“Bucher’s treasury operation was experiencing a range of inefficiencies in the areas of cash and FX management, as a consequence of using technology that had become outdated,” explains Mauro D’Ambros, Treasurer of Bucher.

Problem…

“On the cash management side, our daily procedure involved merging uploaded cash pool balances with treasury deal maturity reports from our legacy TMS, in Excel. The resulting report was incomplete and required manual reconciliation, research, correction and removal of duplicates – as well as the application of intraday bank statement updates – to produce a cash position, which was eventually used as the basis for telephone dealing. The treasury was unable to perform timely bank account reconciliation – any late payment of funds was only detected a few days later, and we were unable to request any entitlement to value date correction. The process was time-consuming, labour intensive, inefficient and error prone – and was wasteful in terms of interest income/expense management.

In terms of foreign exchange, if a Bucher entity needed to make an FX deal to cover a commercial exposure, they would telephone or email central treasury with their order. Treasury would deal externally, and we would then have to enter the external and internal deals manually, as the system did not support deal mirroring. The front office would next print three confirmations for each deal: one would be sent to the back office for settlement, one would be filed numerically, and the third copy would be filed by value date. In addition, the internal deal confirmation was faxed to the Bucher entity who originated the transaction.

Deal maturity management was also cumbersome. Front office would initiate the process from the filed confirmations, and would instruct the back office to make the necessary payment. Back office would check the request, perform any necessary research, and then initiate the payment using manual entry into the online banking system. This paper-based process required front and back office signatures, and was a further source of operating inefficiencies.”

…Solved

“Bucher’s Finance Management decided that operational efficiency could only be upgraded to a desirable level by implementing a modern TMS. Accordingly, treasury executed a thorough system selection process, and chose IT2 to provide a best practice solution for cash and treasury operations management. IT2 impressed Bucher with its look and feel, its structure and its unique process mapping facilities, which enable treasury to comply easily and effectively with ICS (Internal Control System – the Swiss equivalent of Sarbanes-Oxley).

Bucher treasury now uses a robust process in which SWIFT MT940 messages are automatically uploaded into an IT2 folder from the Fides service, via an FTP server. An IT2 ‘job’ automatically scans the folder twice daily, to import intraday updates. IT2 automatically reconciles projected versus reported items, and the Bucher treasury back office researches, corrects and manually matches any un-reconciled items. Reconciliation is now a much more assured and less troublesome process.

IT2 automatically integrates information about new and maturing treasury transactions, so that an accurate real time cash position is available to the treasury team – who can focus completely on analysing, planning and executing the required dealing operations, as opposed to being occupied with the details of cumbersome (and effectively unproductive) data processing operations.

Bucher’s front office uses the IT2 Position Analysis Workbench to review the real time cash position, and then deals in the market either electronically using the 360T dealing portal, or by phone, depending on the counterparty.

With IT2, Bucher has implemented a secure end-to-end STP dealing process. 360T deals are automatically downloaded into IT2. After verification in IT2, deals are automatically uploaded into the Misys Treasury Plus portal for confirmation issuance and matching. After deals have been matched in Misys, they are saved in a folder on a server, which is scanned by IT2 24/7; as soon as a new file is detected, it is imported into IT2 and the status of the deal is set to matched. IT2 initiates and monitors the settlement process. Completed transactions are archived in the IT2 database for audit purposes.

The entire dealing process now executes in less than five minutes, which represents substantial gains in efficiency, accuracy and control. The next stage is to roll-out the IT2 NET module to our subsidiary network. IT2 NET provides 24/7 web based communications between a global network of operating subsidiaries and central treasury. This will extend our IT2 solution to automate the transmission of cash forecasts and deal requests, and the related reporting. We are pleased to have streamlined our treasury processes so that we can now focus on our professional tasks in today’s demanding market environment.”