Treasury’s challenge is further compounded by the fact that at any one time Plan manages from €120-€160 million in cash across multi currencies which is a four fold increase since 2005. Over the past six years treasury’s annual volumes in terms of management have increased to approximately €430m.
Plan works with up to 39 currencies on a regular basis and manages a further 12 from a risk perspective.
In the past this had been simpler to manage, as treasury supplied cash in dollars rather than transmitting in local currencies. However, about six years ago the decision was taken to centralise these transactions so as to leverage the organisation’s buying power on foreign exchange (FX) markets.
In addition, it was decided to introduce new hedging and reserves policies which led to increased cash balances, more complex instruments and higher value/volume transactions. Over a relatively short period of time treasury went from handling about 11 currencies centrally to 39.
Accounting standards such as IAS7, which required publication of treasury-related schedules in the financial statements, had also increased the complexity of reporting. The implementation of the US Dodd-Frank Act and the European Market Infrastructure Regulation (EMIR) had at the same time increased the quantity of reporting and brought the need to reconcile data files with banks.
Traditionally, this had been managed using spreadsheets. As a result knowing the organisation’s cash flow position, bank counterparty and currency exposures at any one time was cumbersome and labour intensive. It involved a complex process which required significant manual data entry into spreadsheets and staff time in terms of verification.
While FX and money market dealing requires access to timely data, this could not be delivered early due to the manual processing of so many currencies thereby delaying treasury’s dealing day.
The TMS Solution
It was evident that Plan needed to increase capacity. Treasury was faced with the choice of increasing staff, yet relying on the manual processes, or to automate. The team chose the latter option, bringing the benefit of future proofing. In order to reduce risk, maximise the value of the organisation’s buying power with timely dealing and streamline reporting, Plan opted for an automated treasury management system (TMS) which could help the team manage its FX, money market, derivatives and cash management.
Expressions of interest were requested from 19 TMS companies globally. Following detailed questionnaires and demonstrations from five shortlisted companies Plan selected Salmon Software, with the internal selection team made up of treasury, accounting and IT. It was important that all departments that would touch the TMS were involved in the selection.
Comprising over 120 software modules, the Salmon Treasurer is aimed at corporate treasurers to manage debt, FX, money market, treasury, banking transactions and other related corporate treasury activities. It provides extended treasury management functionality enabling organisations to centralise or decentralise treasury operations and manage unlimited accounts, facilities, books, funds, dealers and companies.
The system is suited to single, double and triple digit user numbers and benefits a variety of business types and sizes from small firms to large multinationals. Salmon aims to work closely with our clients from the outset to provide as short an integration period as possible. Salmon Treasurer can also be deployed as a cloud as well as on premise TMS solution.
Plan International now has an automated TMS, which reduces risk, increases accuracy and provides timely data to facilitate reporting, trading and payments.
By automating the majority of treasury management processes, Salmon Treasurer effectively eliminated the need for spreadsheets. This released Plan treasury staff to focus on managing risk, positions, planning and undertaking the new processes brought about by recent regulation. Under the old system the treasury team had spent up to three man hours each morning updating data in order to obtain the necessary information required to enter into transactions and make payments.
The new automated system eliminates that drain on resources. The TMS supports all currencies, facilitates trades and manages these across an extensive range of financial instruments providing real-time revaluation of all deals and positions while interfacing with a wide variety of external and internal systems.
It will have eliminated duplication of effort in terms of deal confirmation, payments and general ledger once fully implemented. Single entry input means that data is inherently consistent across all Plan treasury reports and reduces the need for numerous validations.
Salmon Treasurer’s reporting modules allow Plan to optimise cash balances, positions, currencies and maturities. With high level dashboard reporting on financial exposure and risk, the organisation has timely, clear information for its short, medium and long-term treasury risk minimisation strategies and investment decisions.
Plan has access to its cash and bank position in real time. This allows it to fully, leverage its buying power in FX markets.
Salmon Treasurer is fully integrated with Plan’s 360T Trading Networks. In addition, it will be integrated with Plan’s SAP Financial ERP system. Unlike many TMS solutions, Salmon is also compatible with all Microsoft products.
Plan treasury now has increased timeliness of reliable reports for decision making. The automated processes provide live reporting and management of counterparty risk exposures which are transparent, auditable and can more effectively demonstrate compliance with treasury policy.
The team had unanimous agreement on Salmon because of its cost, functionality, flexibility and ease of use. The Salmon team has provided huge support during implementation starting with automated reporting.
The author would like to give the last word to John Byrne, the chief executive officer (CEO) of Salmon Software, which is headquartered in Dublin, Ireland. “Plan International raised almost €700m across multiple currencies last year and does fantastic work on behalf of child poverty,” he comments. “It has been a privilege to be able to help them streamline their reporting, FX, money market and cash management.”
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