Insight & Analysis

Shoemaker’s treasury team hit their stride

Published: Jan 2024

Christian Louboutin has taken major steps to improve the efficiency of its treasury operations by centrally managing intercompany transactions.

Christian Louboutin sparkling shoes in shop window

With more than 150 boutiques in 30 countries across Europe, North America and Asia, Christian Louboutin has become synonymous with high-end women’s and men’s shoes as well as bags and other accessories over the last three decades.

Primary shipment flows are completed by the company’s master distribution entity. That follows a specific process, but merchandise can be transferred between locations to meet customer demand, resulting in a web of intercompany invoices to account for the movement of goods.

As the company continued to expand, tracking the financial impact of these transfers manually became increasingly time-consuming. With each transfer, the sending entity would invoice the receiving entity and then wait to be paid. There were no standardised processes or procedures to manage intercompany settlements or to resolve (or escalate) disputes between the two parties and the treasury team didn’t have sufficient visibility into the exact number and scale of all the transfers taking place each month.

“The time had come for us to gain more control over the impact of intercompany transfers,” explains Annabella Lopes, Senior Treasury Manager Credit Risk & Netting. “With 150-plus stores it had become too inefficient to try to centralise – and rationalise – all these flows using manual systems.”

Key objectives included implementing an automated reconciliation and settlement solution to alleviate friction and manual effort, eliminate neglected transactions, and gain full visibility into those processes.

The ability to implement an API interface with the company’s ERP system was a strong factor in the solution selection process. The data is now automatically uploaded via an API for reconciliation and settlement for affiliates using the ERP system (for some entities not using this system, the upload is completed via CSV file).

“Even though we run monthly AR-driven netting, both AR and AP invoices are imported into the netting solution to facilitate the matching and reconciliation of intercompany transactions,” says Lopes. “The treasury team defines a calendar at the beginning of each year that specifies cut-off dates for every step in the process from upload to discussion and dispute to settlement.”

The automatic interface runs on these specific dates so everyone understands invoices need to be entered within that timeframe, or they will wait until the next cycle to be paid.

“In addition to matching virtually every invoice for quick and easy settlement, this modernisation has helped us save hundreds of thousands of euros for financial year 2023,” says Lopes. “These savings are a result of a reduction in FX transactions, bank transaction fees and float – with a precise settlement schedule, float is no longer a factor in intercompany payments. On average, we are now converting more than 120 monthly gross flows into fewer than 25 net flows.”

To date, 31 Christian Louboutin entities across the Americas and Europe are using the system to enter more than 3,500 invoices per month in eight different currencies, observes Emeline Marchand, Netting and Credit Manager. “Throughout this transformation and after a lot of clean-up of transactions backlog, we are now at nearly 100% matching during each settlement cycle,” she adds.

The various accounting teams refer to how easy the system is to use, allowing precise prediction of settlement dates and easy reconciliation if there is a mismatch between entities.

“Coming from a manual process with a lack of visibility, we are now in a system where we have complete control,” says Marchand. “We will be expanding it to Asian countries and adapting to local regulations and constraints to achieve even greater visibility of intercompany flows.”

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