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Agenda
Introduction History of Oracle Treasury The Best Practices Journey
– Cash Pooling– Intercompany Netting– P-card Processing– Global Treasury/ Banking Integration
Best Practices in Treasury Getting Started …
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Paul Kirch: Director, Oracle Applications Consulting, Answerthink
Currently, a Director in Answerthink’s Oracle Consulting Practice, with responsibility for consulting implementation on the West Coast
More than 20 years experience in the implementation of ERP systems, principally in Finance, Global Supply Chain, and Distribution
MBA in International Finance, CPA (licensed in the State of Maryland) CFA (Certified Financial Analyst) candidate, Level I, June, 2007 Worked for Oracle Corporation in the period 1995-2000, first as a Sales
Consultant in Latin America and later as a Practice Manager in the Oracle One international consulting group
Have worked on treasury systems design, including many of the problems related to integration, at KLA-Tencor, FEI Company, Cisco, and Qualcomm
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• Collections• Payments • AR/AP Admin
• Cash balances management• Money market operations• Currency Pools
• Intercompany funding• FX and interest rate management• Intercompany netting
• Long term funding
Finance Functions to be Centralized
Finance Functions to be Centralized
DecentralizedTreasury
Partially Centralized Treasury
Centralized Treasury
Financial Shared Service Center
Degree of Centralization
The Best Practices Journey
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AUTOMATED USD NOTIONAL POOL
ON-SHORE LOCAL CURRENCY ACCOUNTS
NR JapanUSDCurrent (OD)
OFF-SHORE USD ACCOUNTS in Hong Kong
R ThailandTHBSavings(No OD)Current (OD)
FX
R ChinaCNYCurrent (No OD“ST-Loan”)
FX
R MalaysiaMYRCurrent (OD)No Savgs allowed
FX
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2R Hong KongUSDCurrent (OD)
R Hong KongHKDSavings(No OD)Current (OD)
FX
R TaiwanTWDDDA/Savings(No OD)Current (OD)
NR TaiwanUSDCurrent(OD)
FX
NR SingaporeUSDCurrent (OD)
FX
R SingaporeSGDSavings(No OD)Current (OD)
Payables Receivables R: Resident entity NR: Non-Resident entity
FX FXFX (Spot/Fwd/Option) available on/offshore, per regulation FX (Spot/Fwd/Option) available onshore only, per regulation
R Europe Entity [TBD]USD Account, Current (OD)[ABN AMRO Amsterdam]
R FEI HK CompanyASIA Net USD PositionMaster USD AccountCurrent (OD)
Automated Balance Transferfor Intercompany Sweeps
Operational Expenses
Best Practice: Cash Pooling
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Best Practice: Intercompany Netting (1 of 3)
“A process by which the inter-group payables of each participating group member are settled, on predetermined dates, by effecting one transfer, in the functional currency of each participant, to or from a corporate netting centre (“CNC”)
Settlement of intercompany obligations (3rd parties can be included)
Pre-determined calendar
Payable or receivable
One amount
One currency
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PARENT COMPANY
France
Eindoven
Czech Republic
230K
200K
200K
100K
100K 100K
600K
100K
100K
200K
400K
200K
400K
200K
150K120K
220K50K
500K
100K
United States
Trade Flows before Netting (2 of 3)
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PARENT COMPANY
Czech Republic
470K
430K
970K700K
230K
NETTING CENTRE
Simple Example
75% Reduction of Transactions
31% Reduction in Volume
United States
France
Eindoven
Trade Flows After Netting (3 of 3)
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Best Practice: P-card Processing
StatementLines
ERP System
Bank Statement
Request (PR)
Goods delivered
Charges submitted to bank and approved.
Bank Statement
Reconciliation
Monthly Statement
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Global Payments Platform
GlobalGatewayHub
LATAM Hub
NA Hub
ASPAC Hub
LOCALCLEARING
EMEA hub
LOCALCLEARING
LOCALCLEARING
LOCALCLEARING
LOCALCLEARING
LOCALCLEARING
Branch
Branch
Branch
Branch
Partner Bank A
ERP System User
Global Treasury
Customer Regional Local
ERP Treasury User
Partner Bank Z
Best Practice: Integration between ERP and Global Banking Platform
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Best Practices in Treasury
Consolidation to 1 or 2 banks – globally; reduction in the number and location of bank accounts; centralization of Treasury function
Better use of cash through use of sweep accounts, cash pooling, and netting of intercompany transactions
Greater transactional efficiencies including the use of electronic links to external banking partners and markets and increased use of EDI/EFT for cash receipts and cash disbursements
Increased use of P-cards and Ghost Cards for low dollar transaction processing Tighter integration between banking web based portals/ global payments platforms and
ERP-based Treasury management systems Straight-through-Processing (STP) of Treasury Transactions (automated confirmation e-
mail, accounting, and payment scheduling) Improved information management and reporting including foreign currency exposure,
daily cash position, and cash flow forecasting
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Getting Started …
Recognize that Oracle treasury setup heavily dependent upon company banking relationships and that Oracle Treasury configuration MUST reflect current company banking relationships
Begin best practices journey by:– adopting global, web based cash management solution– seek to more fully integrate Oracle to back-end bank processing platform– net intercompany transactions and replace intercompany cash movements with
weekly/monthly/quarterly USD movements– increase use of bank services, such as P-card transaction processing– adopt centralized treasury/centralized disbursements processing (AP shared services) with 70%
or more of dollars disbursed electronically
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Contact Information
Statement of Confidentiality
This document contains confidential material proprietary to Answerthink, Inc.. The materials, ideas and concepts contained herein are to be used exclusively to evaluate the capabilities of Answerthink to provide value-added assistance to The Williams Company.
This information and the ideas herein may not be disclosed, copied or distributed to anyone outside of The Williams Company Industries or be used for purposes other than the evaluation of Answerthink’s capabilities on this particular engagement
Copyright © 2006 Answerthink, Inc.. All rights reserved.
Paul KirchDirector, Oracle Applications ConsultingHackett Certified AdvisorAnswerthink, Inc.Telephone: (408) 316-5899e-mail: [email protected]
