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Founded in 1895, Firmenich SA is a private Swiss company in the perfume and flavour business. Employing 6,000
people globally, Firmenich is the largest privately owned company in the industry and ranks number two worldwide.
T
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Firmenich was undergoing a global financial transformation project to
ensure that it had the necessary structure and governance to operate
with rigour and discipline moving forward. As part of this process the
company was looking to replace its traditional decentralised cash
management solution by a global solution.
The company’s requirements were as follows:
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To replace the previous cash management set-up by a global solution.
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To deliver uniform payment and security processes.
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To set up a standardised way of communicating with their
external banks.
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To reduce the number of external banks used by the affiliates to one
core bank when offering, at the same time, the possibility to opening
internal bank accounts with the in-house bank.
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To increase business process outsourcing (BPO) capabilities
through the establishment of a payment factory.
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To ensure compliance with their risk management and internal
control standards.
On the technical side, the company wanted to:
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Set up a stable host-to-host connection between the company and
their external counterparties.
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Deliver true automation.
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Get standard text on tag 86 of MT940s from three banks.
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Deal with country specifications on XML payment files.
It was a big project for the company and as Philippe Farine, VPGroup Treasurer
explains: “the challenges we faced were at the level of project management;
first to determine the accurate budget and timeline of a project that would last
two to three years; second, defining the right time to spend in development
and testing and; third, internal resources: we had only a single resource
located in Europe, dedicated to the set-up and the testing of the module in
SAP, who had to deal with all time zones during the implementation.”
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After putting the mandate out to tender Firmenich selected BNP Paribas for
Europe, Citi for the rest of the world with the exception of the CHF covered by
UBS to be their partners for the new solution. Working together with the banks
Firmenich implemented a global cash management solution covering all 28
affiliates allowing them to join their global cash pooling solution as well as their
inter-company netting process. This was completed by the implementation
of a payment-on-behalf-of (POBO) structure serving more than 20 affiliates.
In less than two years, Firmenich has set up a global in-house bank (IHB).
This was made possible by the existence of a single SAP instance (ECC6
version) implemented earlier to which two new SAP modules (IHC and
BCM) were added to run the IHB. Today, the IHB is:
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Heading a true global cash pooling structure (26 affiliates zero
balanced on a daily basis on master accounts held in Switzerland
and UK), offering full control on the cash around the globe.
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Running an internal netting (ICO) process to settle the payables and
receivables of 25 affiliates.
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Paying on behalf of (POBO) 22 affiliates today using only three banks.
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Providing a complete change in the payments process of the
company, transforming inter-company payments into internal
settlements with no cash transfer and cross-border payments into
domestic payments.
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The solution implemented has fulfilled the objectives set at the beginning of
the project, contributing to the implementation of treasury best practices. It
has also accelerated the centralisation trend initiated a few years ago, and
contributed to compliance with Firmenich’s corporate objective to excel in
executing their operations. In addition to this, it offers the ideal architecture to
extend this towards other treasury practices, like eBam or a collection factory.
This solution also evidences the importance of a strong project team.
“We have been able to gather internally (not only at corporate level,
but also including affiliates’ representatives) a range of complementary
competencies/talents,” explains Farine. “Commitment, accountability
and excellence in execution were the values that the team shared during
the project. We also had great interactions with our banks and were able
to build intimacy between the project team and the banks’ team.”
K
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Reduced reliance on bank credit lines.
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Reduction in bank charges – reduced the number of banks and
bank accounts by 180 to concentrate on three global players.
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Cost savings.
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Time taken to implement solution and realise benefits.
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Productivity gains – on average 800 intra-group invoices on
a weekly basis without any rejection.
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Process efficiencies - daily view on more than 95% of the
total cash of the group, out of which more than 75% is
captured by the cash pooling structure.
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Interest savings.
Séverine Bellens, BNP Paribas, Brigitta Keller, Citi, Corinne Mérat and Isabel Paris, Firmenich SA and
Kristian Rygh, Nasarius
HIGHLY COMMENDED WINNER
Best Cash Management Solution
Firmenich SA
Philippe Farine, VP Group Treasurer
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Adam Smith Awards © August 2015