The challenge
Historically, Dairy Farm’s treasury processes and controls within the business units were manual. This presented a huge challenge for data consistency. These manual processes were often cumbersome, not scalable and hindered value-added decision making.
The challenge to maintain a consistent model by manual means was tremendous. To maintain and sustain business growth from a corporate treasury perspective, the company required a single source of truth of their cash and liquidity positions across numerous markets and cultures, multiple currencies, and diverse regulatory climates.
The company’s goal was also to improve its agility, and to scale quickly to take advantage of new business opportunities.
It reviewed different treasury systems, looked at the architecture and decided to adopt cost-effective cloud technology for implementation.
There were three core objectives to resolve:
Cash visibility – due to its scale and complexity, Dairy Farm had challenges in viewing its cash positions across the wider organisation and business units on a real time basis. Driven by spreadsheets, consolidation of balances was conducted on a weekly basis, which was slow and inconsistent.
Management and standardised reporting – manual reporting was time consuming, complex, and inconsistent in nature. The Dairy Farm treasury team spent significant time on reconciliation. However, the team wanted to support their commercial colleagues on retail projects and focus on solving business critical issues.
Operational risk and control – not having a central system for consistent tracking across business units increased the challenges when managing liquidity.
In addition, the Dairy Farm treasury team wanted a solution that could:
- Improve workflow and communications among business units.
- Automate, aggregate and report on data across business units for management and shareholders.
- Provide comprehensive cash, liquidity, debt, foreign exchange, and vanilla derivatives management.
- Support mark-to-market (MTM) valuations for instruments, hedge and statutory accounting, while complying with IFRS standards.
- Support compliance requirements with a system with robust trade capture that would support and uphold compliance with corporate policies on trading between business units, with flags raised when guidelines are breached.
- Transform treasury processes, so that employees can focus on higher value activities.
The solution
Dairy Farm chose a solution that enables full straight through data capture after hedging is done via an electronic FX platform. This reduces duplicate input effort, minimises potential manual entry error and releases the time savings to deploy on other finance responsibilities.
The company can also monitor its credit line utilisation, cash and liquidity, whilst managing its banks’ counterparty limits and share of wallet across the group.
By selecting ION Treasury’s Reval treasury management solution (TMS), a SaaS solution requiring minimal build investments, the company gained a treasury technology partner that not only addressed its business needs for greater clarity, but is also now fostering new ways of working across the organisation.
Best practice and innovation
At the outset of the project prior to vendor selection, the Dairy Farm finance leadership issued a clear vision of the objectives and problems to solve. This provided guidance for the project implementation team on deliverables to meet, work plans to rollout and wins to achieve, including:
- Overall project goals.
- Clearly documented responsibilities among different functional teams and vendor.
- A confirmed implementation timeline.
- Documented ‘before and after’ operational efficiency gains.
- Project takeaways.
Key benefits
- Fifty percent reduction in working hours in data aggregation, management reporting and pre-deal analysis.
- Seventy five percent reduction in working hours in deal confirmation and capture, general ledger processing, cash management and forecasting, fee calculations, MTM calculations and rate setting.
“While the objectives documented at the beginning of the project were clear, a very real, unseen, and costly risk arrived in 2020 with the global pandemic. With this solution delivered via the cloud, any impact on our operations, cash, and liquidity management were mitigated as the company transitioned to remote working, mobility, and connectivity,” says Rodney Seah, Group Treasurer.
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