Photo of Pradeep Prakash, Majid Al Futtaim Holding LLC.

This solution uses the services of a cloud-based treasury management solution provider to help them implement a cash management solution, incorporating SWIFT, in just six months.

The challenge

A key objective for the Majid Al Futtaim treasury function was to improve its financial management systems and become more efficient. The ultimate goal being to eventually establish an in-house bank that will give greater visibility of cash and better control of liquidity, allowing for flexible cash pooling.

However, for the first phase the company would look to establish a payment factory, which would focus on moving from the existing manual processing of payments and statements to an automated system for cash management. This would integrate the disparate transaction flows and streamline a process that involves e-banking with multiple proprietary bank platforms.

However, as one of the first corporates in the UAE to embark upon creating a payments factory and also in linking such large business structures together, the team at Majid Al Futtaim found it challenging to find an adequate industry benchmark for the project and one that also involves SWIFT.

The solution

The first step was to identify a trusted technology partner that could help identify the most appropriate IT infrastructure to meet Majid Al Futtaim’s requirements and provide local support. The company turned to their middleware provider with whom it had already worked to integrate bank statements across 13 countries.

Winning the Adam Smith award for our Treasury model is not only highly motivating for the team to buttress our innovative nature and value-added approach to our business verticals, it also puts a spotlight on MAF in terms of being an innovator and a best practice advocate for other companies in the region to benchmark, thereby raising the general capability profile and quality of other corporates in the region in terms of showcasing what is possible.

Working with the middleware provider, Majid Al Futtaim set about achieving its key objectives for the first phase of the project, which included:

• Reduce operational risk.
• Streamline operations and reduce cost.
• Improve cash management control.
• Optimise dependency on internal IT.
• Improve bank relationships while reducing transactional cost to the company.
• Internal process re-engineering value-additions.
• Reap certain other process innovations, like 100% soft paperless approvals.
• Better value-added back office processing in terms of reduced reconciliation time on vendor queries by having a vendor notification sent from middleware on payment batch invoice breakup.

Treasury recognised that by automating the process so that payments could be prepared and sent directly from the ERP systems across the SWIFT network to the nominated bank, the company would easily be able to cope with higher volumes of payments generated from multiple enterprise resource planning (ERP) sources. Importantly, the concern around operational risk that is inherent with manual processing would be eliminated and efficiencies immediately realised.

However, there was the added complication of integrating multiple ERP systems. Each of Majid Al Futtaim’s three business units had their own system and the project had to ensure the existing process flows – such as the approval procedures – could be maintained.

Once this issue was overcome, the move to automated transaction processing of payments, and having access to automatically generated statements, also ensured that intraday cash reporting would be easy in the future – something that the treasury team felt was essential for timely decision making.

Moreover, to overcome the benchmarking issue, group treasury blueprinted a technical architecture vision that was stress-tested with industry leading banks and experts to get an opinion on the efficiency of the model before going live.

Best practice and innovation

The company is among the first wave of only a handful of corporates in the UAE to embark on such a project. Yet, given its innovative nature it only took one year for the initial phase from signature to completion.

The benefits are clear and the project has enabled Majid Al Futtaim to streamline its payment processing activities and drive down bank transaction fees by more than 75%. These are tangible and significant cost savings applied on monthly message volumes currently running at 1,500 payments and are set to grow.

As well as monetary savings, the solution has also enabled the company to reduce the duplication in workflow and errors associated with manual processes.

Key benefits

• Bank fees reduced.
• Manual errors reduced.
• Process efficiencies such as paperless approvals (integration with invoice scanning), better transaction tracking, automated vendor notifications and mobile approvals.

Key takeaways

• Communicate, communicate, communicate. For a project of this nature, there is no concept of over-communication. Emails, phone-calls, webex sessions, even whatsapp chats, with all stakeholders across payment teams, middleware, banks – we have done it all.
• Make sure when you set the scope, that all stakeholders know that it’s not a black and white project. There are bound to be plenty of unknown unknowns. Keep plenty of buffer in terms of time and expectations to deal with these.
• Project Management is critical – A specialist treasury person with a mix of about 70% business skills/30% IT familiarity would be an ideal candidate to manage the project. IT running these projects risk not having enough hands on expertise to deal with banks and payments teams. Treasury cash management knowledge is a key requirement.
• Higher management involvement – Sign off project charter, deliverables and timelines with top management. We have seen this translate into a higher level of involvement and engagement at the team members level.
• Project support – Finally, the Project Management team must continue to be available for post implementation support and issue resolution for a further period of time. There also needs to be a formal handover of the deliverable, effectively turning the switch from project phase to business as usual operations. The key payments team members will also need to know the key people to contact for issues, along with an escalation path, SLA and TATs. Also keep your legacy models and protocols open for a period of time to revert to, should the new model face challenges.