Treasury - When less is more (page 1 of 3)

What makes this story worth reading?

It's a story of scope. It's a story of how one large multinational corporation with operations in more than 60 countries, acknowledged that in order to continue to be successful in the current business environment, they had to commit to having less - fewer databases, fewer software versions, fewer business relationships, fewer unique processes and fewer manual interventions. This is a story of how less can be more.

It is also a story of the reconciliation between perception and reality. While consolidating, standardizing and automating on a global basis are noble objectives, the perception is easier than the reality. Many times corporations make attempts to accomplish one or all of these objectives, but the reality of their corporate structure and the many unplanned challenges along the way does not allow them full success.

At Oracle, we first began by consolidating subsidiaries into three global shared service centers. We set up a center for the Americas & Canada, one for Asia Pacific and one to cover the Europe, Middle East and Africa region. Each Oracle subsidiary was assigned a migration schedule, which became our road map toward global consolidation.

To accomplish our standardization objective, we reviewed and re-engineered all our existing treasury related procedures, from cash receipt to liquidity management. This step was critical for us to ensure we ended up with fewer banks, fewer accounts and fewer processes - not more.

We defined a standard process for all transactions and implemented new internal policies to ensure compliance. Reviewing all business processes is critical to the success of globalization. If you simply take an existing process and automate it, you will have missed the opportunity to improve and enhance your business.

Standardizing is easy in theory, but in practice takes significant patience and diligence. There are many global challenges that must be considered, and you must ensure that tax structures and central bank regulations fit within the confines of your new standard process.

The table below shows a summary of our project objectives from the beginning of the project in June of 1999 through June 2003. We have reached major milestones in each of our key global objectives, and achieved significant process efficiencies and time savings.

For example, prior to our centralization, excess cash was managed in-country and investments were held at each individual bank. Today, 95% of Oracle's worldwide cash is managed centrally. We pool cash where appropriate to allow for better economies of scale. All investments are held with our Global Custody Agent.

By standardizing the banking model, we have been able to eliminate 80 bank relationships. Prior to standardization, each subsidiary had an average of eight bank accounts. Today the average is four accounts per subsidiary.

How Suite It Is
After centralizinig our business operations into three centralized shared service centers, we began to focus on improving our business through automation. We did this in two steps; first by automating the daily bank reconciliation process and then by implementing one global treasury system. We utilized the Straight Through Processing (STP) capabilities of the Oracle e-Business Suite to automatically upload more than 200 bank accounts with individual line item detail on a daily basis.

The STP for daily bank statement activity uses standard functionality within the Oracle Cash Management product to upload statement detail using a variety of file formats including MT940 and BIA2.