The consolidation of Chevron’s European treasury and cash management business completes a regional project to drive efficiency and significant cost savings throughout the organisation. Through standardisation of systems centred on SAP and utilising SEPA wherever possible, Chevron has been able to bring cash, payments and treasury operations together in a centralised solution.

The solution delivers the benefits of a one-bank approach through J.P. Morgan, using host-to-host payment processing, standardising transparent pricing and a single technology interface. Bringing together all of Chevron’s European operating units with accounts at J.P. Morgan accelerated the timing and capture of liquidity across all of Chevron’s principal currencies. Once the final implementation phase is completed in mid-2011, all of Chevron’s European operating units will be automatically linked to an already established central notional cash pooling structure, thus enabling Chevron to maximise the mobilisation of its cash and to take advantage of scale for deployment and investment opportunities.

Gordon Jolly comments, “The solution not only utilises the latest banking technology and related protocols, but also exploits the benefits of SEPA to enable the centralisation of Chevron’s European treasury operations in London.”

This centralisation enables economies of scale in daily activities including IT support, whilst not impacting visibility or the ability to intervene and react to events on a real-time basis. The standardisation across the region of contract terms and conditions, pricing and reporting has greatly reduced related administration, enhanced internal controls and simplified policy and Sarbanes-Oxley (SOX) compliance.

The main problem that the solution addressed was the reduction in the number of banks used across the European region. Multiple banks and the use of multiple and diverse electronic banking systems was inefficient, expensive and time consuming to manage. A single banking relationship also provides consistent customer service and a single point of contact.

“Through standardisation of systems centred on SAP and utilising SEPA wherever possible, Chevron has been able to bring cash, payments and treasury operations together in a centralised solution.”

The solution has been implemented in phases across the European region and by type of business, with the central notional cash pool being the first. Each phase has provided key learning points, which have benefitted those countries as the solution is rolled out. Simply described as the adoption of a single, primary cash management bank, the related implementation project was named ‘Unify’, which neatly captured the underlying rationale behind the solution which strove to bring together Chevron’s previously disparate treasury activities across Europe under one common strategy and approach. The implementation involved a cross-functional project team comprising members from treasury, IT, accounting and operations staff from the relevant business units, together with dedicated personnel from J.P. Morgan.

The ‘Unify’ project has delivered some impressive benefits in the following areas:

• Reduction in bank credit lines.
• Reduction in bank charges.
• Cost savings.
• ROI.
• Time taken to implement solution and realise benefits.
• Productivity gains.
• Process efficiencies.
• Interest savings.
• Pricing enhancements.
• Risk removed/mitigated.
• Satisfies compliance requirement (eg SOX).

Gordon Jolly concludes, “The selection and implementation of the solution was the culmination of a long and involved Request for Information (RFI) and Request for Proposal (RFP) process. This process ensured that the scope of the required solution and its key deliverables were clearly identified up front, thereby making the implementation that much easier, particularly the selection of the banking products and their related IT infrastructure.”