Best Working Capital Management Solution Highly Commended: Medtronic

Published: Aug 2021


Photo of Paul Miseré, Senior Director Treasury EMEA, Kay Kusters, Senior Finance Business Process Improvement Analyst and John Murray, Director Americas Enterprise & Business Transformation.

Paul Miseré

Senior Director Treasury EMEA

Medtronic is a medical technology leader offering therapies and solutions that enables greater efficiency, access, and value — for healthcare systems, providers, and over 75 million people it serves. Headquartered in Dublin, Ireland, the global company has 90,000+ employees plus over 10,000 scientists and engineers in 150+ countries.

Smart technology delivers global finance optimisation programme at Medtronic

The challenge

Two years ago, Medtronic announced a global finance optimisation programme with the vision to have a best in class finance team operating with a global mindset and serving as a valued business partner by providing innovative and impactful contributions to further the Medtronic mission. Amongst many other elements, this encompassed a new operating model with re-alignment of global transactional finance activities. To enable this significant change, Medtronic required state-of-the art technology to support its global initiative of improving process efficiency, controls and centralisation.

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The solution

In the area of accounts receivable, Medtronic decided to upgrade its cash application solution from Serrala, which it had implemented a few years earlier successfully in EMEA, and to roll out the 100% SAP embedded solution FS² AutoBank globally to North America, APAC/Greater China and Latin America. A global deployment to 250+ entities, four regions, covering two value streams over a period of around 1.5 years (from initially defining the scope, negotiating contracts to implementation in the last region) was completed in 2021.

In most countries, the legal entities are on a global version of SAP. Around the globe, Medtronic has 750+ bank statements, leading to approximately 800,000 bank transactions that the team has to handle globally each quarter. The bank statements are imported daily into SAP and automatically processed further by FS² AutoBank. The software is also used to automate the processing of remittance advices and overall reduce the amount of manual work involved in the accounts receivable reconciliation process.

Best practice and innovation

Since FS² AutoBank had been a proven concept in EMEA since 2007 with automation rates in the 80%+ range, it was obviously part of the shortlist of vendors to consider for the finance optimisation programme.

Primary criteria were to find a solution to automate the processing of bank data, reducing manual tasks to a minimum, thereby supporting staff to focus on better credit and collection management and improve the audit trail.

What has definitely set FS² AutoBank apart from other solutions is that it is fully embedded in SAP and provides very innovative ways to automate the reconciliation process, which includes the possibility for finance teams to set-up and update the algorithms and filter functions of the solution without IT support. In this way, any updates or improvements of the settings can be applied immediately leading to continuously high automatic application rates.

Key benefits

  • Significant reduction in manual tasks.
  • Enhanced visibility.
  • Major reduction in unallocated cash.
  • Days sales outstanding (DSO) improved.
  • Increased automation.

Just taking EMEA as an example, after the March upgrade in 2020:

  • 90% of cash transactions are now auto allocated to a balance sheet or a profit and loss account. This means ‘first time right’, having the financial statements instantly up to date.
  • 85%+ of customer collections are auto allocated to outstanding invoices. As a result, customer account statements are up to date in real time, meaning no blocked orders and fewer disputes, hence increased customer satisfaction.

“Optimising the working capital is a core focus for Medtronic, and this is what FS² does. By applying cash before having breakfast, the solution streamlines the bank reconciliation and cash allocation processes thereby improving our overall liquidity planning. FS² allows the Medtronic teams to focus on the exceptions and delivering higher automation,” says Paul Miseré, Senior Director Treasury, EMEA.

The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2021 Awards attracted a record-breaking 309 nominations spanning 40 countries. To find out more please visit: treasurytoday.com/adam-smith-awards.

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