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Simplifying Complex Treasury:Replacing Multiple Standalone SystemsReplacing Multiple Standalone Systems with One Strategic Platform
Mark LewisDirector, Corporate Treasury
Wall Street Systems
Cindy Wang, CFA CPAy g,Director, Treasury Operations & Systems
Toyota Financial Services
The Quest for Simplification ofThe Quest for Simplification of Complex Treasury
W ll St t S t id St t i T• Wall Street Systems provides Strategic Treasury Solutions to over ¼ of Top 100 Corporates
Wh t i th ld’ l di d• What are we seeing across the world’s leading and sophisticated treasuries
H ti i lti l l t d l i ith• How retiring multiple legacy systems and replacing with one strategic platform can benefit the organisation
Wh i th ti t i t i t• Why now is the time to invest in tomorrow
• Case study and benefits - Toyota Financial Services
ToyotaToyota’’s Global Businessess Global BusinessesToyotaToyota’’s Global Businessess Global Businesses
4
TMCC Products and ServicesTMCC Products and ServicesTMCC Products and ServicesTMCC Products and Services
Consumer Finance
Dealer Finance
Commercial Finance Insurance
• Retail • Lease
• Wholesale • Real Estate • WorkingCapital
• Forklift • Hino Medium Duty • Class8 HeavyDuty
• Service Agmts • Ext. Warranty • GuaranteedAuto • Working Capital
• Revolving Credit Lines
• Class 8 Heavy Duty• Retail • Lease
• Guaranteed Auto Protection
• Roadside Assistance
5
TMCC Key Business MetricsTMCC Key Business MetricsTMCC Key Business MetricsTMCC Key Business Metrics
• We employ over 3,300 associates across the country.
• We service over 2 000 dealers and close to 4 million • We service over 2,000 dealers and close to 4 million customers.
Key Business Metrics Fiscal year ended March 31, 2010
Total assets $81.2 billion
Total debt outstanding $73.0 billion
Short-/long-term ratings A-1+/AA (S&P)P-1/Aa2 (Moody’s)
6
E t i Fi ld O i tiE t i Fi ld O i tiExtensive Field OrganizationExtensive Field Organization
7
T F ti l O i tiT F ti l O i tiTreasury Functional OrganizationTreasury Functional Organization
Accounting
Sales & Trading
Treasury
Capital Markets Treasury Operations Treasury Risk TreasuryCash Sales & Trading
Business& Market Strategy
Debt & Derivatives
Term Debt Funding Products
Operations& Systems
Operations& Settlements
yManagement
Valuations
TreasuryControllership
Debt Accounting
Management
Cash Position
Sales & Trading
Rate Desk & Derivatives
Structured DebtProducts
SystemsManagement
Instruments& Valuations
Market Risk
International InvestmentA ti
DerivativesAccounting
Liquidity Management
RemittancePayment
Bank Products/S i
Back Office Functions
& Derivatives & Valuations Accounting
Front Office Functions Middle Office Functions
Management Services
TMCC T M tTMCC T M tTMCC Treasury ManagementTMCC Treasury Management
Diversified Funding Strategy
Prudent Risk Management
Robust Governance and Controls
Infrastructure and Organizational Alignmentg g
TMCC Funding ProgramTMCC Funding ProgramTMCC Funding Program TMCC Funding Program
TMCC is committed to:• Maintaining funding diversity and exceptional
li idit liquidity • Issuing into strong demand with attractive deals• Identifying and developing new markets and • Identifying and developing new markets and
investor relationships• Responding quickly to opportunities with best-in-p g q y pp
class executionThis requires Flexibility and Speed !
10
Diversity in Debt OfferingsDiversity in Debt OfferingsDiversity in Debt OfferingsDiversity in Debt OfferingsTerm Debt Outstanding
EMTN $6 530
By Deal Type By Currency
EUR, $8 ,366
JPY, $4,500
Eurobonds, $14,118
O ther, $8,565
EMTN, $6,530
USD, $26,486 AUD, $4,0 93
CHF, $3,233
Uridashi, $7,113
Global
Public/Private ABS, $6,356
NZD, $2,294
GBP, $1,608O ther,
$1,087units in USD millions
As of June 30, 2010
MTN, $4,500
MTN, $4,486
11
units in USD millionsunits in USD millionsSource: Company Reports
Wh t W H d B fWh t W H d B fWhat We Had BeforeWhat We Had Before
St d l tStand-alone systems:• Cash Management• Proprietary Bank Portals
i i
Not Integrated
• Debt & Derivative• Commercial Paper• Investment
Not Flexible
Lacks • Accounting • Valuation• Asset Liability Management
Lacks Functionality
N t S l bl• Market Data
What we lacked, we made up with manual processes and
Not Scalable
spreadsheets.
