Published: November 01, 2008
National Express is one of the world’s leading international public transport groups, with an annual turnover of £2.6 billion. Over one billion passengers a year use its services in the UK, North America and Spain. The company has 43,000 employees across three continents. Its 20,000 vehicles worldwide provide bus, coach, train, tram, school bus and airport transfer services.
The company has its roots in the formation of the state-owned National Bus Company in the UK in the 1960s; following its flotation in 1992, the renamed National Express Group expanded by acquiring businesses privatised by national and local Government. The company has developed a strong reputation for successfully transferring companies from the public to the private sector, primarily in the UK but also overseas.
To cope with its increasingly complex international treasury requirements, National Express Group implemented the Wallstreet Treasury ASP solution.
We have a centralised Group Treasury function at National Express, with three people who manage the Group’s funding requirements, interest rate, currency and commodity hedging programmes and group cash management. In addition, we have local treasurers based in each of our key regions, namely the UK, North America and Spain, who manage local payments and collections.
Since implementing the solution, we have the comfort of a complete deal database, replacing the many spreadsheets that were in use before.
Before implementing Wallstreet Treasury, we had managed our activities using spreadsheets. However, due to the growing complexity of our hedging, funding and performance bond requirements and the increasing sizes of transactions, spreadsheets were no longer considered a sufficiently solid or reliable means of managing our activities.
We therefore decided that we needed a robust solution that would cope with expanding numbers of large deals, help us to manage exposures, reduce settlement time and increase accounting efficiency without the need to add further resources or incur high system licensing or maintenance costs.
We made a comprehensive study of five or six different solutions, eventually concluding that the ASP model offered by Wall Street Systems (Wallstreet) was the best fit in terms of ability to manage settlement risk, cost, ease of use and low maintenance.
We implemented Wallstreet Treasury in the UK based Group Treasury, initially focusing on money market, foreign exchange and interest rate hedging. As the volume of transactions was still relatively small, we were able to implement the solution within two months. As the solution is deployed on an ASP basis, we did not need to source additional internal or external resources, including IT, so our costs were limited to the price of the solution as opposed to incurring additional costs.
We achieved our initial objectives of reducing our settlement risk and also reducing our costs beyond the cost of the system. Since implementing the solution, we have the comfort of a complete deal database, replacing the many spreadsheets that were in use before, with its less repetitive manual input and so greatly reducing margin for error. As a web based system, together with a web based banking solution, we can access all the key elements of our treasury infrastructure from anywhere, which is very convenient for home working or business travel and, more importantly, for improving our disaster recovery arrangements. [[[PAGE]]]
We have achieved time savings and improved productivity in the back office with automated deal confirmations, and quicker settlement processes. We have also gained huge efficiencies in the management of internal and external loans. This potentially became an issue after the transfer pricing requirement was introduced, meaning that we needed to charge interest on inter-company loans which had previously been interest free. Before we used the system, this would have resulted in very large increases in manual workload and may have needed new resource. Today, however, with automatic interest calculations we spend no more time on this task than before the requirements came into being.
the upgrade process has worked well for National Express and we think that this consultative team style of upgrade process is very efficient.
A benefit we had not anticipated was the increased efficiency of accounting. With the system easily producing all of the information needed for the accounting journals, and the ability of the system to correct journals where adjustments are made, we have standardised the time it takes to prepare the accounting entries. While this was not something which would have added considerable benefit in the past, it is becoming more significant as the deal volumes expand. Importantly for us, the system also supports split accounting periods. This means that correct postings can be made to entities which have calendar month based accounting periods at the same time to those which use 4 weekly accounting periods.
As mentioned before, the ASP service offers us particular benefit as we do not need internal IT resource to manage the system. We wanted an affordable treasury system whilst maintaining flexibility. With Wallstreet Treasury ASP, the implementation of changes to the system can be made relatively quickly by request to Wallstreet and we have the comfort of knowing that with the provider making the changes the system will always be delivered back fully functional without disruption to us under the terms of the SLA. The ASP solution has been very robust and the downtime over the last three years has been almost unnoticeable.
Since we first implemented the system, there have been several major developments, in particular the introduction of IAS and commodity modules. During the development of this functionality, Wallstreet worked closely with us and other customers to ensure that all our needs were accommodated. The result is that, in both these cases, the upgrade process has worked well for National Express and we think that this consultative team style of upgrade process is very efficient. Additionally, this style of working increases communication with other users, which has proved very useful; not only when adding the new upgrade functionality.
Every complex project inevitably brings some challenges but these have been relatively few. We were up and running within a short period of time (2 months) and realised 80% of the benefits we were seeking. There are still additional areas in which we think we can gain some advantage from the system, such as implementing straight through processing, but to take advantage of this functionality, we would need to dedicate more resources. The achievements we have already delivered have a clear cost benefit but, as with all projects, it is more difficult to justify the cost and resourcing of “nice to have” features.
In the current volatile markets, risk management is increasingly important and the system’s calculation of counter-party and market risk is vital. We do not plan major changes in the immediate future in the way that we use the system, except to the extent that the new version, which we will be implementing soon, includes additional functionality such as the Sentinel automated scheduling module which was not available before via the ASP solution. This scheduling tool enables processes such as bank statement import and reconciliation and report writing to be automated and previously was only available on locally installed environments. More importantly, we are looking forward to taking advantage of the strategic partnerships being forged by Wallstreet with external suppliers to provide functionality beyond that of many other more expensive systems at prices not currently economic to the small corporate user.
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