of going from linear to circular economy business , they plan to serve
their customers by selling rotation as service which they call RAP ( Rotation equipment
performance ). The same would change the whole payment system as now customer pay in
one go then they will have the option to pay in 5 or 10 years , also instant meeting would
increase with the help of digital applications hence mor availability of instant funds.

Source of the Case study

https://www.thecorporatetreasurer.com/article/video-case-study-how-to-centralise-
the-treasury-function/469656