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When does it make sense for corporate treasurers?
give treasurers global visibility on cash. they may overwhelm their current banking communications structure.As companies expand abroad and execute new types of financial transactions. 1 . and bank-agnostic alternative. cost-effective. and increase corporate control and security. The SWIFT for Corporates program may provide an attractive. In the right circumstances. the SWIFT connection can help to drive down costs.
“A corporation cannot manage or control what it cannot see. on the heels of the financial crisis. installation. Corporate-to-bank connectivity generates both internal and external costs. These structural inefficiencies come on top of new imperatives.” In addition. multiple bank connections and standards make compliance with regulations and internal controls more complex and expensive. based on Accenture’s experience. 2 . the financial information system involves multiple connections to multiple banks. and even at mid-sized enterprises doing business primarily in their home country. moreover.The treasurer’s expanding agenda Corporate treasurers face an unprecedented array of challenges involving cost containment.000 to €20. bankspecific e-banking solutions required to access all global cash can be very expensive. Internally. risk mitigation. the individual. Multinationals. they have to pay recurring software license fees.” one treasurer said. and fragmented system management. companies have to spend money and staff resources on hardware. This patchwork of connectivity has led to higher costs. In total. to increase risk coverage. “There are pockets of cash all over the place. further reduce costs. Worse. and visibility to their firm’s cash position. little visibility to cash across the enterprise.000 per year per entity. operate foreign subsidiaries that each usually has relationships with local banks—piling cost upon cost. and maintenance and support. Even in centralized cash management operations. the financial information system that treasurers rely on is like an old car: It gets them there eventually. the typical corporate-to-bank connection cost can range from €5. and optimize liquidity. At most large multinational corporations. but the ride involves too many uncomfortable bumps and costly repairs along the way. Yet at many corporations. Externally. stringent compliance. bank-specific standards mean that the treasurer cannot easily or quickly get visibility to the entire cash position. That causes idle cash positions and many cash allocation inefficiencies.
The connection must be used in concert with a payment platform. Sage. A competing protocol. This is why more are searching for a method to upgrade their financial infrastructure and hold the line on costs. exchanging millions of standardized financial messages each day. including a recent wave of Chinese and Latin American corporations. secure. is increasing its footprint in Germany and France. In general.. and corporate customers in more than 200 countries. and can reduce risks because of greater control and security. and looks set to expand in Europe. and Datalog. treasury and securities orders. SWIFT is not necessarily the only choice for every situation. Electronic Banking Internet Communication Standard. Companies adopting SWIFT for Corporates range from mid-sized companies with simple cash management structures dealing with a few banks locally. the greater the savings by moving to SWIFT. or EBICS.000 banking organizations. And many banks offer their own proprietary electronic connections. They’re based in many regions. One technical system underpinning this method is operated through the Society for Worldwide Interbank Financial Telecommunication.The case for a global standard Figure 1. SWIFT’s simplicity Corporate client Treasury Accounts payable Accounts receivable Other From multiple standards and protocols VAN Leased line Internet PSTN Bank Bank Bank Bank Corporate client Treasury Accounts payable Accounts receivable Other . or SWIFT. SWIFT might still make sense. offers the potential for cost reduction. standardized global platform Gateway to SWIFT Net SWIFT Net Bank Bank Bank Bank Treasurers want timely information about payments. to large corporations deploying sophisticated payments and collections factories. Sungard. Even for companies that have already consolidated their banking to one bank. To be sure. It provides a good foundation for raising the cash management function to a more strategic position. SWIFT has grown to cover roughly 9. the more banking relationships a company has. and reporting. which often are webbased and therefore easier and faster to implement than SWIFT. because of the flexibility and independence it provides. 3 . Companies that deal with just one or a few banks that have a strong and flexible communication format may not find a compelling reason to switch. What many treasurers have found is that SWIFT gives them global visibility on cash. securities institutions. a single.. Wall Street Systems. A growing number are adopting standardized communication through a single gateway. And they need to understand their cash position at the end of every day – sometimes several times a day. offered by many providers including SAP. Founded in Belgium in 1973. SWIFT provides the connectivity framework between a corporation and its banks. a member-owned cooperative that allows corporations to exchange financial information with their financial institutions through one standardized communication platform.
