GAC in Action


TMS Task Force Ready for Action

Calling time on outdated cash management.

In the previous issue of GAC Chat, we outlined the moves being made to bring our Treasury operations into the 21st century. Well, The TMS (Treasury Management System) has arrived along with an intensely dedicated project team. The team is fired up and ‘on mission’ to upgrade and optimise our cash management across the Group.

The Task Force

Alfred Dicdican – Treasury Assistant. Supports the project with data gathering & cleansing, scoping files, administration and much more.

Raquel Auddy, PA to Magnus Sjogren, plays a vital role in coordinating the team members.

Chris van Dijl – External Treasury Consultant from Dubai-based treasury & risk management consultancy Cugavadi. Chris brings to his role as project manager vast experience including TMS implementation for other organisations.

Group Treasurer Magnus Sjogren, who acts as the Business Owner for the project.

Pradeep Kumar V.P. – IT Project Coordinator in the implementation phase. Coordinates the IT resources, integration and technical handover to IT support and operations team.

The System Provider

After a thorough selection process, the task was assigned to Cashforce, headquartered in Belgium. Established in 2012, Cashforce offers a next-generation platform which gives users an interface and dashboards for flexible reporting. It has initially targeted cash-flow forecasting, cash management and working capital management, with a focus on automation and integration. Core functionality for day-to-day treasury operations such as in-house banking and FX deal management has also been developed.

Helena Lemon, Group IT Technology Business Manager – Management Information, played a key role coordinating Group IT’s involvement in the selection of the vendor for the project. She is now focusing on improving Group data and reporting.

Why you need TMS


Group-wide, GAC:

Works with

0

banks

Holds

0

bank accounts

Has

0

bank guarantees

Works in

0

currencies

Makes

0

payments per month

 

0

of which are inter-company payments

No-nonsense, by-the-numbers, roll-out

Cash visibility: Whether you are a warehouse manager, ship spares manager or the Group Treasurer, you need to know how much cash you’ve got in the bank. During the remainder of 2018, cash visibility will be the main focus of the TMS Task Force.

Cash-flow forecasting: Forecasting just two weeks ahead can be a challenge, so imagine how hard looking twelve months into the future can be. There is no such thing as 100% forecasting accuracy, but better system support can take us to the next level. Group cash-flow reporting will move away from Excel spread sheets and be consolidated in Cashforce’s intelligent simulation module. It’s a system that allows users to test their assumptions about the future and evaluate different scenarios.

Treasury Centre (TC): A Treasury Centre is a financial entity in the Group that acts as a central bank serving the other Group entities, enabling such services as virtual bank accounts where laws and regulations permit. Debit and credit interest can be automatically applied, just as with external bank accounts.

The aim is more efficient use of Group and company cash and automated cash management where possible, rather than taking on more bank financing. The TC will increase focus on the savings to be made on bank fees and foreign exchange deals.

Central database: The TMS can track things like:

Forex

Foreign exchange transactions

Money Transactions

Money market transactions

Loan Facility

Loan facilities

Overdraft

Overdraft limits

Guarantees

Bank guarantees

The future is about being smarter in the way we handle our cash. The TMS Task Force has the job of leading us into this new way of handling our money and helping us get the most of the new suite of analytical tools that TMS brings with it.

Treasury Management System (TMS)

Questions and Answers

1.   So, a TMS. Do we really need another system?

GAC doesn’t have a dedicated software application to support its treasury activities and has relied instead on MS Excel, Dolphin and other sources. Efficient management of cash and working capital is crucial to any business. After all, the Group has 100+ banks and 730 bank accounts processing more than 300,000 payments a year, be it electronically or by cheque. You need an effective system to deal with that kind of volume.

2.   How did GAC approach the system selection?

The process started with a survey that all GAC entities took part in, reporting the number of payments, FX volumes, bank fees and so on. Meantime an “as is” and “to be” assessment of the operating treasury model was made, also seeking input from various stakeholders. Seven vendors competed for the job and were subject to an extensive selection process.

3.   Very thorough! So which system was selected?

The chosen company, and its software, is called Cashforce (www.cashforce.com). It is a relatively new player based in Belgium. Key deciding factors were the strong cash-flow forecasting and working capital management modules, both very crucial areas to GAC. As well, Cashforce is strong in the provision of core treasury functionalities such as in-house banking, FX exposure and deal management.

4.   What modules or functions are available in Cashforce?

Cashforce Modules

5.   Wow, that’s a lot! Are we implementing all this?

Not all modules are in scope and some will initially be implemented only at GAC HQ level. Modules like working capital management will undergo a detailed “proof of concept” before global roll-out. The project will last several years and modules will be implemented in phases.

