Increased Productivity, Comprehensive Visibility and Maximum Control

BELLIN's tm5 treasury management system at Emsland Group: the beating heart of group treasury
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Company and starting point

The Emsland Group is an internationally operating company that manufactures innovative products for the processing industry based on raw materials from vegetables. 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 1,200 employees and recorded sales revenue of around EUR 590 million in 2018/19.

Following a breach of covenant in 2014/15 and a subsequent financial restructuring, the management of Emsland Group was faced with more stringent reporting requirements in relation to its banking partners. When the group’s treasury unit was set up as a new and independent department against this backdrop, it was confronted with decentralized processes that had evolved over time, a plethora of manual procedures, and incompatibilities between different systems and formats. Increasing regulatory requirements made the day-to-day work even more complex. A systematic approach was required to address information and security vulnerabilities which had been identified.

The department wanted to introduce a treasury management system in order to create secure, reliable processes and full group-wide visibility and transparency, to benefit from excellent data quality and automation, and to boost productivity. In short, the aim was to overhaul treasury operations to make them more effective and efficient. Following the 2015 restructuring and good financial performance, an ambitious growth and modernization strategy was developed, backed by the treasury unit in the form of major refinancing in 2018. Introducing the TMS was a necessary first step to successfully implementing this project.

Company and treasury profile
  • Number of employees: around 1,200
  • Number of employees in the central treasury department: 2
  • Number of tm5 users: 45
  • Group entities: in the US, Turkey, Poland, Dubai, India, Singapore and Thailand
  • Sales activities: in more than 120 countries
Emsland Group’s treasury is responsible for:
  • Financing / Trade finance
    • Group financing: syndicated loans, borrower’s note loans, bilateral loans, leases, factoring, reverse factoring/supply chain financing
    • Intercompany financing: loans, cash pooling
    • Integrated trading platform, digital matching/electronic deal confirmation and EMIR reporting
  • Treasury
    • Cash management: central cash management
    • Contract management: central administration of external and internal loan agreements, credit lines and individual lease contracts (up to 200)
  • Banking
    • Management of approximately 70 bank accounts, all connected in the BELLIN system
    • Processing of all payments centrally via EBICS and MT101 using tm5
    • Processing of around 73,000 bulk payments and around 1,800 single payments in the 2018/19 fiscal year
    • Banking relationships with eight main banks
  • Planning & Risk management
    • Liquidity management: cash forecasts consisting of rolling 13-week liquidity forecasts broken down by group company and currency and rolling 12-month plans along with corresponding calculations of actual data and comparison of planning and actual data to identify differences
    • Risk management: liquidity, interest rate and FX risk management
  • Reporting
    • Treasury reporting: regular treasury reporting and ad hoc reports in relation to financial status, cash management, liquidity planning, and FX and interest rate risk
    • Treasury accounting: evaluation of financial positions, determination of bookkeeping instructions and transfer to financial accounting

The challenges: lack of visibility and fragmented, siloed solutions

Emsland Group previously used various online banking systems for payments and for pulling together data for cash management. The confirmation of FX forwards in particular was paper-based, and the contracts were not managed centrally in a single system. At the group’s entities in the USA, Turkey, Poland and Dubai, data was accessed with the help of PIN and TAN generators.
There was an absence of reliable, group-wide standardized workflows. The discontinuity across systems resulted in an increased workload, with error-prone manual processes used to transfer or consolidate data. The lack of visibility of cash flows, fees and interest made managing cash flows and securing the financial basis of the group extremely difficult.

The solution: a single platform for all tasks

Data is fundamental to treasury operations. A technology that can provide, filter and collate all relevant data is therefore the perfect foundation for treasury work. tm5, BELLIN’s treasury management system, is a cloud-based platform solution that is in principle accessible by all employees and enables them to collaborate. It supplies real-time data which can be aggregated in a relevant way with just a few clicks. The high quality of the data enables extensive straight-through processing and automation.

The system’s integrated payment platform allows the treasury unit to process payments from the system and enables data from banking communication to be processed, automated, and incorporated into secure, reliable workflows.

