Cash & Liquidity Management
Published  6 MIN READ
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SEPA as a Catalyst for Change

by Federico Focardi, Group Finance Director, Salvatore Ferragamo S.p.A.


Salvatore Ferragamo S.p.A. is one of the world’s most prestigious brands with a commitment to quality and integrity that extends throughout every stage of its supply chain, from the sourcing of materials and manufacturing inputs to the point of sale. This same commitment extends to Ferragamo’s internal processes, such as cash and treasury management. In this article, Federico Focardi, Group Finance Director at Ferragamo, discusses how the company has leveraged its SEPA migration project to embark on a transformation project, including the appointment of a global cash management bank and the centralisation of payments through a highly efficient payments factory.

Project background

We have around 32 legal entities that have relationships with suppliers, each of which has historically been responsible for its own payments. We recognised that this approach was leading to some inefficiencies. In particular, it was difficult to standardise processes and controls in each country, given fragmented bank relationships and technology systems. Payment approvals were also cumbersome, and often required senior management time to engage in manually-intensive processes, particularly when multiple banking systems were involved.

Catalyst for change

The introduction of SEPA and the obligation to migrate to the new payment instruments provided the opportunity to address these challenges by centralising payments and implementing efficient, standardised processes. We made the decision to implement a payments factory as a related initiative to our SEPA migration – not only would this enable us to improve efficiency and reduce costs associated with payment processes, but it would also help us to manage liquidity more effectively. The payments factory would operate using a ‘payments on behalf of’ (POBO) model, where a single entity (the mother company) makes payments on behalf of European subsidiaries, supported by the correspondent recording on intercompany accounts. We would also benefit from a reduction in the number of bank accounts required, as we would need only one account per currency, and leverage ISO 20022 formats – which enable the entity on whose behalf a payment is being made to be recorded on a payment and passed through to the beneficiary to assist with reconciliation.