Amid rampant, top-down, cost-cutting measures it seems that the back office is under more pressure than ever to be efficient.
With this, we took a moment to speak with DONG Energy Head of Treasury & Clearing Back Office, Mikael Kreiner – who will be stepping on the stage to put forward a case on why it’s the Back office which should help manage cash flow.
Let us know your thoughts in the comments below!
Please tell us about your role and what you’re currently working on?
I’ve been in DONG for 4.5 years, and sit in the Back Office which is divided into 3 teams.
I’m head up Treasury & Clearing Back Office, covering post-trade activities for treasury products and cleared commodity trades.
“The current market situation is ever changing, where opportunities quickly arise and disappear, and it is vital that any support function (i.e. Back Office) enables the business to exploit these opportunities.”
What makes an efficient back office and why?
I’ve been in Back Office for 10 years, and I believe the sweet spot is when we’re able to balance flexibility of the processes and cost effectiveness – as these are the two main focuses of our main stakeholders in the front office.
The current market situation is ever changing, where opportunities quickly arise and disappear, and it is vital that any support function (i.e. Back Office) enables the business to exploit these opportunities – through flexible processes & creative solutions to any given challenge.
However, flexibility is not free, and another vital element is cost effectiveness, as this is equally important for our main stakeholders. So Back Office should always consider how costs and risks can be minimized – on all levels (small or big). I.e. Automate processes to the extent possible, revisit control environment on a regular basis, renegotiate fee schedules on a regular basis, update licenses etc.
When we can balance flexibility & cost, we achieve the highest stakeholder satisfaction.
Do you have any examples of any challenges and how you overcame them?
As for any organisation in the energy industry right now, regulation is one of the main department-wide challenges.
In the back office, handling the demands of both EMiR and REMiT was a tremendous challenge, as we had to change our mind-set, from only focusing on settlements, to also focusing on being compliant and ensuring market access.
One of the ways we handled it was to get into industry work groups and talk to each other – one of the wonderful things about the energy industry is, that we talk to each other and help each other out.
It was through that, and through strong project management, we overcame the challenges of the industry.
And then down the road, overcoming this challenge turned into a business opportunity, as we helped third parties overcome similar challenges.
“…one of the wonderful things about the energy industry is, that we talk to each other and help each other out.”
Was there ever an air of “working with the competition” or “we better not help them” when you got together with the industry?
At no point was there ever a risk of disclosing too much – again, this is a feature of the industry: we help each other and we’re all in the same boat.
Of course, we wouldn’t disclose sensitive information, but we were fully sharing the risks of the project, and elements which encompassed the whole organisation.
A big theme this year is the working relationship between back office and IT – any tips?
Communication of course.
But also the realisation that both departments can, in some respects, shift and occupy tasks which traditionally falls under the other departments’ responsibility. I think not being too stationary in the “set” roles of each team member is key to a great working relationship.
Management plays a tremendous role in this – if they themselves are not talking to each other, they will make it enormously difficult for the rest to collaborate.
We have bi-weekly meetings to talk about priorities and resources, and shift things around accordingly – you might say “oh, we need a developer to achieve this, but I know a guy in Back Office who may be able to help” (and vice-versa).
A brief overview of your talk at ETOT? Simple and flexible cash management in energy trading?
One of the things I will briefly elaborate on, is that I believe cash management is one of the duties of the back office – because we know cash flow.
And then I want to talk further about working capital and working capital requirements, and elaborate as to how back office can influence these positively.
Finally, I will try to give a couple of examples on how Back Office can drive the cash management agenda, ensuring simple and/or flexible solutions.
What do you think?
Have you had issues getting your various departments to gel?
Have you also benefited from the “fraternity/sorority” of the industry?
Let us know!
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