In just four months, National Grid was able to establish a world-class treasury function using Reval’s software as a service (SaaS) treasury and risk management solution and outsourced hedge accounting.

Sell-off prompts speedy treasury organisation using SaaS

The challenge

In 2016, National Grid (NG) was preparing to sell a majority stake in its gas distribution business as a new, standalone company outside the National Grid group. Prior to the sale, NG needed to establish all the support structures of an independently operating, regulated business – including its treasury function. This framework would include all treasury transactions, systems and processes.

David Preston, Treasury Manager, Middle Office recalls, “With only a short window of time to set up a support structure for treasury before the sale, we had to consider the kind of system to implement.”

The solution

Expecting requirements would be simple, internal stakeholders considered whether to use spreadsheets and bank portals. Having little desire to set up treasury on spreadsheets, the team considered the kind of technology they would need. In the meantime, as preparation for the sale progressed it was clear that simple requirements would change. For example, while initially the group expected that they would not need FX capabilities, they found that the flexibility to use international debt markets would become part of their new requirements. So as the scope of the new entity changed, so did the scope of their technology needs. Still the team faced a short period in which they needed to select, implement and test a system.

In just four months, NG was able to establish a world-class treasury function using Reval’s software as a service (SaaS) treasury and risk management solution and outsourced hedge accounting. These capabilities included debt, investments, FX, bank accounts and all associated payments to:

• Enhance strategic decision-making processes through the management of cash, risk, investments and debt.
• Gain an accurate picture of actual and forecasted positions to optimise hedging, funding and investment decisions.
• Increase visibility to ensure access to both short-term credit and long-term financing.
• Manage, track, value, stress-test, and account for entire trading portfolios in one centralised location.
• Implement and execute best practice hedging strategies across asset classes.
• Achieve and maintain compliance with both external regulatory requirements and internal guidelines and policies.
• Measure, analyse and report on cash, risk and hedging strategy performance.
• Automate across front, middle and back office requirements, the aim being to eliminate having to use error-prone and time consuming excel spreadsheets and manual process.
• Increase treasury productivity, efficiency and control.

Bank statements and payments functionality are provided by Bottomline Technologies.

Best practice and innovation

NG leveraged their long-standing partnership with Reval for an expedited implementation of Reval’s SaaS technology and Reval’s hedge accounting outsourcing service, Reval Center. NG’s treasury team had already been using Reval’s full suite of treasury and risk management capabilities – from cash and liquidity management, to financial risk management, to capabilities for hedge accounting and compliance. While the team needed the same range of products that NG already uses in Reval, it did not have to go as deep with its solution.

Reval’s solution is scalable and modular, giving companies room to grow at their own pace. David explains, “We implemented only the capabilities we needed to implement treasury technology currently and leveraged Reval’s outsourcing service for a small treasury team that would operate the treasury function of the new entity.”