Photo of Lynda Johnson, Tricia Norberg and Rachel Zdyrko, Harley-Davidson, Inc. and Steve Hall, J.P. Morgan.

The decision to change transaction banking partners presented Harley-Davidson with an unprecedented opportunity to address all of the associated challenges and boldly put in place a best in class treasury function. While short-term benefits will be largely seen in APAC, the framework is fully scalable providing a template for Harley-Davidson to extend into EMEA and the Americas when the timing is right. This incredibly complex and geographically ambitious operation was completed within a very short timeframe.

Ingenuity and vision deliver a best in class global cash management structure

The challenge

The H-D treasurer established a goal for his team to become a best in class treasury operation. From a global banking perspective, the team faced several challenges in achieving this goal. These included a decentralised organisation, policies, procedures, documentation and controls; the use of numerous different banks across the globe, all with different portals and security; lack of visibility to global cash balances on a timely basis; and many manual processes outside of its ERP system. These factors increased H-D’s cost and risk.

To overcome these challenges, The H-D global treasury department set out the following objectives:

• Establish regional treasury leads.
• Implement a global payment risk policy.
• Create a centralised banking database and documentation.
• Rationalise banks and accounts.
• Utilise SEPA direct debits.
• Implement SAP Treasury Workstation Cash Management Suite.

The solution

The H-D global treasury department was able to implement a highly-effective, efficient and cost-saving international cash management solution which included selecting one international banking partner for all of H-D’s international subsidiaries. This solution significantly enhanced visibility to global cash balances on a daily basis; streamlined processes and user administration and controls by providing the same portal and security process for all international subsidiaries; and reduced risk to social engineering by eliminating free-form wires internationally. It provided for a follow-the-sun treasury backup process for all cash management administration and transactions. It allowed for bank account rationalisation, with 19% fewer accounts and 24% fewer banks. It facilitated the use of SEPA direct debits in EMEA. Additionally, it ensured H-D is well positioned for the next stage in its journey to be best in class for all treasury operations which may include implementation of an international notional pooling structure with its international banking provider to increase investment returns, optimise international working capital requirements and return additional cash to the parent.

Best practice and innovation

Working from the ground up, the team put in place a set of best practices, policies and systems that moved them toward their best in class objective. A global payment risk policy was implemented. This policy established formal guidelines, responsibilities and controls for payment methods; established limits and controls for payment made in a banking portal, eliminated petty cash globally; and increased awareness of cyber-security threats through communication and training. A treasury workstation for cash management was implemented in the US and EMEA, and is currently being implemented in the Asia Pacific region. This workstation optimises and standardises routine cash management; provides for straight through processing with standardised XML formats; and enables same day wire, next day ACH, and low value international payments. It also enhances productivity through the automation of journal entries and daily bank account reconciliations and automated banking information updates via SwiftRef.

The H-D global treasury department’s accomplishments were enabled by the foresight to set realistic goals that have ensured success and also set the stage for future enhancements. Treasury was committed to striking the right balance between achieving operational excellence and maintaining uninterrupted business operations which they have successfully achieved.