Published: November 01, 2012
In 2008 Celesio AG Head Office used an accounting software, which was coming towards the end of its life, and a treasury management software that did not support the increasing reporting requirements for example connected to IFRS 7. We decided to move from these two stand-alone applications to an integrated SAP solution.
Celesio AG implemented its first treasury management system (TMS) in 2004 when the group-wide financing and hedging tasks were concentrated at the head office and in our Dutch finance vehicle, Celesio Finance B.V. This TMS was a stand-alone solution, as was the accounting software used at that time at the head office. The interface between these two systems was a daily paper trail. Even though we started to leverage further possibilities such as the download of deal data from 360 T, we realised that this TMS was not able to cover our increasing risk management and reporting requirements.
In line with a group-wide software standardisation we decided to opt for an integrated SAP solution. Our majority shareholder had recently implemented the same solution at its head office, which allowed us to start the project with a copy of their existing system. This initially saved a significant workload and shortened the learning curve, as we could build on experiences made by our colleagues.
In close cooperation with bdf Consultants we performed a detailed gap analysis between the existing SAP solution and our requirements. We recognised that the daily cash disposition process, including the information gathering from our subsidiaries on their expected cash in- and outflows, and also the subsequent money market dealing, was suboptimal in SAP. It would have taken too long and would have also required repeated input of the same data.
As every mistake and any delay within the daily cash disposition could cost the company significant amounts, we decided to develop with bdf Consultants an integrated SAP add-on solution – Cash Cockpit - which supports the day-to-day work during the cash disposition process in the best possible way. Ultimately it extends the time which you have to gather information on your funding requirements as far as possible and thus allows you to make better informed decisions.
The daily cash planning support system has three main screens:
Disposition reporting
This screen allows the user to determine the cash requirements for that day. It is fed with the value balances of the attached bank accounts. Next, our local colleagues capture their daily cash need or surplus. If they miss the deadline for this, up to four automatic email reminders are produced – the last one going to the local finance director. In addition to this, cash flows from derivatives and maturing money market deals are automatically displayed. This allows to determine the funding requirement for that day, which will be supported by the second screen, the interactive disposition screen.[[[PAGE]]]
Interactive disposition
This screen provides a comprehensive view of all existing credit facilities, any current draw-down of these facilities and their pricing. New draw-downs or extensions of existing draw-downs can easily be entered in a pop-up window which already displays all available information. Once the user has confirmed the new draw-down, the related data is fed into a handful of SAP components to initiate for example the accounting process. This also works for deposits. One of these components is the disposition reporting screen.
Finance status
This screen provides an accounting view on the balances of the captured bank accounts. You see the aggregated indebtedness resulting from account balances with the possibility to drill down to each single bank account. It also shows the market value of the existing treasury deals including any derivative deal and thus allows a quick view on the company’s overall financial status.
Implementation at Celesio AG started on 1 April 2009. The go-live of the new joint Accounting / Treasury IT landscape was one year later on 6 April 2010.
The new central SAP TMS includes SAP’s Credit Risk Analyzer, Market Risk Analyzer and since last year also Bank Communication Management. Subsidiaries have access to the central platform via Citrix. The TMS is connected to 360 T for FX trading, Misys for FX and money market confirmations, Bloomberg for market data and SWIFT for payments.
While the go-live was without any substantial problems we recognised in the following days that the integration between Accounting and Treasury required a greater amount of communication between these two departments than previously expected. Both sides had to learn the language and know more about the work of the other department in order to make the new processes successful. Also, we had to learn quickly that the use of the business partner data provided via the system copy saved time initially, but also brought along plenty of data which was irrelevant to our business.
Apart from this the implementation went quite smoothly. Following the go-live we continued to optimise the processes based on our experience from the daily work.
An issue that we faced was SAP’s use of various tables which appear quite similar to the untrained user, but have in fact a significantly different meaning. This can expose the user to an additional operative risk especially when it comes to payment-related data like Standard Settlement Instructions. bdf developed the idea of a screening tool, called XBAM, which covers all relevant data connected to the bank accounts, provides compliance related information regarding the bank accounts and monitors their signature responsibilities integrated with BCM processing. Furthermore, from the process point of view XBAM displays business partner data relevant for Treasury operations and allows us to identify wrong or missing data at short notice.[[[PAGE]]]
In late 2010 we decided to move towards the next integration stage and use SAP Bank Communication Manager to forward payment files. Celesio AG became a member of SWIFT and choose to use a SWIFT service bureau as intermediary. In the meantime we execute all payments of our French and German wholesalers via SWIFT, soon to be followed by those of our Austrian and Norwegian subsidiaries. We currently provide five banks with payment files in the SWIFT file act format. We regard this as a major step forward to reduce the operational and the fraud risk connected to the execution of payment orders.
We will continue to review our processes in order to identify further workflows which can be optimised using SAP.
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