Demerger presents opportunity to harness technology

The challenge

At the time of the demerger in May 2015 to form South32, the global treasury team in Perth was provided with a cash management solution that was still largely manual and had incomplete coverage around the world. The main problems were:

Incomplete adoption of SWIFT with its banks, leaving treasury reliant on manual reporting of bank balances in many countries:

All internal payments made via the external bank accounts, requiring all companies in the group to have at least two bank accounts. This added to the complexities:

• Bank charges and fees were considerable.
• Complying with ever more stringent KYC requirements and carrying out the necessary annual reporting in relation to each company’s board activities had significant time and effort implications.
• Moving transaction banks is far more challenging and costly when companies are using a large number of bank accounts.
• Forecast flows included significant internal movements that didn’t impact the group’s overall cash position.

Poor reporting tools, requiring treasury staff to spend significant time analysing the data whilst preventing the regional finance teams from being fully engaged.

The solution

A three-phased approach was adopted to tackle all the above.

The treasury team pushed through the adoption of SWIFT around the globe, ensuring full integration into their cash management system by working with all the company’s regional banks and local staff to complete this initiative.

Simultaneously, treasury looked at the adoption of SAP’s In-House Cash (IHC) module. The module processes internal and external payments, which would give them the opportunity to reduce the number of bank accounts required.

A business case was put to the senior management to implement IHC; this was approved in January 2016. South32 then began to consider a number of service providers to implement the module. After looking at three providers they decided not to go with any of them, instead choosing to work with SAP Treasury and IHC specialists from Covarius. The project went live seven months later and they are now using IHC to make payments.

Ian Walford, VP Treasury (acting) explains, “Finally, to overcome the manual reporting issues (accuracy and transparency) we then teamed up with our IT team and Deloitte to utilise the new dashboard tools recently introduced to the company. Working with both teams, treasury built new risk and cash forecasting reports that work in near real-time and are fully automated.” This allows for near real-time reporting of risk by counterparty and currency whilst the cash management report shows all forecast flows at a bank account and currency level across all the company’s banks throughout the world that is continuously updated throughout the day.

Best practice and innovation

Utilising leading technology – SWIFT, Tableau, ERP systems in an innovative way has allowed for a highly-integrated solution that has significantly improved the timeliness and accuracy of the data so that the treasury team has near real-time access to cash positions and forecasted flows throughout the world at a level of detail, unthought of historically.

The relatively narrow scope of this project meant the team could really take advantage of best practice and follow a tight timetable. The project was completed on time and under budget.

The introduction of dashboard tools allows for fully automated reporting to occur and the CFO can now access treasury exposure reports via apps in near real-time.