Material Gains with Virtual Accounts

Fashion leader OTB, parent company of major brands such as Diesel, Maison Margiela, Marni, Paula Cademartori and Viktor & Rolf, is a pioneer not only in its core business, but also in cash management. In 2016, in co-operation with partner bank UniCredit, OTB  implemented an innovative virtual account solution in order to gain efficiency in the centralised collections management. In this article, Gianluca Marcolongo, SSC Treasury Manager, OTB SpA explores the project in more detail.

Project background

OTB has a centralised treasury function which deals with collections for account of several group entities; the drawback was that the collections account was owned by OTB, with the  entity as beneficiary. This meant that customers were asked to specify the beneficiary entity in the remittance information, which inevitably resulted in some confusion and it was difficult to reconcile incoming payments that frequently lacked this information. OTB is a group committed to efficiency and excellence in every part of our operations, so we were seeking to resolve this challenge. This would in turn allow us to improve the customer experience whilst improving our own working capital position by reconciling flows more quickly.

Although we wanted to continue operating on a COBO basis, we wanted the process to be more convenient, efficient and automated. Firstly, the collections account would be in the name of an OTB entity, but secondly, we opted to implement UniCredit’s virtual account solution. We already had a relationship with UniCredit in Italy, and decided to extend this further based on the quality of this relationship and the innovative solutions that they offered.

Virtual accounts and SWIFT

We implemented the collections factory, including virtual accounts, for several OTB entities in February 2017. We use an Italian-based treasury management system (TMS), Piteco, which is integrated with SAP. We are also connected to SWIFT, so we receive information in ISO 20022 format which we then integrate into our TMS for reconciliation purposes, at which point the ledger of the relevant entity is also updated in SAP.

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