Security, efficiency, visibility: system-driven results
Security, efficiency, visibility: system-driven results
Emsland Group is a mid-sized company with global operations which manufactures innovative plant-based products for industry and the food-processing sector. Emsland is Germany’s largest producer of potato starch and the market leader in flakes, granules and specialty products made from plants and vegetables. The group has seven factories which process a total of around 2 million metric tons of potatoes and peas and distributes its products to more than 120 countries. The company has about 1,250 employees and recorded sales revenue of around EUR 600 million in 2016/17.
Head of Group Treasury, Emsland Group
The group’s treasury team was set up in 2015 as a one-man department. Treasury operations were historically characterized by decentralized processes, a plethora of manual procedures and incompatibilities between different systems and formats. The burgeoning number of processes for reconciliation and checking made the day-to-day work increasingly complex and presented potential information and security vulnerabilities. The group wanted to introduce a treasury management system to reduce the time and effort involved in managing its treasury operations, creating secure processes and full group-wide visibility.
For treasurer Alexander-Friedrich Reich who joined in 2017, it was important to gain complete visibility and overall control of the group’s treasury data, establish clear structures and automate recurring processes wherever possible to increase security and free up time for important treasury issues. When inviting tenders for the TMS, Emsland Group thus focused on a clear definition of tasks and set out four goals in the business case i.e. the system should: firstly, allow all financial risks (in relation to cash, FX and interest) to be captured, monitored and managed; secondly, create visibility of all group cash; thirdly, establish secure processes for capturing deal data; and fourthly, process group-wide payments efficiently and securely. Emsland Group found the solution – tm5, the treasury management system which the company also uses as a group-wide multi-bank payment platform.
To achieve its first goal – comprehensive risk management – Emsland Group captures all data in the system. The treasury team is provided with an overview of the group’s liquidity using centralized cash positioning across all bank accounts. As electronic account statements are automatically processed on a daily basis, the group has complete visibility of all account balances and activity. All loans, leases, FX deals and swaps are also captured centrally in the system and interest is automatically calculated and accrued for loans and swaps.
The second goal – visibility of all cash positions across the group – is achieved by tm5 at the click of a button: as all data is captured on a single platform and all of the group’s global payments are processed using the system, both central treasury and the subsidiaries can be kept up to date on the liquidity of the whole company and individual entities and the status of payments.
Emsland Group achieves the third goal – secure processes for capturing deal data – using the audit-compliant user permissions and roles model available in tm5 and ongoing process automation. The user permissions model in tm5 is based on dual approval (the four-eyes principle) and determines who can create master data, enter deals, settle deals and set up and authorize payments. Automated, fully integrated processes and multi-stage approval help avoid errors, ensure security and prevent potential fraud (keyword CFO/CEO fraud).
In terms of efficiency of processes, the trading platform 360T was connected directly to tm5 providing a powerful interface solution for derivatives trading. All deals concluded in 360T are automatically captured in the system and the same-day electronic counterparty confirmation exchanged at the click of a button in the system. “It’d also be possible to automate this process, but at the moment we are happy that the process is significantly streamlined and this new method fits well into our daily business,” explains Alexander-Friedrich Reich. Overall, the system reduced the need for manual tasks and thus also the scope for errors and fraud.
Emsland Group tackled the issue of payment security, the fourth major goal of system implementation, head-on and uses tm5 not only as a treasury management system but also as a central, group-wide platform for global payments. Emsland Group initialized 11 banks via EBICS. Right from day one, central treasury was able to make a live intercompany payment by the US subsidiary from the subsidiary’s US dollar account via MT101. This was previously done using a local online banking tool with accompanying high transaction costs. Just a few weeks later, Emsland Group was able to do away with the online banking tools for the main companies in the group and process payments entirely via tm5. Emsland Group’s complete payment process is now, for the most part, automated: payment files are transmitted via interfaces from the ERP systems to tm5. Payments from bank accounts which are not connected via EBICS are made via the connected banks in MT101 format and the relevant account statements made available in MT940 format in the system itself. The BELLIN Process Automation (BPA) service provides a helping hand for Emsland’s treasury team when it comes to payments, performing certain recurring actions in accordance with a predefined schedule. The BPA service is used, for example, to import and export account statements, import bulk payments and import trade deals, thus saving manual effort and at the same time preventing any manipulation of the data and therefore reliably minimizing the potential for fraud.
Emsland Group’s treasury team was able to systematically achieve security and visibility and make key treasury processes efficient. The newly implemented treasury processes have complemented the reorganization of the corporate group and offer the ideal basis for managing and monitoring the company’s growth strategy.
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