Treasury Vision:Treasury Vision:yySimplify the ComplexSimplify the Complex
iAutomation• Straight-through processing
Scalability
Integration Flexibility• Plug-and-play architecture
C t li tiCentralization• Banking relationship management
Global Reach
I f ti d C t li tiI f ti d C t li tiInformation and CentralizationInformation and Centralization•Question: centralize or decentralize?Question: centralize or decentralize?
Or, how do we efficiently use information?
•Which is better?C t li “ ll th k l d hi h ht t b d Centralize “all the knowledge which ought to be used but which is dispersed”
or to “convey to individuals additional knowledge in order t bl th t fit th i l ith th f th ?”to enable them to fit their plans with those of others?”
- F. Hayek
D t li d M d lD t li d M d l
Products / BANKS
Decentralized ModelDecentralized Model
Products / Processes
BANKS
C t li d M d lC t li d M d lProducts /
Centralized ModelCentralized Model
BANKSProducts / Processes
BANKS
A d B d d C dA d B d d C dAndon Boards and CordsAndon Boards and Cords
F t/Middl /B k I t tiF t/Middl /B k I t tiFront/Middle/Back IntegrationFront/Middle/Back Integration
Sales & TradingCapital Markets
Treasury Systems O ti & Accounting
Front Office Middle Office Back Office
organization alignment: functional roles and responsibilities
Capital Markets Debt & Derivatives
Operations & Settlements
gCash Management
PeoplePeople organization alignment: functional roles and responsibilities
governance: policies, procedures, separation of duties, SOX
PeoplePeople
ProcessProcess
infrastructure: system defined user right, workflow and controlsSystemSystem
Treasury Systems EnableTreasury Systems Enabley yy yProcesses & Internal ControlsProcesses & Internal Controls
OBJECTIVE: Minimize financial & operational risk through:• Segregation of duties
• Enforced through treasury system workflow design and fi ti ith i d d t it t lconfiguration with independent security controls
• SOX defines key controls within and outside system flows• Front/Middle/Back office integration
B t ti & kfl• Best practice processes & workflows• Governance/risk management• Horizontal/Cross-functional alignment & controls
B i i / h k & b l• Business review/checks & balancesF/M/B office integration supports open communication and
transparency of information which helps govern and control i k risk
Treasury Trading & Servicing Cycle Treasury Trading & Servicing Cycle --y g g yy g g yChecks & BalancesChecks & Balances
Independent monthly interest expense analysis by Treasury Risk (MO)
Treasury Policy SOX Certification & Peer Review
FO BO ACCTNG
MO
Transaction Capture /
DetailsRights &
Obligations
Financial Statement AssertionsPre Trade
Monthly review of issues with Treasury Operations & Systems (MO)
Cross-dept
review
Quarterly interest expense report by debt category for independent FO management business review
New Products & Processes Committee
Weekly Treasury Management Team
MeetingFO management business review
Structure Notes Committee
ALCO
Treasury System Enforced Controls Treasury System Enforced Controls
T h l I f t tT h l I f t tTechnology InfrastructureTechnology Infrastructure
Strategic Treasury Platform
Commercial Paper
Enterprise Accounting Systems
Treasury Accounting
Cash Management
PaperDirect Issuer
System
Market Info SWIFTTransaction & Risk Management Banks
Treasury Management System
Asset/Liability Management
System
Business Integration Interface
Internal Business Units
T M t S tT M t S tTreasury Management System Treasury Management System
C h M t Cash Management
•Web-based submission of business units’ and subsidiaries’ cash forecasts and funding requestscash forecasts and funding requests•System-enforced approval process•In-house banking, netting and payment factory capabilitiescapabilities•Automated cash reconciliation •Real-time cash positioning•Automated bank reporting and real-time transaction p gconfirmation through SWIFT•Security and Audit trail•Straight-through processing(STP)•Integrated with SWIFT for FIN and FileAct services
T M t S tT M t S tTreasury Management System Treasury Management System
SWIFT
•Single portal for treasury to all the banks•Wire transfer and real time confirmation•Wire transfer and real-time confirmation•Prior day and current day Bank reporting•Secure file transmission via FileAct
•Electronic payments/receiptsElectronic payments/receipts•Confirmation•Check files•Lockbox files
B k ti•Bank reporting
T M t S tT M t S tTreasury Management System Treasury Management System
Treasury Transaction Management
•STP from trade capture to settlement, accounting and valuationvaluation•Transaction workflow management•System-enforced approval process•Interfaces with market data providers•Interfaces with market data providers•Unlimited flexible portfolio structures•Counterparty set up and authorization process•Limits monitors o o•Security and Audit trail
T M t S tT M t S tTreasury Management System Treasury Management System
Accounting Module
•Integrate with different Enterprise Systems used by different business unitsbusiness units•Financial sub-ledgers in multiple currencies: base, local and reporting•Transaction level accounting entries: ease of reconciliation •Transaction level accounting entries: ease of reconciliation and research•Automatic generation of journal entries & trial balances
Questions?Cindy Wang, CFA CPADirector, Treasury Operations & SystemsToyota Financial ServicesEmail: [email protected]