Multinational companies often have a wide range of different payment systems in place in order to cope with the assortment of different accounts, banks, networks and formats needed to process payments on a global scale. Increasingly, companies are looking for solutions that can consolidate their cash flows in order to improve visibility and facilitate a centralised approach to cash management. SunGard has recently expanded its capabilities in this area with the acquisition of Trax, the financial messaging and payment processing software provider.
Success on the Trax leads to Scale problems
In October 2006, SunGard announced the acquisition of Trax, the Belgium-based payment software solutions provider. Trax was founded in 2004 to provide an infrastructure for optimising payment flows, payment instructions and related information. “The product escaped from us when we started commercialising it,” comments Hans Cobben, Chief Operating Officer of AvantGard Payments and co-founder of Trax. “At a certain point in time we realised there was a real discrepancy between the size of our customers and implementations and the size of the company itself. So we started looking around at a number of options to grow the company. Since we already had a relatively mature product at that point of time – and we didn’t want any hiccups in the marketing of the product line – we were pleased when SunGard showed interest after our initial discussions.”
…solved with the SunGard infrastructure
SunGard acquired Trax for two reasons. Firstly, Trax already had a strong presence in the market SunGard was aiming to develop. Secondly, both parties felt that Trax’s product complemented SunGard’s existing products in the payments area.
Following the acquisition, the Trax product was renamed AvantGard Trax and the company became SunGard’s AvantGard Payments focus area, part of the wider AvantGard suite offered by SunGard.
What it does
AvantGard Trax is a financial messaging platform that specialises in the initiation and reporting of payments. On the corporate side, it can be used to access multiple platforms, multiple networks and multiple protocols. It is also used by banks and is suitable for consolidating incoming payments from a range of sources, including corporate-to-bank and bank-to-bank transactions routed through a variety of clearing channels.
In addition, the AvantGard Trax reporting engine is used by corporates to consolidate cash positions across different accounts and currencies in real-time or for end of day reporting. Likewise, banks can access reporting information for their customers on a range of networks including SWIFTNet and the SunGard Transaction Network (SunGard STN).
AvantGard Trax also has applications used by banks wishing to optimise their exceptions handling processes or adopt SEPA compliant payment solutions.
AvantGard Trax Payment Factory provides a payments platform for corporates, enabling the cash flows of local subsidiaries to be centralised.
AvantGard Trax Corporate SWIFT Station is designed to act as an interface between SWIFTNet and corporates’ existing systems and is fully compatible with SWIFT messaging formats such as FIN and FileAct. A number of Trax applications have been awarded the SWIFTReady label. SunGard has always had a strong relationship with SWIFT, collaborating to develop solutions which allow clients to connect to SWIFT. In addition, SunGard is a member of SWIFT and also supplies SWIFT itself with certain software solutions.
AvantGard Trax is a rule-based system, meaning that rules can easily be added to govern the behaviour of its payment instructions and reporting methods. For example, the system can be set up to route payment instructions through different banks or clearing systems depending on the company’s cash position on specified accounts.
Chief Operating Officer, AvantGard Payments
What differentiates AvantGard Trax from your competitors’ products?
One differentiator is time to market. AvantGard Trax is ready, it’s there, it works. The rollout of the AvantGard Trax platform is relatively short – generally speaking, for corporates we’re talking an implementation time of one to three months; for banks, three to six months.
It is also very adaptable, and adapts to the existing environments in which it is being installed. AvantGard Trax sits in between existing platforms and payment initiation systems. These could be SAP, accounts payable systems, salary systems, local infrastructures – typically our corporate clients are using a wide range of systems as a result of mergers and acquisitions over the last couple of years. AvantGard Trax adapts itself to all these formats, protocols and networks, and gives you a very easy way of integrating all these flows to a bank.
From a banking point of view, if you install AvantGard Trax for a SEPA-compliant payment processing infrastructure, again AvantGard Trax will adapt itself to the existing back office infrastructure. As such, it allows a gradual adaptive evolutionary approach to these new standards and market requirements, rather than trying to do ‘big bang’ implementations – which as you know often result in a lot of big bangs and not necessarily a solution!
One last differentiator I would underline is that AvantGard Trax is a rule-based system which very easily caters for additional functionality. It is an evolutionary system in itself – if you want to add functionality to an existing system later on, it is very open to that.
Why should treasurers be interested in this sort of solution now?
