Global corporate extends use of OmniFi in pursuit of greater treasury process automation

Challenge

As a global organization, this SkySparc client historically maintained relationships with many banks to execute payments and manage liquidity. Whilst necessitated by its corporate structure, this complex arrangement compromised process efficiency, information quality and liquidity visibility, with negative implications for investment costs and returns. To accelerate and increase cash availability for short- and long-term investment, the client developed a strategic vision to streamline its liquidity-related operations. Achieving this vision required high levels of automation, underpinned by a single payment process and standardized channels for balance and transaction data from banks.

A key first step was to streamline payment flows, by issuing an RFP for development of a universal methodology based on the ISO 20022 XML message framework. This concentrated the vast majority of the firm’s cross-border payments with a handful of core banks and introduced a common process across 100+ banking providers worldwide, which increased reconciliation automation to almost 99%.

With WSS’s CMM module serving as a central hub for standardized payment flows, the liquidity management team could accurately identify excess cash for liquidity, hedging and investment purposes. However, the firm’s auditors needed certainty that daily balance updates received into CMM were fully consistent with data held in its ERP systems. Although statement formats had been standardized, providing line-by-line itemization, they were still subject to errors and anomalies. These included closing balances that did not tally with inflows and outflows, as well as variations and delays, resulting from local business calendars and interest-application practices.

Solution

The client asked SkySparc to propose a solution to this data quality challenge based on OmniFi’s aggregation, visualisation and reporting capabilities. SkySparc proposed daily bank balance data be extracted and enriched by OmniFi for reconciliation against CMM data, recommending also regular data quality checks. This allowed the client to demonstrate to auditors that the bank statements tallied with general ledger data in the firm’s ERP systems. Further, the client leveraged OmniFi to develop a solution to monitor and adapt to evolving statement delivery patterns and practices over time. With more than 2,000 accounts worldwide, manual daily reconciliation – requiring bank portal access and/or statement print-outs – would have required extra budget and higher headcount.

The client decided to implement and run automated statement reconciliation three times a day, reflecting cut-off times in the three major time zones. Each time the process is executed, OmniFi automatically generates a report, flagging any anomalies and required actions via an email summary. This releases staff from manual processing to focus on valueadded tasks, attending to operational routines only by exception.

Because of the added certainty provided by OmniFi on data quality, the client could automatically generate daily FX transactions used to optimize liquidity in key currencies, thus creating new efficiencies. Rather than relying on human decisions, FX deals are proposed automatically, based on data already contained within client systems, using flexible parameters, such as for counterparties.

Once the statement reconciliation report had demonstrated its value, the client extended its use of OmniFi’s reporting capabilities to its monthly ICL netting and settlement routines. ICLs are a critical element of the firm’s liquidity management strategy because they enable the balancing out of credit and debit positions between entities unable to participate in cash pools for regulatory reasons. ICL netting and settlement is done physically on the same day every month to minimize impact on the firm’s investment portfolio.

OmniFi’s weekly and monthly ICL reporting process extracts data on cash flows related to loans from WSS’s CLM and other modules, then enriches with additional data sources, consolidating data on current and future costs, outstanding amounts and forthcoming expiries. By using data visualisation techniques to identify liquidity optimization opportunities, OmniFi allows staff to focus on decision-making, rather than data collection and aggregation.

Result

The solutions implemented with SkySparc’s support provided important steps toward the client’s strategic vision of optimizing global liquidity for cash investment, thus adding value and flexibility to the firm’s balance sheet. OmniFi plays a critical role in the client’s efforts to automate and improve liquidity management; first, by enhancing the quality of the data in its decision-making processes; second, by freeing staff from manual tasks through greater use of automated alerts.

In the next phase of its optimization strategy, the client updated its liquidity aggregation processes in light of reduced bank provision of notional pooling structures. Like other multinational corporates, it switched to physical zero balancing, which can be highly time consuming, and began exploring alternatives, including virtual pooling.

In parallel, the client is investigating how OmniFi can further support liquidity optimization through data quality assurance. By combining time series data on balances and transactions across multiple accounts (verified by OmniFi) with other market and static data sources, a calculation engine can recommend excess liquidity transfers that factor in tax, interest and funding efficiencies. The client has built the first prototype as part of its efforts to further optimize and mobilize its global liquidity.