Former Head of Group Treasury, Alexander-Friedrich Reich, was already familiar with BELLIN’s system from his previous employment at a listed international company that also uses the BELLIN system. He was able to leverage this knowledge at Emsland, enabling the group to begin the implementation process on its own by connecting to banks: “When I started out in my career in 2009, I was fortunate enough to be involved in the implementation of a treasury management system at an international corporation before I encountered BELLIN for the first time with my subsequent employer in 2013. I ended up implementing tm5 there and working with it extensively. When it came to the selection process for a TMS at Emsland Group, BELLIN’s system was chosen. The intuitive user interface and the structured underlying system design enabled me to plug and play the system once again with little external help.”

Emsland Stärke uses BELLIN’s system for its key treasury tasks such as cash management and contract management, for planning and risk management, for banking and for reporting.

Key treasury tasks with BELLIN

Cash management

Before implementing BELLIN’s treasury management system, the group companies’ account statements had to be retrieved individually and painstakingly collated manually. Now treasurer Marco Hindriks can get real-time quality data from the system at a glance: “In the past, my data was in theory no longer up to date when I logged out. Now I can be sure that the information is correct and complete.” The account statements of all entities are automatically imported into the system, which is especially useful for the group companies abroad as their information previously arrived with a considerable delay. Emsland’s treasury is also kept up to date throughout the day with the help of the intraday MT942.

The system creates the group-wide financial status from the data, which treasury can compare with the planning data in just a few clicks. The group’s treasurers use the cash management data for cash forecasting and positioning and for treasury reporting. In addition to the information from bank accounts, data from deals also feeds into the financial status report in the background. “The planning data for our various contracts, including the countless individual lease contracts that evolved over time, is also automatically incorporated into the cash position. This allows us to manage our day-to-day business effectively and efficiently,” explains Hindriks.

Improved planning and an overview of short-term due dates have resulted in Emsland Group significantly improving the efficiency of payments and, for example, halving the number of expensive rush payments. Each time the treasury team looks at BELLIN’s system, it obtains additional valuable information. The team highly values this aspect of tm5. For example, due dates on deals for the next two days are visible and can be taken into account in cash management. There are no surprises; the team is always able to be proactive rather than reactive. BELLIN’s treasury management system increases the productivity of the group’s treasury department and above all the quality of its daily work.

Contract management and derivatives trading with integrated trading platform
Emsland Group has used BELLIN’s system to greatly increase efficiency, security and reliability in its derivatives trading. Central treasury uses the 360T trading platform, which is directly linked to BELLIN’s system, to conclude deals. “We use the 360T trading platform to compare the bids of our six main banking partners and to conclude a deal directly. This process also has the advantage of meeting our compliance requirements. The data is automatically captured in tm5 and the same-day electronic confirmation exchanged at the click of a button from the system,” explains Hindriks.

In addition to electronic matching, the treasury department also uses tm5 for EMIR reporting, deal administration and payment at maturity. The integrated payment platform in BELLIN’s system enables deals to be automatically created when concluded in such a way that the cash flows are already shown on the correct accounts for settlement and payment can be executed when due. “From FX trading in 360T, to deal capture in tm5, electronic deal confirmation, settlement and EMIR reporting – the process requires only a few clicks in the system.”

Banking with BELLIN

A focus on payments at the start of system implementation

The fully integrated payment platform in BELLIN’s system can connect any bank via any available technology – whether via local standards such as EBICS, FTX and MBS, direct bank connections such as host-to-host or APIs, or via the global banking network SWIFT as part of the BELLIN SWIFT Service.

For Emsland Group, the EBICS technology was an obvious means of processing all German payments in the standard formats. With the help of the multi-bank payment platform in the BELLIN system, payments for group entities in the USA, Dubai, Thailand, Italy and Poland can also be processed centrally via EBICS using the MT101 payment format.

