Published: April 20, 2010
One of the most predominant subjects at this year’s CEBIT was how web-based software systems and software as service concepts will be able to change and optimise information technology within companies. Lindner Group’s Treasury Department has been working since 2008 with a forward-looking web-based application produced by BELLIN.
Lindner Group is a worldwide family-owned company headquartered in Arnstorf, Germany and a leading producer of façades and interior fittings. The group’s constant growth and international expansion meant that the existing banking department needed to be transformed into a modern group treasury function. The foundations for this were laid in 2006. Until this point, the emphasis within what was then known as the banking department had been primarily on provision of day-to-day finance, bookkeeping as well as the management of guarantees. A banking product was used for the actual provision of day-to-day finance; diverse data and figures needed to be taken from various sources, manually reprocessed in Excel and merged in new reports. The increased demands meant that a new positioning was essential. New areas such as currency, guarantee and risk management required a new way of thinking and new processes.
In addition to the construction and expansion of a central treasury function, the introduction of a treasury management system (TMS) was a major step forward and an investment in the future.
A heterogeneous system landscape, the usage of various ERP systems and e-banking solutions combined several resources such that data integrity was either not guaranteed or only at a high cost. The cost of the provision of day-to-day finance, inter-company interest and loan costs as well as the reporting had to be considerably reduced but also optimised. As the support for the cash management system we were using had ceased, we were compelled to introduce a new treasury system.
Basically, we decided not to use a consultancy firm for the specifications and the selection of providers. Jointly with various specialist departments within the company a questionnaire was produced for the subsidiaries and related companies along with a catalogue of requirements for the system suppliers. The aim was to find a treasury management system that covered the areas of liquidity management, planning, reporting, payment transactions and netting, and which used a forward-thinking technology for communications. [[[PAGE]]]
We divided the selection and roll-out process into three stages:
A pre-selection of potential suppliers was based on references and information such as that provided by financial symposia. Following the pre-selection process, three suppliers, one of them BELLIN, as well as two banks, were invited to presentation meetings. At these presentations, the system was fully presented along with a demonstration of whether and how it would meet the requirements.
Further discussions were held with two suppliers, complete offers obtained and a schedule for the roll-out set. We decided on the TMS offered by BELLIN. The offer was convincing not just as a result of the modular construction and the licence model (no additional user licence fees) but also from the point of view of the easily accessible user interface. The fact that the TMS was developed as a web-based system from the outset was of particular importance. It was possible to introduce this technology quickly into the group since users only need to have access to Microsoft Internet Explorer and it did not require any local installation. In addition to the simple integration of the treasury software into the existing system, this led to a high degree of acceptance within the group.
Tha aim was to find a treasury management system that covered the areas of liquidity management, planning, reporting, payment transactions and netting, and which used a forward-thinking technology for communications.
Thanks to the modular structure of the TRDB we were able to set a clear position and roll out the individual modules gradually and in a manner suited to our requirements and capacities.
The system installation along with the fundamental preparations for going live were completed. The necessary core data required for the start-up was loaded within two working days. All account statements had been read and the first test payments made as early as the second working day. On the third working day all payments and the provision of day-to-day finance were carried out through the new system. In the following weeks we collected important experience during live usage, various procedures were optimised and the system adjusted to the requirements of the Lindner Group.
We were soon able to achieve considerable optimisation of the daily cash and liquidity management thanks to the integrated platform, as all the account statement information was completed automatically around various planned data (data from trading such as fixed-term deposits due and currency futures transactions as well as the planned data from the payment factory [payment recorded or data carrier read]). The payment factory also offers major advantages compared with traditional systems in terms of signatures and entitlement concepts.
The usual running difficulties were solved by optimising various in-house processes and by the good level of support received from BELLIN.
After the prompt and successful introduction of TRDB, the foundations were laid for the usage of the treasury system outside Germany. The electronic integration of all the relevant accounts, the construction of the financial status for the individual subsidiaries, the issue of authorisations and the creation of the principles for financial planning were carried out by Group Treasury. On-site training, assistance and support are all carried out by us as a central service-provider for the Lindner Group. Due to the web-based nature of the application, the implementation process went smoothly at the decentralised units. Currently there are over 250 connected bank accounts in Germany and other countries. The important aim of having the worldwide group financial status was therefore achieved. [[[PAGE]]]
The preparations for the introduction of liquidity planning were completed at the end of 2009 and the structure, along with the necessary parameters and planning categories, defined. The 2010 planning is already conducted directly through the treasury system. The liquidity planning consists of short-term planned cash management with longer timeframes. In the Lindner Group, the planning in all cases for the coming year is carried out using the system for a maximum timeframe of 12 months. A major advantage is that we can plan liquidity split by currency for individual companies. Accordingly, for the first time, we are able to make decisions on hedging transactions based on the anticipated foreign currency inflows and outflows. As a result of the integrated platform, it is easy to calculate hedge ratios and valuations for hedging transactions, a factor which has considerably improved the risk management function. Also it is easy to analyse discrepancies in the planning even at the level of the individual group company and compare more plans with each other (e.g., budget v. forecast).
In early 2010 the principles were laid down for the netting centre. There are plans to introduce netting into the whole of the group in mid-2010. As a result, payment flows arising from goods and services amongst the companies will be calculated solely through Group Treasury at Lindner Finanz GmbH. Thanks to web-based technology it is therefore possible to conduct reconciliations between the group companies at individual documentation level. This will lead not only to an optimisation of the monetary flows within the group – in terms of numbers, costs, reduction of currency risk – but also to considerable improvements in the quality of the inter-company reconciliations (reconciliation, delayed payments, discipline when clearing up disputes).
We have proved that it is possible to construct a truly functional treasury department jointly with BELLIN within a short timescale. Treasury that works. Although we were initially very sceptical of BELLIN’s expenditure and resource planning, it has been demonstrated that they understand their craft and do not make empty promises. It has proved helpful that the implementation advisor of BELLIN comes from the specialist areas and not just from application. Our project was completed within the cost and timeframe budget.
However the path that we have jointly embarked on is far from completed. The banking department has become a modern treasury department and the treasury department is now becoming an in-house bank. Lindner Finanz GmbH was formed at the end of 2009. As an in-house bank, it will provide future financial services and related services exclusively for the parent company, subsidiaries and sister companies within the Lindner group. In order to meet further and new requirements, we upgraded in recent weeks within a short timeframe from TRDB 4.3 to tm5 which again took place without problems.
The web-based inter-company trading platform was newly implemented and is already actively used. We are able to look at any further challenges calmly, particularly as we have found a system that allows us to shape the working processes more effectively and thereby create more freedom for the important treasury activities. But this is also due to the fact that we are already successfully employing future-proof web technology.
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