SITA Management recognised the need to rationalise its operations, including cash management. The team successfully deployed a unified Strategic Financial Solution (SFS) and implemented a unique Global Finance Centre (GFC) in Prague to improve visibility into cash positions, reduce costs, better manage exotic currencies and simplify choices over settling payments (local or global bank).

The challenge:

As a result of the company’s large geographic presence, the SITA treasury faced several significant cash management and FX challenges. It was compelled to maintain a vast number of bank accounts and bank relations, creating a highly decentralised structure, which made control and visibility into cash positions difficult at best.

The treasury also faced critical challenges with its master data and existing manual payments exposed the organisation to security risks. “In addition to this, large local foreign currency balances needed to be repatriated,” says Andrea Sottoriva, Group Treasury Director at SITA. “In some cases, small volumes of exotic foreign currencies were involved, further complicating the task of funding and repatriation.”

The SITA treasury team therefore decided to centralise its payments and optimise process flows to remove these issues. The key objectives that needed to be addressed included:

• Dramatically decrease the number of bank accounts and relationships.
• Optimise the process flows from scratch to control the entire AP process.
• Replace manual payments with a secure automated payment process.
• Reduce the number of exotic foreign currencies, requiring less funding and manual cash repatriation.

The solution:

SITA embarked on a cash management initiative, facilitated by a number of projects and underpinned by an ambitious re-engineering of the company’s technology infrastructure to support the centralisation of payments. By optimising its IT infrastructure and ensuring the security of payments, the company has successfully transformed and streamlined its cash management, FX/IR management, payments and inter-company funding.

The implementation of a best-in-class Global Finance Centre (GFC), with deep expertise in accounts payable (AP), extensive local language skills, and a strong understanding of the regulatory environment has been a prime driver of SITA’s successful effort to improve visibility into cash positions, reduce costs, better manage exotic currencies and simplify choices over settling payments (local or global bank).

As part of the re-engineering process the company has deployed Oracle which would serve as a unique ERP across the company’s 200 locations. This ambitious task was accomplished within two short years. As a result of this ERP harmonisation, SITA began looking into the need for secure communications with its banking partners. It was decided that host-to-host connectivity with its banks would benefit the company, providing traceability of payments by minimising manual transactions and offering a layered approval mechanism with a full audit trail.

Sottoriva explains: “at the same time, we embarked on a project to greatly simplify our banking footprint to address the company’s vast global presence”. SITA developed an ambitious Bank Footprint Model, which focused on reducing the very large number of bank accounts and bank relations in order to improve visibility into trapped cash and control of payments processes. By clearly defining its bank model, identifying its main currencies through its global bank accounts, SITA is better able to navigate regulatory constraints. SITA is now using central USD bank accounts for automated currency conversion (AUTOFX) where appropriate.

Best practice and innovation:

The implementation of SITA’s GFC in Prague provides a single point of control for the company’s AP globally and its banking footprint model simplifies the choice of using centralized bank accounts versus local bank accounts, relying on a central USD bank account for an automated currency conversion. The project has successfully streamlined cash management, FX/IR management, payments and inter-company funding – all in an extremely compressed period of time. This centralisation initiative, covering four regions and more than 200 countries, was ambitious not only in its scope, but also its aggressive two year timeframe.

In addition to these benefits, the use of a unique ERP approach, which promotes host-to-host connectivity with SITA’s preferred banking partners, has been a game-changer for its transactional business.