Photo of Sarah Foster, J.P. Morgan and John Wallace, ConocoPhillips.

ConocoPhillips’ US Bank Realignment Project was initiated in February 2014, starting with an RFP to nine banking partners. The objective of the initiative was to streamline the company’s banking structure. Treasury also was interested in reducing the number of bank accounts and in combining different payment types within a file in order to minimise the number of files processed between ConocoPhillips and its banking partner.

The challenge:

Following the 2012 split of ConocoPhillips into two independent companies, corporate treasury and finance recognised its US banking structure was sub-optimal and lacking in terms of technology and client service. It was clear that a vastly simplified bank account structure was needed.

ConocoPhillips’ project was initiated in February 2014, starting with an RFP to nine banking partners. The objective of the initiative was to streamline the company’s banking structure. Treasury also was interested in reducing the number of bank accounts and in combining different payment types within a file in order to minimise the number of files processed between ConocoPhillips and its banking partner.

The solution:

J.P. Morgan was chosen to implement the company’s innovative new banking structure and integrate industry-leading technology. As ConocoPhillips’ single provider in North America, J.P. Morgan handles the company’s numerous payments and receivables files using a payment-on-behalf-of and receivables-on-behalf-of structure that operates using ISO 20022 XML standards within SAP’s system.

Some benefits of the initiative include:

• Improved liquidity management and funding through streamlined and simplified banking structure.
• Reduced the number of bank accounts by approximately 25%.
• Combined different payment types within a file through the use of SAP’s Payment Medium Workbench (PMW) and Bank Communication Manager (BCM) “batching”, which allows treasury to reduce the number of files processed between ConocoPhillips and the bank.
• Leveraged the latest SAP technology to create real-time payment transaction visibility.

Best practice and innovation:

For an organisation as large as ConocoPhillips, the simplicity accomplished by the innovative US Bank Realignment Project has been nothing short of remarkable.

By using the latest banking and SAP technology, Treasury has put best-in-class processes in place that assist in determining an accurate cash position, as well as utilising the best controls currently available to reduce the opportunity for paper and electronic payment fraud. This complex initiative has allowed the company to change its payment format type from Electronic Data Interchange (EDI) to XML, thus allowing treasury to combine different payment types within a file, which in turn has facilitated a reduction in the number of files.

The use of XML enables treasury to use standard SAP logic to replace customised configuration, eliminating manual emails and controls. The SAP payment configuration is now global, enabling technical and business teams to create much needed redundancy to back each other up more effectively, reducing risk to the enterprise. ConocoPhillips continues to exclusively use host-to-host connectivity for payments and to have a prohibition against using manual payment processing, other than as a business continuity solution.

“ConocoPhillips’ culture of collaboration enabled the team to tap into many organisational resources, eliminate silos, reinforce accountabilities and enable members to call upon each other’s strengths and expertise,” Judy Bouchard, Banking Director, concludes. “By working effectively and efficiently among the various stakeholders, the team was able to successfully execute the project ahead of schedule and under budget.”