ConocoPhillips Wins AHA Gold for Cash Management

As energy company splits in two, treasury clones itself.

Diana Noteboom, IT business analyst, finance, ConocoPhillips; Tammy Burks, director of treasury services, Phillips 66; and Judy Bouchard, banking director, ConocoPhillips Diana Noteboom, IT business analyst, finance, ConocoPhillips; Tammy Burks, director of treasury services, Phillips 66; and Judy Bouchard, banking director, ConocoPhillips

Houston-based ConocoPhillips didn’t have to invent a state-of-the-art treasury operation. It already had one, using SAP’s treasury and risk management module within its single global SAP ERP system. But it had to clone that operation quickly and seamlessly when the board of directors decided to split the company in two, making ConocoPhillips an independent exploration and production company with $65 billion in projected annual revenue and putting the downstream businesses into a new company, Phillips 66, with projected revenue of about $190 billion. To minimize the changes, the company decided not to use any new systems or providers. But extensive, complex streams of payments and receipts had to be surgically separated so that each company would be operating securely and efficiently from the go-live date of May 1.

A global treasury separation project team started working in January with the company’s three banks, J.P. Morgan, Bank of America Merrill Lynch and Deutsche Bank. “All receipts and disbursements, including lockbox, wires, checks and ACH activities, had to be coordinated across the various groups,” notes Tammy Burks, director of cash and reconciliations at Conoco. “Because transactions were commingled under ConocoPhillips’ pay-and-receive-on-behalf-of structure, a whole year’s worth of data from more than 700 accounts globally had to be analyzed to identify each bank account’s activity and supporting processes.”

“The mission was to prepare duplicate systems so that all payments could be processed successfully and all receipts posted appropriately on day one,” says Diana Noteboom, IT business analyst and project manager. “It was crucial that each company’s SAP system could generate separate payment files and properly handle transaction processing for payments and receipts on that date, and we accomplished this.” The systems were cloned, as were bank account structures and the cash management and treasury services staffs.

Cloning staff is harder than cloning systems, but ConocoPhillips came close. It nearly doubled the total size of the cash management and treasury services staff. “The cash management group was essentially cloned, one-to-one,” Bouchard explains, “and the treasury services group’s function changed somewhat for both companies, but we tried to equalize staff. We split the legacy employees pretty evenly and tried to balance depth of experience and expertise. We looked company-wide for talent. We also did some hiring.” Noteboom and Bouchard, for example, remain with ConocoPhillips, and Burks went to Phillips 66.

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