As TWE’s treasury system approached the end of its licence period last year, Taghian started looking for a replacement. Ideally, this would enable the company to replace the older architecture and enhance treasury operations. TWE, a medium-sized enterprise with a market cap of about US$3.5biln and 3,000 employees, needed a robust system to handle its global financing and banking activities in about around 15 countries.
The company also wanted a solution that would automate treasury activities and enhance cash management as well as payments while not burdening the team with heavy compliance requirements and costs. Along with meeting the requirements of the treasury team in Melbourne, the new system had to add value for users in the finance departments in the other countries where the company operates.
“As an organisation we’re focused on optimizing cash positons and liquidity, so we don’t want surplus cash sitting idle when it can be employed elsewhere,” says Taghian. “The key benefit we expected from the new cash management framework was enhanced insight into our cash, where it is, and how treasury can implement initiatives to move it to where it needs to be.” After a thorough review and evaluation of the options, TWE chose Reval for its new treasury management system (TMS).
The next step was implementation. While having the system hosted in the cloud reduced IT requirements and simplified the set-up, the team still had to replicate its existing data, build it into the new system, and run 12 financial periods to ensure that the new system was doing what they expected and ensure controls were fully in place. One of the team members had ownership over the implementation nearly full-time for six months and two other staff in finance and IT were chosen to be part of the internal implementation team.
The Benefits of New Technology
With phase one of the implementation now complete, Taghian reports that treasury has achieved its objectives and has gone from having a monthly cash report to using Reval to generate a daily cash position report that show TWE’s cash by bank account by country. “What that means is that we can manage our cash more efficiently, optimise our liquidity management, and minimise our reliance on external financing.”
The new system has also increased payment transaction efficiency significantly. Whereas staff previously utilised separate online banking systems in order to make a settlement or check transactions, they can now access and get visibility across all their bank accounts through a single interface in Reval to access the information they need. “We built the final link for end-to-end payments into the system,” says Taghian, “so we are now able to process payments directly. The whole payment and statement automated statement offload is a big efficiency for us.”
Another key benefit is greater security and control, he adds. “A transaction that is input by a dealer is approved by another individual within the treasury department before final approval by multiple independent payment authorisers. Before, it was segmented and disjointed – now, you can establish controls through those systems and have a complete picture from beginning to end.” Moreover, combining the two systems the company previously used into one has reduced costs by 30-40%.
Perhaps most importantly, the efficiencies of the new system enable the treasury team to add greater strategic value. “Members of the team can increasingly focus on value-add opportunities rather than pushing files around,” says Taghian. “It frees up resources to focus on value-add treasury, whether it’s working with the business on new transaction banking solutions to support marketing or promotional activities, or financial risk management strategies.”
The next step will be to leverage the reporting more fully to gain a better lens across metrics and treasury functions. “That’s where we need to eke out the benefits,” Taghian confirms. He’s also looking to exploit having better information about cash to understand the nature of TWE’s exposure and build an improved profile by currency.
“On a standalone basis our company is a relatively new one, having demerged from Foster’s Group nearly four years ago,” Taghian adds. “Starting with a relatively clean base has allowed us to focus on our information requirements and the process and procedures we implement. The system has added to that. Having a system where you can be flexible and do whatever you want is very valuable. It is modular, so you can pick and choose elements. And the cloud-based solution requires less from a hardware perspective, and is not as reliant on internal support.”
Opportunities for Optimisation
While a significant number of companies in Asia Pacific still use Excel – or even paper-based records – for treasury management, TWE’s experience shows the opportunities for automation, efficiency and cost reduction to enable delivery of the value-add that more companies are looking for from their treasury team.
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