quantifiable. • Some local banks may not be willing to accommodate a SWIFT channel. The switch to SWIFT thus might not be a simple plug-and-play. may need to be incorporated into the payments platform.The challenges of implementation Making a systems change should not be done lightly. 4 . local requirements. which involves a certain amount of legal paperwork to be signed by every affiliate of the company. of course. • In the course of the deployment. Companies typically must contend with several challenges during SWIFT implementation: • Switching to a single connection means modifying the legal contract between the company and the bank. Working through these challenges is only warranted if the benefits are substantial and. A company must then weigh the trade-off between the opportunity to continue the relationship with the bank or to exclude it from centralization. such as regulatory reporting or withholding tax certificates. for some if not all of them.
replaces manual intervention with straight-through processing. and risk management. which fueled most of the business case for the project. has to be imported manually to e-banking software. and infrastructure. SWIFT’s system provides a channel which. 410% and 600%. Rationalizing and automating systems leads to higher staff productivity and the avoidance of additional staff as the company expands its regions or business units. a global chemical company reports an ROI of 200%. Costs get reduced as well through the rationalization of electronic bank messaging systems. excessive exception handling. By consolidating banking relationships and centralizing treasury operations.How SWIFT improves performance Most companies that make the shift to SWIFT do report substantial improvements along the dimensions of cost. At many firms. This organization operates in 33 countries and found itself overwhelmed by too many manual activities in payments. and an international oil and gas company and a global steel company report ROIs of. performance. and securities deals. For example. SWIFT reports that a multinational pharmaceutical company has realized a return on investment of 120%. SWIFT helps to reduce costs of labor. business processes. containing all the information about which organizations need to receive which payments. To improve efficiency and control by automating manual faxes and processes. How does SWIFT help these and other firms produce such impressive ROI statistics? The SWIFT approach offers specific benefits to the corporate treasurer on several fronts. One aspect of cost reduction comes through automation and standardization of processes that traditionally have had high levels of manual intervention. identification of errors in payment orders at an early stage. a payment file is created in an SAP or similar database. A large oil and gas company retired over 100 electronic banking applications. A platform for sustained cost reduction. residing on a computer drive. Consider the payment process. respectively. currency. as reported by Accenture. the company 5 . That file. as detailed by SWIFT. and fewer mistakes caused by flawed system interfaces. On top of these direct savings. combined with the right software. and an overall lack of transparency into payment flows. An international oil and gas company is a case in point. indirect cost reduction comes about through fewer handling errors.
and 38 proprietary software connections to one. By contrast. And these operational efficiencies allow treasury staff to focus on more strategic initiatives for the company such as a shared services center. which can improve overall security. notifications. Traditional corporate-to-bank online connections also involve a cumbersome process to register and authorize individual users 6 . and thereby achieved straight-through processing in payment requests. Depending on the relative autonomy of different business units. The company went from 50 connection failures per year to none. In addition. Affiliate 2 Order acquisition Payment optimisation routings (In house bank) Validation Authorization Affiliate 1 Bank Bank Transactions management Affiliate 3 Bank SWIFTNET Reporting Affiliate n Bank moved its communications with its six primary banks via SWIFT. Instead. a raft of transmittals must be created or changed. it chose to implement SWIFT for Corporates. Treasury staff levels at the organization remained constant despite a doubling of transaction volumes and a 55% reduction in overtime. in a cycle of break-fixworkaround-update-maintain. The organization’s information technology function was spending major resources to maintain all these systems and connection points. leading to high costs and inefficiencies for both companies and banks. Systems reliability also comes into play. Several years ago. The current process of bank account management – opening. When someone leaves or joins the company or the bank. Consolidated bank communications can also facilitate future moves such as establishing a central payment factory or an inhouse bank. Scaling up to handle the demands of its growing business would have required an increase in headcount. a multinational conglomerate’s corporate treasury function was wrestling with multiple banking relationships and connections to execute their payment and receipts strategies. Operating on a global basis makes it challenging to gain a central view of all banking arrangements. but SWIFT for Corporates eliminates the need to register multiple signing authorities. Payment Factory . it may not always be practical to simply centralize all global accounts. Improved bank account management. and confirmations. SWIFT rationalizes the security mechanisms. Treasurers want to spread balances in order to distribute risk and avoid increases in fees spurred by being locked in to a banking relationship. SWIFT standardizes and centralizes the on-boarding process. and closing accounts – is heavily manual and paper-based. The company saved in telex and bank processing costs. for each bank. SWIFT reports. Who initializes the setup will depend on the company’s own software.Figure 2. A clearer view of the bank relationship. It requires only a single security setup with all financial service providers.What functionalities ? Different functional blocks may be necessary to build a payment factory. maintaining.