System implementation started before the kick-off date, with BELLIN carrying out technical installation of the treasury management system via remote maintenance. Emsland Group’s treasury team added all master and deal data to the system without support and were also able to connect the existing accounts themselves. The team only needed to request new EBICS IDs from the group’s banking partners, which were used alongside the existing e-banking solution for a short time. When implementing the BELLIN system, the focus was initially on payments, because the company was able to save money in this area right from the start. The system was fully implemented within a short space of time, with only a few days of consulting required.  On go-live day, central treasury was immediately able to make an intercompany payment by the US subsidiary from the subsidiary’s US dollar account via MT101. Previously, a local online banking tool was used for these payments, incurring significant transaction costs. BELLIN’s TMS therefore helped cut Emsland Group’s global banking costs from day one.

 
Bank relationship management and restructuring of payments

Emsland leveraged the flexibility of the BELLIN system in relation to bank connectivity to restructure its payments. The aim was not so much to consolidate banking relationships and reduce the number of accounts, but rather to reorganize them based on cost and volume. “BELLIN’s integrated payment platform also enables me to administer a large number of bank accounts easily,” says Hindriks.

BELLIN’s system provides visibility of cash flows and the costs actually involved in payments. Emsland’s treasury was also able to save a considerable amount on fees by reorganizing payment orders and by effective cash positioning. “The flexibility that the BELLIN system gives us in relation to our banking partners has significantly improved our position with regard to how business is allocated and the targeted structuring of terms. As a result, we were able to significantly reduce our banking fees,” remarks CFO Höning.

Emsland Group originally initialized 11 banks via EBICS in 2017. After successful refinancing as part of a drive to focus business on key banks, Emsland now maintains banking relationships with a total of 14 banks with 70 electronic accounts. The main entities maintain accounts in euros and US dollars in order to be able to carry out transactions in the same currency. Emsland Group processes all of the group’s payments amounting to an annual volume of EUR 1.7 billion via BELLIN’s banking system.

Planning and risk management with BELLIN

Implementing BELLIN’s system gave the treasury department at Emsland Group a tool to record, monitor and control significant financial risks in the areas of liquidity, interest and currency.

The basis for this is visibility over relevant data: Emsland uses the system to obtain an overview of liquidity using centralized cash positioning of all bank accounts and other financial positions. As electronic account statements are automatically processed on a daily basis, the group has complete visibility of all account balances and activity. Transactions are accurately assigned, based on the cash flow rules set up, to the categories Emsland Group also uses for rolling liquidity planning. The actual data calculation based on the bank statement data available on a daily basis enables the company to check the quality of its liquidity plan at any time by comparing planning and actual data in real time and to quickly identify differences – all done seamlessly in a single system.

All loans, lease and FX deals, and swaps are also captured centrally in the system. The accrued interest for loans and swaps is calculated automatically and can be used independently by the accounting department or transferred to the ERP system.

The treasury system is used for the cash flow forecast, which involves recording and evaluating rolling liquidity plans broken down by group company and currency. Based on budget and actual data from the financial accounting or controlling department, treasury creates a base plan in Excel and adjusts it accordingly. Finally, the positions are imported via an interface into tm5 where they can be efficiently evaluated, aggregated into a group-wide plan and combined with the cash flows from the account statements categorized in the system. The group’s smaller companies in particular have recurring, steady business. For this situation, the use of historical actual data provides a solid point of reference for the baseline scenario in the liquidity planning, which is easily verifiable using the current actual data. System support has generally enabled te group treasury team to reduce the workload on its entities in relation to liquidity planning.

Reporting with BELLIN

As a result of the financial restructuring of recent years, treasury reporting now plays a crucial role for the management team. For reporting, it is essential that the underlying data is structured and complete. It is vital for the treaury team to be able to recognize the figures used to create the reports. The BELLIN system enables the team to tailor the reportingcriteria to meet its requirements and thus produce exactly the reports it needs.

All information available in the system can be used for reporting. In addition to the monthly treasury report, both daily recurring and sporadically available information must be prepared or retrieved in a targeted and simple manner.

Information can be provided quickly using “custom page views” in tm5. This feature makes use of the various filter criteria within each function. The required filter options for a particular purpose can be stored either as centrally predefined selections or individually on a user-defined basis, so that users have access to the relevant data within seconds. Treasurer Hindriks remarks: “We use the custom page views every day. They enable us to use the system effectively and efficiently and are also especially useful for colleagues who do not work with tm5 every day.

