Topics: Perfetti Van Melle at a glance Perfetti Van Melle treasury redesign project Lessons learned Conclusions Perfetti Van Melle Holding B.V., Treasury Department
Perfetti Van Melle at a glance Perfetti Van Melle Holding B.V., Treasury Department
Facts & Figures Perfetti Van Melle Holding B.V., Treasury Department HQ in Lainate (Milano) Italy. Finance / Treasury HQ in Breda, The Netherlands Turnover: EUR 2,5 bln Sales in 150+ countries 31 production facilities Subs in 40 countries worldwide
Perfetti Van Melle treasury facts Situation back in 2009: • 62 bank relations in 40 countries • 380+ bank accounts • 15+ electronic banking systems, partly central, partly decentral • Manual banking used widely • Central intranet based cash position reporting systems (weekly balances, manual entry by subsidiaries) • Treasury management system used by corporate treasury only • Cash pools in NL in 9 currencies, subsidiaries participating with non-resident accounts. Centralized execution of hedging and funding • Treasury staff of 3 FTE (FO&BO) Perfetti Van Melle Holding B.V., Treasury Department
Treasury redesign goals (Q2 2010) Primary goal: Cash visibility and control • New system for payment management, liquidity management and treasury management including full ERP connectivity • Bank connectivity via SWIFT for statements: • MT940 statements in FileAct • 97% of cash flows & 85% of bank accounts visible daily • MT942 via FileAct on principal trading accounts (150 accounts) • Bank connectivity for payments: • XML payments (pain001) harmonization • Local CM execution, central administration and policy making • Bank rationalization (62>35) • Secondary goals Perfetti Van Melle Holding B.V., Treasury Department
Treasury redesign business case Perfetti Van Melle Holding B.V., Treasury Department Business case performed on high level Business case findings: Business case not positive Despite that, support from management Sole reason: value of visibility and control.
Achievements up to Q3 2011 All new systems operational 45 bank relations in 37 countries 325 bank accounts 76% of bank accounts reported via SWIFT from 20 banks, approx. 85% of all cash flows visible daily Treasury live on manual payments via SWIFT 3 subsidiaries live on manual & bulk payments via SWIFT Perfetti Van Melle Holding B.V., Treasury Department
Lessons learned: SWIFT (1/2) Perfetti Van Melle Holding B.V., Treasury Department • Statement reporting via SWIFT serves the purpose of visibility very well • When it works, it works: little maintenance on the channel • Support from SWIFT is generally very good • Good reason for bank rationalization • Underestimated total cost of maintaining connectivity via SWIFT: • Connection (Alliance Lite / service bureau fee) • SWIFT subscription fees • Messages (SWIFT), possible message surcharge Service bureau • Banks’ setup fee and messages • Corporate infrastructure setup and maintenance
Lessons learned : SWIFT (2/2) Perfetti Van Melle Holding B.V., Treasury Department We have been struggling with technology issues: • Making SWIFT alliance lite work and the subsequent migration to SWIFT service Bureau (Broadridge) • Technical infrastructure setup: • Servers • FTP connectivity • Interfaces • Functional IT: • ERP integration (SAP integrated system of HanseOrga selected as the tool for Payment management, Liquidity mngt. and Treasury mngt.) • Interfacing with dealing platform (FXall) • Interfacing (temporarily) with intranet reporting system • Payment format setup and testing
Lessons learned: Banks&SWIFT (1/2) Perfetti Van Melle Holding B.V., Treasury Department Support and performance differs significantly between banks: • Struggling with documentation • Connectivity setup • Message types supported • Statements • Payment instructions • Direct debit • Treasury confirmations • Bank delivery times can be very long • Due to heavy investments, not a bank independent solution
Lessons learned : Banks&SWIFT (2/2) Perfetti Van Melle Holding B.V., Treasury Department Costs are not transparent up front. Completely off the scale pricing proposals seen. Negotiation pressure heavier than anticipated. • Setup fee • Maintenance fees • Message fees often overlooked Logic of pricing often not visible • Portfolio determines the price only partly • Sophistication of proprietary solutions used as SWIFT pricing argument (higher)
Lessons learned: The company Perfetti Van Melle Holding B.V., Treasury Department • Impacts almost every business area: long list of stakeholders to maintain. Notably: • Audit (separation of duties and EDP audits) • Procurement (vendor master data) • Financial administration (key users) • Issues sister companies (rightly so or just as excuse) • Sense of loss of control / ownership • Complex local products not easily fit in standardized tools / formats • Legal discussions • Transfer pricing discussion • Permanent “project” = permanent support • Pilot subsidiaries necessary to show achievements to reluctant subs
Lessons learned: In house technology and functional design Perfetti Van Melle Holding B.V., Treasury Department Technology needs are vast. We have certainly overlooked areas. • Sophisticated payment / treasury management system • Servers, secure connections • ERP connectivity • Staff that can cover both Treasury and IT subjects (integrated project team)
Conclusions on SWIFT Perfetti Van Melle Holding B.V., Treasury Department The statement reporting via SWIFT has proven very useful in the visibility goals SWIFT is not a solution fit for all. Whether it works for your company depends on the company’s structure and approach. SWIFT is not plug and play, not even SWIFT Alliance Lite Beware of marketing
Conclusions on Banks Perfetti Van Melle Holding B.V., Treasury Department Banks in NW Europe are highly cooperative Banks in NW Europe show extensive knowledge SWIFT setup with banks is not plug and play, many banks struggle with their own systems Beware of marketing It is not bank-independent due to the investment, especially in time.
Conclusions on the Company Perfetti Van Melle Holding B.V., Treasury Department Technological complexity has to be covered by Finance and IT together, impossible to do this without integrated treasury and IT project team. Visibility and control are the main benefits, not cost saving from efficiency This is not a project for us. It has proven standard process. Underestimation of the complexity and impact. Endless list of stakeholders.
Q&A Perfetti Van Melle Holding B.V., Treasury Department ?