- Andreas Lützelschwab
- Head of Corporate Finance, Treasury & Tax, Swissgrid AG
by Andreas Lützelschwab, Head of Corporate Finance, Treasury & Tax, Swissgrid AG
National grid company Swissgrid was faced with the challenge familiar to many treasury departments: multiple bank connections and standards, and lack of process automation. To overcome these issues, Swissgrid appointed Treasury Intelligence Solutions GmbH (TIS) to support its automation, integration and security objectives, as the company’s Head of Corporate Finance, Treasury & Tax outlines in this article.
Treasury organisation and priorities
We have a small treasury function at Swissgrid comprising three people in front and middle office, and two people with back office responsibility. We work with five house banks, and maintain around 70 bank accounts. We use SAP as our ERP across the business, which includes the TR (Transaction Manager) and CFM (Corporate Finance Management) modules.
As a small treasury team with diverse responsibilities, it is very important that we are able to automate cash and treasury management processes wherever possible. One of the problems we had in the past was the need to maintain separate electronic banking systems for all of our banks, each of which supports different formats and security protocols. In addition, we used FIDES for our Swiss-based accounts for both account statements and payments.
This meant that we had to dedicate a lot of resource to managing each of the various systems, none of which were integrated with SAP. Payment files had to be manually uploaded into the relevant banking system, and electronic bank statements into SAP. Daily cash positioning and reconciliation was also a manual process. The lack of STP (straight-through processing) was a concern in terms of security, risk of error, and the amount of resource required to undertake relatively simple tasks.
Key Points
Challenges
- Fragmented infrastructure
- Lack of STP
- High maintenance costs and resource requirements
- Security concerns
Objectives
- Rationalise and standardise bank connectivity
- Achieve high level of STP
- Automate and standardise payment and account reporting processes
- Comply with internal and external regulations
- Meet stringent security requirements
- Harness vendor expertise and avoid the need to dedicate resources to system maintenance
Outcomes
- Acquired a credible and reliable partner through TIS
- Visibility over payment processes, cash flow status and cash position
- Compliance with internal and external audit requirements
- Ability to scale up the treasury operations and adapt to changing regulatory and market conditions
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Reducing complexity and diversity
We therefore made the decision to implement a more streamlined, secure solution for bank communication and SAP integration. Our aims were to improve security and control, standardise and automate processes, and free up resources. We considered a range of alternatives, including SWIFT and various solution providers, including TIS. When looking at SWIFT, we contemplated both a service bureau connectivity model and the cloud-based solution, Alliance Lite2. We concluded that as a primarily domestic/ European-based business, we would not benefit from many of the advantages that SWIFT offers to multinational corporations, and the costs were relatively high.
In contrast, we were seeking a provider that offered a cost-effective, cloud-based solution that would support Swiss payment requirements, and that would manage the format conversions seamlessly. A high level of STP was essential across all of our payment types, including salary, supplier and treasury payment. This required two-way integration with SAP to support payments transmission and status reporting, and account statement retrieval. Furthermore, the solution had to comply with stringent security requirements.
Having performed a detailed evaluation exercise, we made the decision to work with TIS and implement the TIS Platform. The system was built on state-of-the-art technology, and would be managed by the vendor, rather than Swissgrid having to dedicate resources. We recognised that the solution would enable us to meet our security, standardisation, automation and integration requirements and that TIS had the expertise and track record to support our business effectively.
Achieving objectives
Not only do we have secure, automated processes, but these processes are now clearly documented and auditable.
The implementation was efficient and took only five months from concluding the contract to going live. As a result, we have transformed our payment and reporting processes. Payments are created in SAP and delivered automatically to TIS. Approvers are then alerted via email that there are transactions ready to approve, which then take place according to each individual’s user rights. Once payments have been correctly approved, these are transmitted automatically to the bank. Transaction status information from the bank is then available to us automatically in SAP. Similarly, balance and transaction reporting flows through directly to SAP, providing us with timely, accurate information on our cash position and enabling us to automate processes such as reconciliation.
The benefits of implementing the new solution have been substantial. Not only do we have secure, automated processes, but these processes are now clearly documented and auditable. We have full visibility over the status of transactions at any time, and we also have visibility over our cash. This has been largely due to the high level of commitment and expertise across the TIS team which has made it possible to implement the specific requirements of the Swiss market. As the solution is cloud-based, the implementation was straightforward and there is almost no time or resources required from Swissgrid to maintain it. It is also proving very stable with high levels of availability.
Sharing experiences
Based on our experiences of replacing a fragmented, multi-system infrastructure with an integrated, streamlined solution, we would emphasise the need to check each proposed vendor and solution carefully against the evalution criteria. This is important both in order to select the vendor that matches these criteria most closely, but also to identify any gaps that may need to be addressed during the implementation. For example, we knew at the start of the implementation that not all of the bank interfaces were available, but TIS committed to deliver them, and this was built into the project plan. This meant that we avoided project slippage or additional costs, so the project was completed on time. Where there are gaps, it is important to have a strong commitment from the vendor to address these gaps, which was an element we particularly appreciated in working with TIS.
Now that users are familiar with the system, the next step is to develop reporting using TIPCO, a strategic partner of TIS. We are also able to implement SEPA Business Direct Debits, which was difficult to achieve through our previous infrastructure. As a growing business, we now have a scalable solution, and valued business partner, that will enable us to build capacity without adding resources, and support future regulatory and market requirements.
