French multinational automotive manufacturer Renault’s Sylvie Faure, in charge of Cash Forecasting, and Cyril Schäfer, Head of Euro Cash Management, tell TMI how DataLog Finance’s TMS is driving next-level treasury efficiency.
The primary goal of Renault SAS’s (Renault’s) daily cash management process is maximising cash centralisation. As with many companies around the world, the pandemic has pushed this to the fore.
To achieve this goal, the company’s central treasury team has created a robust cash management environment: cash pooling systems have been established across Europe, with essential smooth collaboration with the company’s broader European finance teams enabled. In order to improve Renault Automotive branch cash management, a well-selected TMS was needed.
Project drivers
Renault’s Euro Treasury department is divided into two areas. The first covers daily cash management and payments control and approval in the countries of the Eurozone. This oversees around 15 partner banks, 250 external bank accounts, one internal bank, and about 200 subsidiaries. For this part, the project enabled the team to work with a modern tool that provided more security in handling treasury flows amounting to billions of Euros.
The second area is long-term cash flow forecasting (headed up by Faure). This covers the entire automotive branch, including daily cash management historical data and all the international subsidiaries (including Brazil, Romania, Morocco, and Argentina among others) which have local cash management teams. These are managed by the International Treasury department, which sits close to Renault’s Euro Treasury team in the Financing and Treasury Direction.
Cash management has not always been as fluidly handled as it is today. According to Schäfer, until just a couple of years ago, daily cash flow statements were produced in Excel. Treasury budget data was run alongside in-house tools that were created way back in 2000 for the analysis of cash flow actuals and the production of long-term (12-month) forecasts.
“The system was heavy to maintain, not very user-friendly and limited to a small scope of subsidiaries,” recalls Faure. Indeed, this set-up provided only a partial and temporary response to problems related to flow volumes and forecasts.
The project goal was all about reducing the risk. It was not about changing the scope of required actions, but replacing two legacy tools and removing Excel. The first initial objective was to deliver a detailed analytical cash flow based on bank statements rather than accounting data. The second was to break down macro budgetary data, presented over a daily horizon, into multiple cash flow categories.
To reach the objective of real analytical cash flow, the team quickly understood that it would have to implement a TMS. With the ability to produce up to 18-month forecasts set as a priority, Faure says the team was prompted in 2019 to survey the solutions market.
Time to replace
Having seen how far the SaaS market had progressed in recent years, Schäfer’s team knew that it could avoid the set up and maintenance issues of an installed solution. In going to market, the team was able to shortlist only those vendors capable of offering cloud-based cash management.
The RFP, issued in late 2019, had three core functional objectives:
In addition, the platform had to be able to cover the entire functional and geographical scope of Renault’s 200 subsidiaries and be implementable “within a reasonable timeframe”.
After exploring its options, Renault decided that only DataLog Finance’s cash management solution covered all of its needs without any extra IT development. What’s more, it was apparent that implementation was possible within just a few months, the system being 100% customisable through parameter settings alone.
With Faure’s background in finance and information systems (she was involved in the implementation of the previous cash flow platform and was responsible for deploying SAP at Renault’s subsidiaries), she knew what to look for in a system. After a “very convincing demonstration”, and many positive comments from existing treasury users of the system, she states that the selection of DataLog Finance was “obvious”.
“We were particularly impressed by the DataLog system’s ability to enable us to perform a long-term analysis of actual cash flows with a very high level of detail, which seems to be unique in the market,” she comments. What’s more, she knew that the vendor’s system would enable Renault treasury to “completely change the paradigm”, using bank statements instead of accounting data from the ERP.
From Schäfer’s perspective, “only DataLog offered a solution that was easy to implement, without the need for specific development, and which could offer analytical breakdowns not just by means of payment but also by line item”.
Smooth sailing
“The specifications of the project were highly detailed and complex, especially concerning our need to analyse actual cash flows,” recalls Faure. “Nonetheless, the DataLog platform’s capacity for parameterisation enabled us to implement all the allocation rules we required.” While she says this resulted in a slightly longer implementation than if the team had opted for a customised solution, the extra time had no negative consequences, with all objectives being met.
There was more to come, though. “The expertise of our DataLog dedicated project manager enabled us to implement a centralised communication function. While this was not essential for us at first, it turned out to be a real bonus,” notes Schäfer. The process replaces ad hoc emails about cash flows from pooled European subsidiaries with figures entered directly into the software. This reduces risk of errors and creates time savings at a central treasury level.
Post-implementation, while the pandemic somewhat limited face-to-face training, Schäfer believes that the strong relationship formed between the Renault team and its DataLog Finance consultants lasted throughout the entire project. “Each side listened to the other, opening the way for a smooth project, and perfectly tailored solution,” he recalls.
No more ‘thankless tasks’
With the DataLog Finance TMS now live, among the main gains are the security, accuracy, and reliability of its output, says Schäfer. “It enables us to keep a sharper eye on our accounts, with forecast data now attended to right away. And the fact that we don’t need an IT team to carry out further parameterisation to ensure the systems evolves with us is just great.”
For Faure, the DataLog TMS provides “versatility and user-friendliness that was previously unknown to us”. Indeed, she says, it removes a whole roster of “thankless tasks”. But more than that, she believes the ease with which, for example, additional rules around reconciliations can be applied without the risk of error, is “an added value that brings security to cash management”. It’s a level of user satisfaction that has led Renault’s treasury to begin planning the implementation of dynamic reporting for 2022, with migration to version 5.0 of the system and AI forecasting, also now in the pipeline.
TMS advice
Having travelled the full length of the TMS selection and implementation journey, both Schäfer and Faure agree that it is vital for the expression of treasury’s needs to be determined “very precisely, with a detailed design file” at an early stage. Within the Renault Group, support of the Digital Transformation Department was offered in putting together that file of requirements and definitions, with further essential assistance provided by the internal IT department.
Renault also conducted a broad benchmarking exercise with a dozen other corporate groups in order to learn about best practices in cash management and forecasting and explore how the products of various vendors responded to these key areas. Within the treasury team itself, Schäfer and Faure say it is a fundamental requirement of any such project to be organised to be able to devote maximum time to it. It’s also beneficial if treasury is able to bring a sympathetic approach to information systems, enabling it to better understand its parameterisation options, and the chosen platform’s operating logic.
In the final analysis, Schäfer and Faure are certain that their project was accomplished as expected. This was largely attributable to the investment of time and effort by both parties, but they comment that the knowledge of the platform and of treasury practice displayed by the DataLog consultants enabled them to meet the treasury team’s expectations and to adapt to its requirements. It’s a positive outcome that is giving Renault’s treasury team the kind of mileage and longevity that its old systems could never have achieved.
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