6.   What is in the first phase?

  1. Cash Visibility – we will request our banks to report a so-called MT940. This is an end-of-the-day bank statement sent to Cashforce electronically from the bank, via the bank connectivity partner and SWIFT service bureau Fides. GAC is also in process of obtaining its own Corporate BIC (Bank Identification Code). This is way cool!
  2. Cash-Flow Forecasting – the monthly submission of the Cash-Flow Report (CFR) will be done via Cashforce (likely through an upload in the first step). The monthly reporting from Group Treasury to Senior Management will be set up on Cashforce. Variance analysis to be available through the system.
  3. Treasury Centre (TC) – setting up the TC and a liquidity structure with HSBC London (a Zero Balance Account (ZBA) solution). Establishment of virtual bank accounts with the TC for local entities and transfer of inter-company loans to the new TC.
  4. Working Capital Management – proof of concept on the reporting & management of working capital and related KPIs. Work with Group IT is required to ensure accurate service delivery dates are captured and can be fed to Cashforce.
  5. Treasury Transactions – overview of facility limits and transactions such as external bank loans, inter-company loans, guarantees, FX deals and money market deposits. Upload of facility letters. Tracking of signatory rights and limits on bank accounts.

7.   You want visibility of our bank balances. Why is that? The whole purpose of this is to spy on us and take our money!

For any planning and decision-making, timely data and information are required. It is in everyone’s interest that GAC efficiently uses the cash it is holding for continued growth and investment, rather than leaving it idle or taking on more bank lending and paying fees and interest to the banks. Currently many companies have overdraft facilities with the bank that attract fees and interest. Is that necessary or can an overdraft limit be arranged via the Treasury Centre? The key point is to have money in the right place at the right time.

8.   What is Fides?

To make the flow of electronic bank statements and payments work, you need a strong bank connectivity partner that can act as a SWIFT service bureau. Fides is one of the largest and most experienced, with connections to 10,000+ banks and processing 160,000+ bank messages daily. They process a staggering USD 5.5 trillion in payments each year.

9.   How do we benefit as a local company?

To mention some:

  • Improved processes such as bank reconciliation
  • Favorable FX rates
  • Help with cash-flow variance analysis
  • Simulations or scenario analysis for large projects or investments
  • Reduced bank fees in the long term
  • Netting of inter-company invoices through the TC
  • Shifting overdrafts from external bank to TC
  • Improved working capital management & analysis
  • Tracking of all treasury transactions

10.  How can local Board of Directors support the implementation?

  1. Local bank relationships - support Group Treasury when needed.
  2. MT940 – be supportive of getting electronic bank statements from your local bank.
  3. Treasury Centre – take active interest and be an early adopter.
  4. Provide input – offices may be requested for input during scoping and proof of concept stages.
  5. Feedback/suggestions. Got something innovative in mind? An Idea for automation or centralisation? Share it!

11.  I don’t want to use this TMS system!

Change can be threatening and it’s true that many people just want things to stay the way they are. But we are now shifting to a world with stricter compliance rules and increasing transparency and openness when it comes to business. For these reasons, the TMS is a must for all GAC entities to be able to comply with internal reporting requirements and Group standards.

12.  Does this mean any changes to our existing reporting?

Yes. The initial target is:

  • Cash-flow (CFR)
  • Bank status (BSR)
  • Bank guarantees (BGR)
  • Bank facility letters and loan documentation

13.  I am a Regional Controller. How does this fit into my work?

You will get access to all Treasury and banking activities in your region. Cashforce will give you better insight and analysis capability covering:

  • Cash visibility – overview of cash positions.
  • Cash-flow reporting – a work-flow will be set up whereby you can approve reports, add comments and analyse variances between actuals and forecasts.
  • Simulation and scenario analysis – run different cash-flow scenarios.
  • Bank account management – check signatory rights and limits on bank accounts.
  • Working capital management – improved oversight and analysis.
  • Transaction management – track credit limits, loan repayment schedules, bank guarantees etc.

14.  Will we receive training?

We are just finishing the first scoping phase and will shortly begin implementation. Training will certainly be done for users and will be a combination of Webex and face-to-face training sessions.

15.  What comes in later phases?

Even more exciting stuff! To mention a few:

  • Centralised payment solutions.
  • Compliance screening of payments before release to bank.
  • FX exposure management.
  • Short-term cash management – upon further integration with Dolphin.

16.  Sounds like you need a project organisation for managing this?

Yes, alongside a Steering Committee with people from both Group Finance and Group IT, the project organisation is as follows:

Project members

Role

Magnus Sjogren, Group Treasurer

Business Owner

Chris van Dijl, External Consultant from Cugavadi

Project Manager

Pradeep Kumar V.P., Senior Project Manager,
TBM, Group IT

IT Project Coordinator

Alfred Dicdican, Treasury Assistant

Project Assistant

The project team liaises with reference groups such as Group Tax, Regional Controllers and local GAC offices as and when required.

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