Overcoming the age barrier
When an ageing TMS could no longer provide the necessary degree of visibility over Mediq’s cash and liquidity management processes, change was necessary. Picking the right system involved much deliberation and patience, but has it paid off?
The transition in 2013 from being publicly listed to private equity ownership revealed its 20-year-old treasury management system (TMS) as the weakest link in the treasury operations of Netherlands-based Mediq.
The 115-year-old company operates in the medical supplies sector with 25 business units spread across 14 countries in North Western Europe and the US. With revenues of around €2bn, it employs a small treasury team consisting of Paul Schreurs, Group Treasurer, a Treasury Assistant, an interim who supports various projects, plus one back office full-time employee (FTE) who reports to the controller’s office.
Under its new private ownership regime, cash visibility topped the agenda. Treasury implemented a new cash flow forecasting tool but whilst this afforded the necessary cash view, integration with the existing TMS was difficult. This meant treasury was still relying on spreadsheets for much of its output, raking up the inevitable problem of version control. As Schreurs admits, it was very cumbersome to get a consistent picture of the truth around all sorts of treasury transactions. “This just increased the need for us to look for a new integrated system.”
The selection process
Seeking the assistance of Dutch finance and treasury consultancy, Orchard Finance, Schreurs and his team embarked on a four-part selection process. The first phase was to closely consider Mediq’s current treasury processes, redefining some to meet current best practice. A major internal meeting was then held to define the requirements for the TMS. Based on this document, a long-list of potential suppliers was drafted, this subsequently being distilled into a short-list of four. The four were invited to respond to Mediq’s formal RFP in which each would provide company and system details, reference clients and responses to specific business cases (notably around cash operations). And, having just rolled out the new cash flow forecasting tool, the incoming TMS had to operate at least along similar lines.
An implementation plan had to be provided and, of course, the price had to be right; with reference to the latter, one of the four immediately ruled itself out of contention recalls Schreurs. The remaining three – Trinity, BELLIN and Integrity – all demonstrated a very close fit to Mediq’s requirements. Each was invited to give practical demonstrations – using real bank account and hedging data, for example – having first been given an extensive list of elements to address. “We didn’t want to spring surprises on them,” comments Schreurs. In the actual implementation, all parties would be working together to set things up and look for further improvements, so he was keen to keep the demonstration realistic for the vendors, not catch them out.
The selection process revealed the solution of Frankfurt-based vendor, Trinity, as the best ‘out-of-the-box’ fit. Working with Trinity’s regional sales partner, Wieltec, Schreurs could see that the system “already had a very good basic set up which would make it quick and easy to implement”. In contrast, one of the other systems would require a full understanding of how Mediq’s treasury operates before being fully configured. “It means you must already have very good practices. Trinity’s standard set-up allowed us to fit in our existing ways of working but we were also very open to adopting the best practices found within Trinity.” This flexibility paid off. The full implementation took only 19 working days to complete, says Schreurs, adding that project brevity afforded a significant saving on the cost component.
Orchard Finance had been brought in initially just for the selection but Mediq decided to retain it for the project too. Schreurs points out that it was necessary to externally appoint a dedicated project manager as the Mediq treasury team was too small to free-up any personnel. An Orchard consultant was joined by project leads from Mediq’s own IT department and from Trinity “ensuring we realised the project within budget and on time”. Whilst “further opportunities” were realised on the way to completion (additional reporting, for example) the project came in within scope too, he confirms.
The roll-out started with central treasury in January 2014. By March, the incumbent TMS, which had been run in parallel for a short period during testing, had been decommissioned. The timing of the switch-off was pressured by the imminent licence renewal of the old system. With the old system out of the way, the project commenced rolling out to the business units in 14 countries. Once everything had been fully tested, Mediq was also able to switch off the cash flow forecasting tool it had recently deployed as this function was now fully enabled in Trinity.
Technology has been consolidated and, states Schreurs, “our reporting is much more automated”. But whilst most content for treasury’s monthly report now comes directly from Trinity, he admits that (like most treasurers) “you always need some spreadsheets”, in his case mostly to tackle residual data that, for now, lives beyond the TMS.
Nonetheless, the Trinity TMS has contributed to a major increase in Mediq’s efficiency. It has given Schreurs considerably more visibility over cash, enabling him to log in and check balances and provisions which he can easily filter. “If a certain business unit has cash outside of the pool, obviously it is something I don’t like. Now it is easy to see that cash and where it comes from so I can contact the business unit directly to seek an explanation and to take action,” he says. “Where previously I had little or no visibility at the level of the bank account in certain countries, now I have full insight – and everyone is looking at the same data.”
Having seen some “big improvements” delivered by the new system, the Mediq team pressed ahead with another automation project to drive yet more efficiency. To access MT940s from its main banks it had to log into the relevant bank portal and manually download them. Today, Schreurs confirms that automatic importing of MT940s is now possible and that the system “works perfectly”. Indeed, “every morning all transactions and cash balances of the previous day are available in Trinity”. The group’s cash, it seems, has never had so much clarity.