OpenText, an Ontario-based developer of enterprise information management (EIM) products, has globally transformed its treasury in order to improve efficiency, reduce costs and cut cycle times.

The project consisted of three major elements:

• Treasury automation for payments, statements and cash management
• The rationalization of 120 banks and 420 accounts across 53 countries
• The creation of a new liquidity management structure.

Handling so many bank accounts was just too tall of an order to continue handling manually. And like many treasury departments, OpenText was low on staff. “We just reached a tipping point where we had to do something different,” said Jonathan Burkhead, CCM, director of global treasury for OpenText.

Additionally, OpenText was managing seven acquisitions at this time, meaning that treasury had to be laser-focused in its dedication to making sure the project saw its way through to completion. This required exceptional coordination with many other departments.

The project

The treasury team began by implementing a treasury management system (TMS), working with Kyriba. Moving to a TMS allowed treasury to more easily view bank balances, manage and forecast cash, automate payments and access bank transaction data for general ledger posting. Treasury also streamlined transactional processes to facilitate straight-through processing for statements, payments and receivable processes.

Burkhead admitted that, in retrospect, it would have been worthwhile for treasury to rationalize its banking partners first so that it wouldn’t have had to put all of that data into its new treasury system, only to change it later. But that was a long-term project and it couldn’t afford to wait that long to put an automated system in place.

Once it came time to start the bank rationalization project, treasury quickly realized it had a mammoth task on its hands. It affected both of OpenText’s shared service centers in Manila and Waterloo, Ontario. “When you’re changing banks, you have to get everybody’s buy-in because it’s something that treasury usually can’t do on its own,” Burkhead said. “We really needed all of the operating groups as well. We put an RFP together, and we selected some strategic banks. We went with global banks—J.P. Morgan, Citibank, HSBC—and then from there, it was a matter of tackling every single account, figuring out what we did in each one and then implementing best practices. Citi was a key advisor for us throughout the project and shared many best practices that were implemented.”

A key element of the project was the use of OpenText’s own products. The solution uses a treasury aggregator and payment hub (OpenText Trading Grid®), allowing for flexibility in relation to ERP systems. Using OpenText Managed Services and products, including OpenText Trading Grid® and OpenText Swift Service Bureau, direct payments are automated with strategic banks while SWIFT is used for banks where OpenText does not have a direct connection. Files are simply pulled from the ERP before being appropriately formatted by OpenText Managed Services for each bank.

Treasury’s goals were ambitious; it aimed to reduce its banks from 120 to less than 20, and decrease its bank accounts from 420 to 190. The department also sought to reduce costs by leveraging volumes and eliminating fixed costs at unnecessary banks, and reduce FX conversion costs by negotiating margins with a small number of strategic banks.

Reassessing all of OpenText’s banking accounts allowed for treasury to look for opportunities for process improvements and efficiencies. “We were able to streamline a lot of the activity by reducing paper,” he said.

As for the liquidity management component, treasury created a global cross-currency pooling structure, divided into the United States, EMEA and APAC. It improved liquidity management, enhanced control and increased returns on excess cash, while increasing visibility into global cash and liquidity. The ability to settle intercompany balances rapidly and efficiently was enabled by pooling structures.

“Being an acquisitive company, getting cash to where it needs to be in order to concentrate it and purchase other acquisition targets was a big process—it took time to move money around the organization,” Burkhead said. “But with the pooling structure, we saw that we could have the funds already concentrated through the pooling mechanism. So when we go to do acquisitions, it’s a lot less effort. What might have taken three months in the past can be done in a matter of weeks now.”

The numbers

OpenText’s treasury department has achieved annual project savings of more than $2 million due to bank fee savings and enhanced investment and interest yields. It has also reduced in-person hours by about 100 per month, equating to approximately $100,000 in annual savings. Automating processes has also resulted in reduced access administration and log-in time to a large number of banks, resulting in annual savings of $260,000 per year. OpenText was so successful that it received the 2017 Adam Smith Highly Commended Award for Top Treasury Team.

“It’s taken us a couple of years to do all of this work and there’s still a little bit more to do,” Burkhead said. “With the treasury transformation work that we’ve done, we actually have a strategy going forward in terms of who our banks are and what our cash position looks like. So every time we do another acquisition, we roll those new inherited bank accounts into our strategic banking system.”