Henkel needed greater visibility and control over its entire banking structure and “wanted to see all balances of all accounts on a daily basis, at the press of a button”. The only solution was a web-based, bank-owned solution and Citi’s TreasuryVision liquidity portal stood out.

Problem…

Henkel had more than 1000 bank accounts with over 140 banks around the world, many accumulated via acquisition. Although it had been using a single database (containing all account numbers, SWIFT codes and so on) to maintain accounts worldwide, it had no centralised bank account statement collection and no group-wide ERP. The onset of the financial crisis drove the company’s senior executives to seek a way of establishing greater visibility and control over Henkel’s entire banking structure. In essence, says Henkel’s Treasury Processing Manager, Andreas Liebenow, “we wanted to see all balances of all accounts on a daily basis, at the press of a button”. Given the economic environment, it also wanted this structure in place with minimal delay.

Having formed a requirements definition, Henkel’s project team studied the market closely for a solution. Although integration of balance reporting into the company’s existing SAP ERP and Wall Street Systems TMS would be the ultimate aim, it was deemed at the time to be an overly resource-intensive solution. Buying in a separate software solution would also require commitment to a major implementation effort, with considerable costs likely. The only other option was to deploy a web-based bank-owned solution.

…Solved

In this respect, one offering stood out: Citi’s TreasuryVision liquidity portal. “From the beginning we felt good with Citi,” states Liebenow. Henkel already had around 20% of its accounts with Citi but TreasuryVision, with full data warehousing and reporting functionality, would be taking in MT940 electronic account statements from all of the group’s banking partners. This solution had never been implemented in Germany before but it was live with more than 120 corporates globally. “We never once felt like we were the guinea pig,” states Liebenow.

With a dedicated and experienced Citi implementation manager and solid technical support in place, Henkel was provided with template forms and information packs to send, via all treasury locations, to each of its banks. The form requested daily MT940s from every account to be sent to Citi. With Liebenow supervising account feedback, TreasuryVision was tailored to fit Henkel’s data structure.

Within a couple of months, 80% of the group’s liquidity, representing the most important accounts, was visible within TreasuryVision. In the second wave, some ‘less-sophisticated’ third-party banks have been unable to submit MT940s in the correct format. With Citi’s support Henkel has either been working with them directly on a case-by-case basis to implement a work-around. In some cases Henkel finally opted to manually input their balance information into TreasuryVision. As new accounts are opened (and others are taken on through acquisition) all must be reportable via MT940. And with all local subsidiaries now paying to maintain multiple accounts, it ensures each is justified. Liebenow reports that almost 150 accounts have been either closed completely or moved to a bank that can accommodate MT940s. The total number of bank relationships has been reduced by 14.

“The most important benefit is that we now have liquidity status on a daily basis whenever we are asked,” notes Liebenow. “It does not matter if we are asked for a region or for a company or for the whole group; we have the answer.” This “positively completes the project”; anything else – such as improved counterparty risk management and faster response to industry and economic change – is a welcome add-on.

Henkel has implemented a rule of zero cash for its affiliates. Cash pools are kept in the regions with most liquidity – the biggest Asian countries, North America and Europe. It also requests a quarterly report on the use of guarantees and credit facilities. With greater control over all accounts, facilitated by TreasuryVision’s capacity to drill down into account data, funds retained by affiliates must also now be justified and checks can be made on their use. Improved head office oversight promotes the prudent use of funds, becoming almost a self-regulating process, Liebenow commenting that it has indeed “encouraged changes of behaviour”.

Plans are afoot to build an interface between TreasuryVision and the Wall Street Systems TMS to enable automated reconciliation of net financial debt and daily financial status reporting (currently manual processes). There is also a plan to integrate credit facility reporting. None of this would be possible without Henkel first having established implemented TreasuryVision. As Liebenow comments, “this is an excellent result so far and there is a lot of future potential”.