Treasury & Risk - November/December 2011

Standardizing Bank Reports: Microsoft

microsoft continues to break new ground and reap the benefits of embracing s WIFT and the newest Iso 20022 standard. By driving bank-agnostic standardization, the Redmond, Wash., company has gained better control over global cash as well as greater automation and less friction in file transfers. The $70 billion software giant launched a liquidity management project to move money among banks quicker, manage counterparty risk better and get richer data to automate payables and receivables reconciliation, auto-clearing and auto-posting. The effort has a projected RoI of 44% over three years, but savings and efficiency gains should continue beyond that. “using a common standard opens up tremendous benefits for all parties involved,” notes George Zinn, treasurer and corporate vice president.

last April, microsoft, working with Bank of

America and Citigroup, became the first corporation to achieve a common language for bank reports received in version two of Iso

20022 and get them through one s WIFTNet
pipe. microsoft’s Biz Talk translates the Xml
camt messages that come out of the s WIFT
components with the payment messages,
explains Anita Prasad, general manager of
u.s. treasury capital management.
With bank statement reporting wrapped
up, the project will move on to channeling all
wire traffic over the same single s WIFT pipe
in the same Iso 20022 version two uniform
format, reports Jayna Bundy, group manager
of treasury operations.

microsoft was pushing into new territory ahead of its banks, so it called them together, along with s WIFT representatives, to negotiate a consensus over exactly how version two of Iso 20022 would be implemented. “We knew that if banks implemented and used fields in their own ways, it would defeat our purpose,” Prasad says. No banks supported version two at the time, but Citigroup and Bank of America merrill lynch were willing to move first. other banks will be on-boarded as they adopt the newer version, Zinn says.

Using a common
standard opens up
tremendous benefits
for all parties involved.
—MICROSOFT’S ZINN

pipe into iDoC language that its sAP system can process automatically. It no longer has to deal with bank virtual private networks to get statements. Version two of the intra-day reporting and end-of-day reporting messages provides richer detail and aligns the

Getting the Scoop on Outlying Accounts: Omnicom

To get full visibility into the cash of its businesses—1,500 ad agencies world- wide—$12.5 billion omnicom Group was bumping into limits. As recently as 2009, it had 3,600 accounts in 150 banks on six continents. Then treasury took steps to concentrate and mobilize more than 90% of non-restricted cash daily by using pools and sweeps. The company also centralized much of its cash management activity in a regional in-house banking structure that provided real-time visibility into all the included accounts.

But balances in accounts outside that structure were revealed only at month-end.

“Without knowing those balances, we could not fully optimize our allocation of liquidity or quantify all our risk,” says Conor leyden, project lead and managing director in omnicom’s Dublin treasury center.

so omnicom, based in New York, came up with its Global Cash Control system. To get the missing information, it signed up Citigroup’s

Global Transaction services, which uses s WIFT m T950s to get daily balance reports from omnicom’s outlier banks. Computer sI built the database, with an online portal and custom workflows, powered by Hyland onBase.

The project took less than 18 months, and omnicom now has perfect daily visibility into all cash, which means more informed cash and risk management and an annual savings of $5.7 million, reports John Voorhis, director of treasury operations. With that visibility, omnicom identified more than 500 accounts that could be consolidated or closed. It reduced cash in outlying banks by $50 million and cut borrowing costs by $5 million.

By the time the cleanup is finished, leyden predicts the annual savings from bank account rationalization alone will hit $1 million. “This has been a real game changer for omnicom,” says Dennis Hewitt, omnicom’s treasurer. “We can now manage our cash as well as the best of the highly centralized companies.”