Process automation and integration into Emsland Group’s system environment

The treasury team views BELLIN’s system as the beating heart of the central treasury at Emsland Group, allowing the two-person department to establish secure, reliable and efficient processes and to make advances in automation in order to create capacity for time-consuming projects and making further process improvements. BELLIN’s system can fulfill these far-reaching and essential functions primarily because it can be administered autonomously by the treasury team and can be integrated into the company’s system environment.

“Process automation is important as it frees up time for major projects and improvements,” explains CFO Höning. Many of the group’s payment processes are now closed-cycle electronic processes: payment files are generated from the ERP systems and imported into the system completely automatically via interfaces. Payments from bank accounts which are not connected via EBICS are made via the connected banks in MT101 format. “We enter these manually, but using appropriate templates enables this to be done efficiently and more securely than in online banking,” says Hindriks. Account statements are made available in MT940 format in the system itself. Data is also automatically provided to the accounting department in the required formats.

Derivatives trading has also been comprehensively automated. Trading takes place via the integrated 360T platform. Deal data is automatically imported into tm5 as an XML file with full detailed information, including competitive bids, and planned cash flows are recorded against the corresponding accounts. Deals can be confirmed electronically in BELLIN’s system at the click of a button. “In the past, deal confirmations were laboriously printed out, two signatures were obtained and then the confirmations were faxed back. Everything had to be completed within two days to be EMIR-compliant. Now we do it directly in the system with just a single click,” notes Hindriks, pointing to the time and effort saved by using the system.

All automated processes, such as those for importing and exporting account statements, importing bulk payments and importing deals, are performed in the system in accordance with a predefined schedule. The automated processes not only work in the background that a user would otherwise have to do, they also prevent any manipulation of the data and therefore reliably minimize the potential for fraud.

Security and fraud protection with BELLIN

In the past, the company suffered a loss of millions of euros due to embezzlement, which resulted in a breach of covenant. Financial restructuring became necessary under the new management. The treasury department was set up to ensure the professional handling of financing issues and reporting requirements and to achieve bank communication which would meet this aim. The implementation of the group’s treasury management system underpinned this approach.

The system has also been used to introduce more layers of security, particularly in relation to payments. The integrated user permissions model ensures basic security standards are met. The model is based on multi-stage approval and determines who can create master data, enter deals, settle deals and set up and authorize payments. Bank authorizations are also incorporated into the system. “BELLIN’s system is essentially straightforward and logical in terms of structure. We have users who only enter data and others who only authorize. This has enabled us to incorporate dual approval across the system and to achieve separation of duties. The system drives secure, reliable processes,” explains Hindriks.

As Emsland Group’s treasury department can centrally grant and revoke user permissions, the group also has the agility to deal with staff changes. Aside from facilitating process security and reliability, the user rights and roles model in the BELLIN system automatically ensures that the company meets compliance requirements.

The project in a nutshell

BELLIN’s treasury management system with integrated payment platform provides Emsland Group’s treasury with a tool that makes all financial information available in a reliable and easily visible manner. Data can be collated or filtered in just a few clicks and used for analysis or reporting.

The high quality of the system’s data has allowed Emsland Group to establish automated, closed circuits for processes, especially payments, and straight-through processing in derivatives trading. Managing user rights in BELLIN’s system and integrating the system into the group’s system environment enabled Emsland to create standardized workflows across the company and thus make a lasting positive impact on productivity, security and reliability in relation to all treasury issues, but especially with regards to the group’s payment processes.

Results

  • Increased productivity and security as a result of full group-wide visibility and transparency and real-time data
  • Sound decisions and improved risk management due to reliable and complete information and reports
  • Optimized trade finance courtesy of an integrated trading platform with digital matching, digital EMIR reporting and fully digital deal administration and processing, right through to payment processing
  • Secure, reliable and automated processing of group-wide payments and a reduction in banking fees
  • Optimized restructuring of banking relationships based on cost and volume thanks to flexible bank connectivity
  • Simple administration of bank accounts
  • Maximum process security and reliability, compliance and fraud protection due to the system’s audit-compliant user rights model and standardized workflows

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