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Insourcing Treasury Operations at Borealis

by Eddy Jacqmotte, Manager Cash & Bank – Head of Back Office Administration, Borealis

Borealis has a centralised, multi-site treasury organisation, with the front/middle office based in Vienna, and the back office in Mechelen, Belgium. Until 2008, Borealis had outsourced its treasury front- and middle- office operations for a number of years to an agency treasury in Dublin, Ireland. This included connecting directly to the agency treasury’s treasury management system (TMS) from both locations, and downloading data into our ERP. While this arrangement worked well, we made the decision to bring our treasury operations back in-house. There were a variety of reasons for this. Firstly, as a complex, multinational business, we needed more flexibility than a standardised service offering was able to provide. For example, it was not always easy to adjust the outsourcing service in line with changes to the business or mergers/acquisitions. Secondly, treasury outsourcing can be quite an expensive option, and bearing in mind we had the skills and resource in-house and the availability of better as well as more cost efficient systems it was advantageous to manage treasury operations internally.

Adopting a new TMS

Having made the decision to insource, we started to manage our treasury activities in-house on 1 April 2008 but we had already undertaken the migration project before this. We needed a new TMS as although we had been very satisfied with the TMS used by the agency treasury provider, it was getting older and the new versions were not able to fulfill all our requirements.

Furthermore, more user-friendly systems were available. We therefore reviewed the market and shortlisted three TMS suppliers. We conducted an evaluation process, looking at the degree to which each solution supported our functional requirements, integration with SAP and the cost benefit. Based on this combination of criteria, we selected IT2. Initially, it was difficult to convince our IT department of the need to adopt a specialist solution as opposed to using the standard solution SAP, but ultimately, we decided that it much better suited our objectives.

Treasury integration and automation

Achieving integration between IT2 and SAP was a major exercise, both to achieve the automation we were seeking and to align our accounting rules. We were fortunate in that our accounting rules and coding had already been well documented for our agency treasury provider, which made it easier than trying to start from scratch. The next step was to look at connectivity between IT2 and our banks for transmitting payments and retrieving statements. This was a very quick and straightforward process of less than one day, and RBS, our key partner bank, was very responsive in making formats available and facilitating easy integration. In addition to our key interfaces to RBS and SAP, we also integrated IT2 with Misys, our confirmation matching platform used by our back office, and to both Bloomberg and 360T for market rates and electronic dealing respectively in our front office.