Enhancing Performance and Reliability with a Treasury Management System
The finance department of the multinational Ramirent Group renews the administration of treasury operations. “The management of our treasury positions with our previous manual methods had become inefficient. More time was taken up on reporting and compilation of reports than on analysis. The rapid growth experienced over the previous years brought further challenges,” explains Ramirent Oyj’s group treasury manager, Petteri Järvinen.
“In our group, we have 13 countries with 12 different currencies. As an example, the effective management of the group’s currency position was a challenge, because the cash flow forecasts for the subsidiary companies were manually consolidated using data in spreadsheets received by email,” Järvinen adds.
Group treasury offers the 20-odd subsidiaries of the machinery and equipment rental group financing services and related advice, and looks after the group’s external and internal funding, foreign exchange transactions as well as hedging against risks. In the operating companies, the finance staff manages daily payment transactions and cash management for their own units in practice.
In 2007, Ramirent decided to introduce a treasury management system (TMS) with the aim of achieving effective straight-through processing (STP) of treasury transactions as well as a more secure operating environment. In summer 2008, after a thorough tendering process, the company chose the IT2 Treasury Management System supplied by OpusCapita.
“Of all our alternative solutions, we found that the availability of information and the ability to analyse it were best with the IT2. In addition, the system offers good opportunities for further development,” Järvinen explains.
Järvinen states that their decision was also influenced by the knowledge that the supplier of the IT2 solution is a respected Finnish industry expert, who is familiar with local requirements and customs.
The implementation project was initiated in September 2008. In the group treasury, the 2009 financing transactions are already being processed with the new system. Furthermore, the link to the automated payments function was completed early this year and the system already produces the information for the accounts.
“We already get substantial benefits from the system, but the full benefits will not be realised until all the subsidiary companies have been integrated into the system, which will take place by summer 2009. One specific benefit of the IT2 solution is the IT2Net tool, through which our subsidiaries report to us,” Järvinen explains.
In the future, the operating companies will use the IT2Net to submit, for example, their loan, deposit and currency trading requests to the group treasury and to check their own positions from the system. Group treasury will get the companies’ cash flow forecasts directly from the system and it will also be able to automate its own month-end reporting to the subsidiaries.
Järvinen doesn’t foresee that the implementation of the IT2Net as a system project will be a major task for the subsidiary companies. The routines themselves will not change: now, the subsidiaries will enter the same information that they previously emailed to the group treasury directly into the IT2 system.
“Here we have a chance to review the reporting processes of the companies. We wish to focus attention on obtaining as high quality and accurate forecasts as possible,” states Järvinen. One of the strengths of the IT2 is process maps, which make it easy to model the treasury processes and, for example, the segregation of tasks as well as responsibilities between the front, middle and back office functions. “The system offers off-the-shelf best practice models, which can be used as templates when modifying treasury processes,” Järvinen adds.
The key advice from Järvinen to anyone planning a similar exercise is the allocation of sufficient resources. “Managing a system project alongside one’s own job is challenging. This type of arrangement is also risky if everything rests on the shoulders of a single individual. Even under great time pressure, it pays to stick to systematic documentation. You also have to remember to involve and engage all the concerned persons outside group treasury in good time, both inside and outside the company. We have contracted out our accounting function and our IT activities together with their respective infrastructures, which meant there were several partners involved in our project. Nonetheless, OpusCapita has been able to support us,” says Järvinen. For the Ramirent group treasury, the treasury management system means ‘more time for the key, productive work i.e. monitoring, analysing and hedging positions against risks’.