From the November 2008 issue of Treasury & Risk magazine

Silver AHA Award Winner for Working Capital Management

Large corporations usually have to work around legacy systems. However, when Merck decided to launch an enterprise-wide infrastructure project to standardize end-to-end business processes on a single instance of SAP and implement a network of regional shared service centers, treasury had "a once-in-a-generation mandate and opportunity to work with our local subsidiaries to define and implement a new global vision for treasury," says Ian Johnson, senior director of global cash management. "It will be based on the best banking and technology structure to support the company in the 21st century." So the race was on to put in place that treasury infrastructure ahead of the SAP and SSC rollout. It is a race that Merck treasury is winning.

One of the first decisions was that all transactions and communication should rely on global industry standards like SWIFTNet, SCORE, XML ISO 20022 and Digital Identity Management. And with ISO 20022 just emerging as a robust XML standard being embraced by SWIFT and SEPA, Merck could get in on the ground floor. In the streamlined financial infrastructure, the global SAP system will communicate with a single instance of Merck's WallStreet Suite treasury management system which will communicate with Merck's two primary global banks, HSBC and Citigroup, using the latest message formats, including ISO 20022 messages. "We are in the process of implementing one delivery channel, one file format and one payment process supported by a handful of global banks," Johnson says. Merck treasury is also developing a single digital tool to open and control bank accounts, signatories and to secure payments.

Treasury access to real-time bank account data in global affiliates has doubled in the past 18 months to 274 accounts, he reports. The radical standardization and automation also has reduced and will continue to reduce treasury activity at subsidiaries around the world, Johnson says. Savings in 2008 already exceed $2 million, and that's just the tip of the iceberg, he says. They come from reduced bank fees, increased visibility of cash, and more productive deployment of available cash.


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