Treasury Today Country Profiles in association with Citi

Hudson Advisors Europe Ltd

Hudson Advisors Europe Ltd, Highly Commended, Best AP Solution

Barry Clifford, Citi and Conleth Fay, Hudson Advisors Europe Ltd

The solution centralises payments in the global payment factory and standardises the payments process within an updated version of the company’s ERP system. All invoices are submitted via the ERP system and are then approved – within the system – by two business approvers. The system generates and securely transmits a payment file in the ISO 20022 XML V3 format, creating a standardised payment file across all regions.

Photo of Barry Clifford, Citi and Conleth Fay, Hudson Advisors Europe Ltd.

Conleth Fay

Assistant Vice President, Treasury

Hudson Advisors LLC and its subsidiaries are a globally integrated, full-service asset management company providing due diligence and analysis, asset management and global support services for Lone Star Funds, a leading private equity firm.

in partnership with

The challenge:

Hudson Advisors operates a shared services centre at Hudson Advisors Europe Limited, (HAEL) for accounts payable and other treasury functions for many entities and investments, which include corporates around the world. HAEL made payments via a proprietary ERP system that used several separate file formats (with a different file type for each payment method such as ACH or wire), multiple host-to-host connections to banks, and numerous payment systems.

This payment system, which was put in place years earlier at short notice, was inefficient and inflexible. In addition, the payment solution required a high level of manual intervention in the payments process by staff and was time-consuming to manage: the firm limited the number of payment runs per week because of the complexity of the task.

Moreover, the infrastructure was not robust – host-to-host connections were delicate and required frequent certificate updates. HAEL’s various systems and processes were also not fully integrated: business approvals were made via an external system, for example. The complexity of the payment process also made it more difficult to audit.

“We wanted to streamline and centralise the payments process in Dublin and minimise regional involvement in payment approval,” says Conleth Fay, Assistant Vice President, Treasury at HAEL. So, the company sought to implement SWIFT as a standardised form of communication with its banks in the US, Europe and Japan and update its ERP to create a user-friendly approvals process with a clear audit trail.

The solution:

Following request for proposals to several banks, Citibank was selected as HAELs primary partner bank in Europe. Working closely, Citibank and the firm implemented a global payment factory in the European Treasury headquarters in Dublin, Ireland. The solution centralises payments in the global payment factory and standardises the payments process within an updated version of HAELs ERP system.

All invoices are submitted via the ERP system and are then approved – within the system – by two business approvers. The system generates and securely transmits a payment file in the ISO 20022 XML V3 format, creating a standardised payment file across all regions. The payment file (PAIN001) is sent via SWIFT to Citibank.

In return, the bank sends two PAIN002 response files: the first is a file-level response and the second is a transaction-level response. Once these are received, accounting is triggered within the ERP system. In addition to communicating with its primary bank via SWIFT, HAELs receives MT940 messages from the local banks it works with to update its account information and improve visibility.

“Our cost benefit analysis shows a net present value of $2.12m for the project and an internal rate of return of over 100%,” Fay notes. “In addition, the solution has improved our cash management. Since the payments process is less complex and time-consuming, HAEL now executes more payment runs every week, enhancing working capital and ensuring suppliers get paid quicker, thereby improving supplier relations.”

Best practice and innovation:

The solution has revolutionised and future-proofed HAELs treasury role. It has reduced the number of systems used from five to one, while processes have been streamlined – within treasury, four hours of manual process a day have been eliminated, freeing up time for value-added tasks.

Fay explains: “the solution was initially implemented for 28 corporate entities and subsequently expanded to include hundreds of accounts. By developing a tailor-made ERP system to meet business requirements, utilising SWIFT connectivity and using the ISO XML standard, the solution demonstrates both best practice and innovation.”

Key benefits:

  • Reduction in bank charges.

  • Cost savings.

  • ROI.

  • Time taken to implement solution and realise benefits.

  • Productivity gains.

  • Process efficiencies.

  • Improvements in the cash conversion cycle (CCC).

  • Pricing enhancements.

  • Risk removed/mitigated.