Rapid Response to Achieving Cash Management Objectives

by Jörg B. Bermüller, Head of Cash and Risk Management, Merck KGaA, and Jörg Konrath, Global Cash Management Relationship Manager, BNP Paribas

At the start of 2011, Merck embarked on a project to rationalise its banking partners and streamline its cash management activities. Despite ambitious targets and an aggressive timeline, Merck’s treasury has achieved impressive results within nine months of embarking on the initial planning stages. This article, based on Jörg Bermüller’s presentation at BNP Paribas’ Cash Management University 2011, outlines how this was realised.

Treasury structure

Merck Financial Services GmbH, which is managed by Merck’s Group Treasury, acts as an in-house bank on behalf of all 242 of the group’s legal entities in 69 countries. In treasury, we process 650,000 external payments each year with a value of €71.5bn. We manage 1,180 intercompany accounts in 33 currencies, and over half a million internal invoices. From an external cash management perspective, we operate 16 cash pools in 14 currencies, which include 150 legal entities in 35 countries.

Our Cash Management function for the in-house bank comprises only 10 professionals, so in order to manage our complex, high-volume cash and risk management activities effectively, our sophisticated technology infrastructure based on SunGard’s AvantGard Quantum is crucial. This is integrated with Siemens’ payment tool finavigate® as well as our banks’ cash management systems for backup purposes. We also integrate Quantum with 360T for online trading, Misys for confirmation matching and our ERP environment for accounting and group reporting.

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