A Swiss pharmaceutical company provides a strong example of modern cash-flow management and reporting beyond traditional boundaries.
A centralized treasury function based on SAP Technology Infrastructure was not the subject of these experiences, but helped as an enabler. The company saw treasury as a central service provider with the goal of cost reductions and efficiency gains for finance and IT.
The core tasks are providing optimal funding and safeguarding business from forex exposures.
In relation to Bank Relationship Management they achieved the goal of reducing bank fees and increasing automation in Bank Communication.
The ease of communication with bank partners, business wise and IT wise was an additional value add.
In protecting the internal supply chain from external challenges (such as financing fees and exchange rates) they secured the Supply Chain Finance.
The company considers Treasury as a financial supply-chain-oriented one and its inhouse bank concept is based on the management mission, which sees the Treasury as a service provider for the business, its vision to partly internalize business of external banks, and its strategic decision for central Treasury to run SAP and “pick up your customer at his front door”.
In 2004, the company started the global rollout of InHouse Bank with key enablers of physical cash pooling with non-resident and Bank streamlining to three global cash-management banks with strong IT automation and standardization.
The InHouse Bank achieved classical benefits in Cash pooling by more than 150 affiliates participating with 42 countries, 34 currencies
by Interest savings > CHF 5 million
by ST Cash reduced by 80%.
Intercompany payments initialized (volume > CHF22 billion pa)
Interest savings and lower bank fees > CHF1 million
Forex hedging internalized (volume > CHF 30 billion pa)
Netting gains & margin savings > CHF 1 million
Fewer bank accounts, fewer Treasury HQ headcount etc.
Additional benefits for the financial supply chain included:
Automation of bank postings and Automated EBS upload and Payment File- upload host to host
Intercompany invoicing and reconciliation upgrade by currency streamlining + elimination of local FX P&L, automation of payment allocation (850’ 000 invoices p. a.)and local finance headcount reduction
Communication with banks (IT) through elimation of local EBS interfaces, process automation and standardization. Payment interfaces are standardized and file upload is automated.
On their radar screen, they define the outlook towards a payment and collection factory, with further benefits for the financial supply chain. Cross-border payments can be turned into domestic payments, saving bank fees, Forex spreads and value-dated, as well enabling the closing of more than 100 bank accounts. IT complexity can be reduced—no more interfaces from local SAP to banks, routing of electronic payments and collections can be done via IHB, and payment workflow can be streamlined and concentrated onto SAP. Centralized cash flow becomes information and transactional-wise. A centrally controlled standardized disbursement channel aids compliance & security when it is Swift & SAP-based.
- Page 4 of 5
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