Basic HTML Version
C
:
Hudson Advisors LLC and its subsidiaries are a globally integrated, full-service asset management company providing
due diligence and analysis, asset management and global support services for Lone Star Funds, a leading private
equity firm.
T
:
Hudson Advisors operates a shared services centre at Hudson Advisors
Europe Limited, (HAEL) for accounts payable and other treasury functions
for many entities and investments, which include corporates around the
world. HAEL made payments via a proprietary ERP system that used
several separate file formats (with a different file type for each payment
method such as ACH or wire), multiple host-to-host connections to
banks, and numerous payment systems.
This payment system, which was put in place years earlier at short notice,
was inefficient and inflexible. In addition, the payment solution required
a high level of manual intervention in the payments process by staff and
was time-consuming to manage: the firm limited the number of payment
runs per week because of the complexity of the task.
Moreover, the infrastructure was not robust – host-to-host connections
were delicate and required frequent certificate updates. HAEL’s various
systems and processes were also not fully integrated: business approvals
were made via an external system, for example. The complexity of the
payment process also made it more difficult to audit.
“We wanted to streamline and centralise the payments process in Dublin
and minimise regional involvement in payment approval,” says Conleth
Fay, Assistant Vice President, Treasury at HAEL. So, the company sought
to implement SWIFT as a standardised form of communication with its
banks in the US, Europe and Japan and update its ERP to create a user-
friendly approvals process with a clear audit trail.
T
:
Following request for proposals to several banks, Citibank was selected
as HAELs primary partner bank in Europe. Working closely, Citibank and
the firm implemented a global payment factory in the European Treasury
headquarters in Dublin, Ireland. The solution centralises payments in the
global payment factory and standardises the payments process within an
updated version of HAELs ERP system.
All invoices are submitted via the ERP system and are then approved –
within the system – by two business approvers. The system generates
and securely transmits a payment file in the ISO XML 20022 V3 format,
creating a standardised payment file across all regions. The payment file
(PAIN001) is sent via SWIFT to Citibank.
In return, the bank sends two PAIN002 response files: the first is a file-level
response and the second is a transaction-level response. Once these
are received, accounting is triggered within the ERP system. In addition to
communicating with its primary bank via SWIFT, HAELs receives MT940
messages from the local banks it works with to update its account
information and improve visibility.
“Our cost benefit analysis shows a net present value of $2.12m for
the project and an internal rate of return of over 100%,” Fay notes. “In
addition, the solution has improved our cash management. Since the
payments process is less complex and time-consuming, HAEL now
executes more payment runs every week, enhancing working capital and
ensuring suppliers get paid quicker, thereby improving supplier relations.”
B
:
The solution has revolutionised and future-proofed HAELs treasury
role. It has reduced the number of systems used from five to one,
while processes have been streamlined – within treasury, four hours of
manual process a day have been eliminated, freeing up time for value-
added tasks.
Fay explains: “the solution was initially implemented for 28 corporate
entities and subsequently expanded to include hundreds of accounts.
By developing a tailor-made ERP system to meet business requirements,
utilising SWIFT connectivity and using the ISO XML standard, the solution
demonstrates both best practice and innovation.”
K
:
•
Reduction in bank charges.
•
Cost savings.
•
ROI.
•
Time taken to implement solution and realise benefits.
•
Productivity gains.
•
Process efficiencies.
•
Improvements in the cash conversion cycle (CCC).
•
Pricing enhancements.
•
Risk removed/mitigated.
Barry Cli ord, Citi and Conleth Fay, Hudson Advisors Europe Ltd
HIGHLY COMMENDED WINNER
Best AP Solution
Hudson Advisors Europe Ltd
Conleth Fay, Assistant Vice President, Treasury
14 |
treasurytoday
Adam Smith Awards © August 2015