The starting point for this project had financial as well as operational goals. Cross-border payments were difficult to identify and reconcile due to ‘Bene-deduct’ fees. There were also different float times in the payment cycle and transactional fees were often high (payment fees in 2008 totalled €250,000).
Operationally, the company had a fragmented banking landscape comprising over 40 different banks, a multitude of local counterparts and over twenty electronic banking systems. This needed to be addressed.
The company’s desired way forward was to standardise its tariff structure for all SEMIKRON Group companies, to apply same day value to all incoming payments and to reduce fees for euro-denominated payments by up to 50%.
Operationally, the company wanted to establish direct access to local euro clearing in phase one and US dollar clearing in phase two. Payment formats were to be standardised to leverage the industry developments, particularly in the area of SEPA XML ISO20022.
The number of electronic banking systems was also reduced down to a single system. In addition, a consistent, liquidity structure was sought, with one central, German and English speaking contact person at the bank.
To assist with developing a state-of-the-art cash management solution HSBC and Schwabe, Ley & Greiner were appointed to analyse the financial transaction data, in particular pricing, volumes of transactions and transaction types.
“The project was run within a tight time schedule, within budget, and exceeded the expected results by far.”
The so-called SEMIKRON Excellence in Treasury Initiative (SETI) began with the following five pillars that were implemented in close collaboration/co-operation with all involved parties:
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Roll-out a single central treasury system – tm5 from Bellin.
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Centralisation of euro bank accounts with HSBC in Germany.
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Implementation of a transparent zero balancing cash concentration structure.
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Training of SEMIKRON employees in the new systems.
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Involvement and instruction of SEMIKRON group clients to facilitate SEPA payment instruments.
Thomas Dippold, CFO states, “The project was run within a tight time schedule, within budget, and exceeded the expected results by far, not only financially, but also – and this is the key factor – from the perspective of our employees and their acceptance of the new environment.”
“The Adam Smith Award is a highly reputed Award, which gives us the external recognition of all the hard work our Treasury Team has done in this project. It validates the transformation process of the SEMIKRON group finance organisation in our strive for excellence.”
The SEMIKRON Group is enjoying significant efficiency improvements amounting to €150,000 per year through the formation of a Group Treasury department, the accompanying centralisation of the bank account structure, lower transactional banking fees and an automated liquidity management structure which generates high interest yields.
As Thomas Dippold concludes, “We not only enjoy improved financial control over our subsidiaries, but the ability to enhance the group’s performance during the current economic recovery.”
