Cash & Liquidity Management

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The Evolving Value Proposition of Payment Factories Leading treasurers joined TMI and D+H in a roundtable discussing the latest trends and experiences in in-house banking and payment factories. Helen Sanders, Editor, presents the findings.

The Evolving Value Proposition of Payment Factories

The Evolving Value Proposition of Payment Factories

The experience of six leading treasurers

by Helen Sanders, Editor

In June 2015, leading treasurers joined TMI and D+H in a roundtable moderated by Damian McMahon, director of the finance and treasury group for PwC in Belgium to discuss trends and experiences in in-house banking and payment factories. The panel comprised the following:

  • François Masquelier, Senior Vice President, Treasury and Risk Management, RTL Group
  • Marie-Astrid Dubois, Assistant Treasurer, EMEA & Asia, Honeywell
  • Karen Van den Driessche, Treasury Director EMEA, Avnet
  • Luc Vlaminck, Group Treasurer, Remy Cointreau
  • Michel Verholen, Director, Global Treasury Center, Zoetis
  • Jean-Philippe De Waele, Treasurer EMEA, Johnson Controls

Meet the panellists

Luc Vlaminck, Group Treasurer, Remy Cointreau

“We first set up a global treasury centre in Belgium eight years ago, including an in-house bank. Last year, we started to expand this into a payment factory, which will ultimately cover around 60 legal entities globally, but the project will be implemented in phases. We started with our affiliates in France, and then extended the project across Europe, which comprises around 25 entities and €1bn in payments. We are now rolling out the final steps of the project into Asia and the US. The payment factory operates on a payments-on-behalf of (POBO) and payments in the name of (PINO) basis.”

Michel Verholen, Director, Global Treasury Center, Zoetis

“I started with Zoetis which is a spin-off from Pfizer, seven months ago. When the company was first formed two years ago, most of the Pfizer infrastructure was replicated, but over time, we have been able to review and rationalise our treasury model to meet the specific needs of Zoetis’ business. At the same time as establishing the treasury function, we also implemented a shared service centre (SSC) for operational payments. Therefore, account management, banking infrastructure and connectivity are all managed by treasury, but payments processing takes place in the SSC. There are still some entities that process payments locally, which do not yet share the same ERP, but we are leveraging the SSC infrastructure at present, either by bringing them into the SSC or leaving them separate, but using the standard connectivity solutions. . We are also rationalising our legal entity structure, so ultimately around 55 entities will be using the same connectivity solutions for payments and transaction reporting.”

Karen Van den Driessche, Treasury Director, Avnet

“Part of my role is responsibility for global treasury technology strategy. We do not yet have a payment factory, but we are rolling out a new treasury management system (TMS), SunGard’s AvantGard Integrity combined with Trax and SWIFT connectivity globally. Initially, we are using Trax to transmit and convert payment and bank statement files between SWIFT and Integrity, but we will use it as a payment factory tool as a second phase.

We use multiple SAP instances (nine) and some other smaller accounting platforms. Our payment factory scope will probably start with a roll-out in EMEA, covering over 140 legal entities, and then be rolled out globally. We plan to use standardised XML formats and are currently learning from other corporates’ experiences to define the approach and roll-out plan. “

François Masquelier, Senior Vice President, Treasury and Risk Management, RTL Group

“We have a payment factory in treasury that covers around 90% of our 300 entities, which equates to nearly 99% of our total payments volume, which is around 400,000 payments each year. We use SAP across the business, although we currently have multiple platforms, and we generally aim to integrate new acquisitions on SAP as soon as is feasible, including those we have made in Canada, US and Asia. We use City Financials as our TMS and use CashPoolerWeb (from Datalog) as our payment factory system, which is connected to SWIFT via a service bureau. (i.e., SunGard). We also use ISO 20022 formats wherever possible. Having centralised most of our payments, our next step may be to implement POBO and/ or COBO depending on what is achievable and relevant to our business in each country. For example, we may look first at POBO in Benelux, France, Germany and possibly UK.

One of our challenges is the number and frequency of acquisitions, which has major implications for integration. It is difficult to impose a systems infrastructure on an acquired entity, particularly when this is relatively small, but we need to find a way of creating group-wide financial reporting.”

Marie-Astrid Dubois, Assistant Treasurer, EMEA & Asia, Honeywell

“Like other panellists, we use SAP as our corporate ERP. In addition, we use SunGard’s AvantGard Quantum as our TMS. A few years ago, we launched our global disbursement and SWIFT (GDS) project. This aimed to achieve a common approach to bank connectivity via SWIFT, including XML formats and a standardised, end-to-end automated process flow. This has enabled us to eliminate a large number of payment centres – more than 40 in Europe alone. Our European payment factory implementation is now nearing completion with over 150 active entities in EMEA. We have pilot projects in US and Asia now underway. This is a long-term project, not one that can be completed overnight. We have a centralised payments entity in India, but this handles third party disbursements, excluding tax, payroll and treasury payments, but is not managed by treasury. For us, while POBO offers theoretical advantages, it would be very challenging for us in practice, and add rather than remove complexity.”

Jean-Philippe De Waele, Treasurer EMEA, Johnson Controls

“As a multi-industry group, we use various ERPs, mainly SAP, Oracle and iScala. Although we originally implemented an in-house bank for cross-border payments, intercompany netting, intercompany lending and settlement of internal FX hedging, we now perform these activities and manage liquidity and risk through Bank Mendes Gans, part of the ING group. In 2009, we started to implement SunGard’s Trax, initially in EMEA but ultimately globally, which comprises over 350 entities and 100 banks today. This now acts as our global platform for all payments, which amounts to $40bn each month (including settlement of internal and external derivatives). Salary payments are currently excluded, although we expect to include them in due course. We also use one standard SWIFT complaint XML-file format (ISO 20022) across our banks.”

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