Treasurers are facing a number of challenges. First of all, cash management and cash forecasting continue to be laborious tasks of gathering, integrating and tying together reports, phone calls, post-it notes and so on. This is because you’ve got a multitude of systems that move cash up and down in the organisation. The treasury system should be able to have a clear view of these information flows. AvantGard Trax sits between the cash management system and the treasury management system and all these flows and it can initiate high value payments from the treasury system in order to do sweeping or pooling. At the same time, it can report back into the treasury system virtually in real-time what cash movements are happening in different positions, with different account systems and with different banks – it ties all these things together.
That’s also where the strength is in combination with our treasury solution, AvantGard Quantum. AvantGard Quantum is fed virtually real-time operation information out of AvantGard Trax, which comes directly from the bank via SWIFTNet. On the other side, AvantGard Quantum can initiate high value treasury payments to any bank directly through AvantGard Trax. So AvantGard Quantum has the payment initiation and reporting components, but these are used for treasury purposes alone. AvantGard Trax can unify those functionalities with all the other flows that are being initiated and reported on – such as accounts receivable, low value payments, direct debits and salary payments.
Do customers buy AvantGard Trax as a stand-alone product or with the rest of the AvantGard suite?
Both. There are customers that have treasury needs and no payments automation needs and they will go solely with an AvantGard Treasury solution. You also have customers that have both of these needs, and they will have an AvantGard solution with Treasury and Payments capabilities. Even before Trax became AvantGard Payments, we had a number of customers that were already AvantGard Treasury users and needed to add payments capabilities – and we’re now providing AvantGard Treasury solutions to a number of existing AvantGard Payments customers, which clearly underlines the need for an integrated approach. We also provide AvantGard Payments capabilities to a number of other Treasury Solutions.
Where AvantGard Trax adds value is in its ability to unify the treasury management system with companies’ other cash management and cash operations initiating systems – like salary payments, ERP systems and others. AvantGard Trax very much allows for the transparent and SOX-compliant execution of these payments operations. In terms of its relationship with AvantGard Quantum, typically it broadens the horizon of AvantGard Quantum for the payments part of the AvantGard Quantum activities and functionalities. Then of course you’ve got AvantGard receivables, which makes the package complete and ensures a centralised view of what is happening from within these AvantGard applications.
The majority of AvantGard Payments’ corporate customers are multinational companies looking to obtain visibility over their local cash flows. A classic example is Yves Rocher, which is using AvantGard Trax to maintain a centralised view over its cash flows in 13 different countries and across a range of different banks and currencies.
On the banking side, SEPA is an important factor which is having a significant impact on AvantGard Trax’s business. “Those banks that really want to play a determining role in the SEPA area are coming to AvantGard Trax to have SEPA-compliant solutions while still using non-SEPA-compliant payment instructions,” says Cobben. “One of the big challenges for these banks is becoming compliant with the SEPA ruling while respecting the existing standards and payment infrastructures. This is quite a challenge – not just from a formatting point of view, but also from an information and compliance point of view.”
Looking ahead, AvantGard is focused on working to ensure SEPA compliance in Europe. While its products are as ready as possible in terms of compliance with the standards that have been published so far, further updates will be required as the new rulebooks and formats are published.
In addition, AvantGard is working on developing its offerings further to ensure that it can handle payment transactions from beginning to end. In particular, it is currently developing solutions for low value payment initiation to expand its existing capabilities. It is also working on being able to provide ASP and hosted solutions for payment initiation and execution.
Finally, AvantGard is focusing on solutions that combine centralised cash management with distributed liquidity management capabilities. Cobben reports that centralised treasuries are increasingly asking their local subsidiaries to provide a certain level of liquidity forecasting and management, while still wishing to retain a centralised view of these activities. AvantGard is working on solutions that make this possible.
SunGard’s incorporation of Trax into its AvantGard suite comes at a time when suppliers in this space are increasingly aiming to provide clients with holistic solutions to cover all their payment needs. The close fit between Trax’s solution and SunGard’s global capabilities with existing products makes this a particularly interesting acquisition.
With annual revenue of $4 billion, SunGard is a global leader in software and processing solutions for financial services, higher education and the public sector. SunGard helps information-dependent enterprises of all types to ensure the continuity of their business. SunGard serves more than 25,000 customers in more than 50 countries, including the world’s 50 largest financial services companies.
SunGard AvantGard provides real-time visibility into cash flows and increased operational controls around treasury, receivables, and payments management. The solution aggregates data for a single view of cash, drives productivity through automation, fosters enterprise wide collaboration, and facilitates connectivity between the ecosystem of suppliers, buyers, banks, trading partners, and customers.