Confirmation matching is one such area. Individual transactions are protected against manipulation and fraud. The growing sophistication of hackers and cyber rogues. Better tracking of financial flows helps to raise liquidity throughout the organization. Expanded risk coverage. combined with everincreasing regulatory mandates. SWIFT offers a digital identity credential. SWIFT gives treasurers a direct line of sight into their global cash position. whether through the SWIFT network or any other private or public network including the Internet. a number of customers that owe a major amount of money. put a premium on more secure systems to handle sensitive payment data. improving cash management. For corporations under stringent regulations. called 3SKey. When companies execute a trade by phone or through an electronic system. such as Sarbanes Oxley. or that need liquidity to manage their debt.Better cash visibility. providing end-of-day or intra-day reporting directly from all the firm’s banks. It’s stored on secure tokens and interoperable on a global scale. including counterparty. Cyber-security risk is another area where SWIFT is making advances. and traditionally receive paper or email confirmation from a bank. With SWIFT’s Accord software. confirmation comes in seconds and can be checked instantly for accuracy. 7 . for instance. Only registered SWIFT users can get access to the SWIFT network. That reduces the risk of unwittingly violating a regulation. avoid the need for more working capital. they agree with the party on the other side of the transaction on a rate for the deal. for example. using one interface reduces the administrative work required to document and keep up to date on banking communications. This can be critical for companies with. and reduce its borrowing. That allows companies to handle exceptions or misunderstandings in real time. These days. during payment file transfers. SWIFT’s security setup has one of the highest levels of encryption and authentication technology available. Good visibility on cash also helps a company optimize its uninvested cash. SWIFT’s messaging service can be used for ACH transactions. Security gaps can occur. SWIFT can help mitigate several types of risk. the treasury function gets involved in an expanded range of risks. direct debits. This allows corporate treasurers to use a single certificate to sign files sent to all their banks that participate in this program. foreign exchange. that can be used across multiple banks and applications. and cyber-security risks. and salary payments. which greatly reduces their operational risk.
SWIFT enables treasurers “to build one centralized source of truth for all banking data shared across the company. Depending on the company’s strategy. 8 . the transition must be planned.One central “source of truth” A move to SWIFT does require careful planning and implementation. it also frees up the treasurer to add value by spending more time focusing on firm strategy and performance. The effort often will be more than paid for through rapid cost savings. some staff in IT. A system using SWIFT as its communication platform does not just address corporate cost.” as characterized by the group manager for treasury at a global software corporation. accounting or other functions might be redeployed so that they can work on more value-added activities. and the company’s IT function will need to install and maintain a new system. and better management of both bank accounts and cash flow. greater flexibility. Either way. Each bank a company works with will need a SWIFT connection.
or proprietary connections. to design of the operating model. We start by assessing our clients’ objectives and needs. or improving process harmonization. and bank relationship strategy. We offer the full spectrum of services from a diagnostic that builds the business case. transform their treasury operations. and clarify connection-related requirements. The diagnostic allows us to quickly estimate the business case for implementing SWIFT. For example. EBICS. Accenture and SWIFT have combined assets to help clients realize even greater benefits in optimizing their treasury operations. whether that’s adding security and improved audit tracking to the payment process. We have successfully delivered several projects with multinational corporates in multiple geographies. Accenture was the first consulting company to partner with SWIFT and receive certification.How Accenture can help Accenture works with corporate clients to help improve and. to selecting and implementing treasury systems packages. Capitalizing on the assets from both firms will help international corporations reduce their banking costs and increase visibility and control over banking flows. 9 . Accenture brings its experience to bank communication and global payment platforms projects. Accenture and SWIFT have developed a quick-scan diagnostic of the current situation. when appropriate. When it comes to implementation. We then lay out the best agreed options through a business case that puts hard numbers to each solution. helping clients save time and money. Our cumulative experience has allowed us to “industrialize” the deployment process. whether through SWIFT. analyze the service bureau strategy. treasury organization. we take an objective and informed view on the choice of connection and software. We can help define the payment process blueprint. rationalizing the number of banks and systems.
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