Pricing tool
Two main steps in the treasury transformation journey were a complete bank reorganization and the implementation of a new treasury management system (TMS). “In May 2018, we completed the solution design and a blueprint for our Treasury Transformation and after presenting our business case, I got final approval in early November 2018,” Geldenhuys says. “I was challenged to have the new structure up and running by June 2019. With this very short timeline the big challenge was without a doubt: will we be able to go live in June? We effectively officially kicked off in mid-November 2018 with our selected TMS partner and in January 2019 with our new selected corporate banking partners.”
Kongsberg Automotive’s treasury also needed a solution to leverage technology for arm’s length transfer pricing of financial transactions. Geldenhuys: “If you have a global zero balance cash pool and intercompany loans, the pricing needs to be in order and set. The focus on these intercompany transactions has increased in the past couple of years. With the current focus of tax authorities globally, we need to make sure that we are ahead of the curve. So, we shared our thoughts with Zanders and the idea was to have a full-proof, state-of-the-art pricing to meet all requirements. Their solution was a Transfer Pricing Solution. With a new Intercompany Rating & Pricing (ICRP) tool we were able to price our cash pool and our intercompany loans.”
Packaged and presented
Next to bank reorganization, the implementation of a new TMS and the ICRP tool, the company took it a step further to enhance and standardize cash application. Geldenhuys explains: “Redesigning this process, we went from having people manually print out all bank statements and manually booking all to pushing these statements to the ERP environment and achieving automated reconciliation to a larger extent. We’ve made great strides. Together with the cash pool and the TMS we also implemented an in-house bank. One of the big achievements of this project was that we – the central treasury team – are now releasing the majority of Kongsberg Automotive’s payment traffic after validating these payments against the global liquidity and currency positions and planning. Soon, in addition to this, we will further streamline our payment traffic by going live with Payments on behalf of (POBO).”
The next question was how to put these massive changes to the organization. “The biggest challenge is bringing the people with you on the journey,” says Geldenhuys. “The coaching, teaching and showing was a daily job. All of the new tools had to be packaged and presented within the organization – the users of these tools. And we managed to do so through new technologies – again the enabler.”
In terms of cash visibility and liquidity planning, the treasury organization is now able and equipped to effectively manage the cash needs of the group. “All these things were previously done in Excel, but now completely captured in the TMS,” Geldenhuys adds. “We make sure to utilize as much functionality in our new TMS as possible. We really have a one-stop solution for all treasury activities.”