When the management team at Stanley Black & Decker rolledout their strategic goal of growing the global business from US$13billion to $22 billion in annual revenues by 2022, mergers andacquisitions (M&A) became a key pillar of the corporatestrategy. The increased M&A activity has been successful ingrowing the business, but it has come with a side effect: anincreasingly diverse technology and banking infrastructure.

“A few years ago, we had over 100 ERP [enterprise resourceplanning] systems and more than 2,000 bank accounts withapproximately 200 different banks,” explains CatherineGrant-Alston, director of global cash operations for Stanley Black& Decker. And the treasury team's processes for managingliquidity across this web of accounts and accounting systems wasinefficient, at best.

For example, the company's treasury management system capturedliquidity information only for U.S.-based business units. “We werea global company that could only see our U.S. liquidity profile,which was a small portion of the overall company's portfolio,”Grant-Alston says. “Our general ledger [G/L] entries were manual.We would work with our finance teams around the globe to get ledgerbalances at month-end, but the other 29 days of the month werepiecemeal. We would send emails to newly acquired entities thatwere not yet integrated, asking, 'What was your bank accountbalance as of Friday? And what does your forecast look like for thenext two weeks?' It was the perfect storm of a global company usingantiquated processes.”

To modernize finance processes, Stanley Black & Deckerlaunched a single instance of SAP to serve as a centralized globalERP system and began moving business units onto the platform. Thetreasury team, meanwhile, saw the opportunity to streamline theirown processes. “We wanted to be able to easily and automaticallysee global liquidity,” Grant-Alston says. “We also wanted toautomate payments globally. It was daunting because every bankneeded its own connection. Even within a single global bank, everycountry needed its own account-mapping exercise to make sure wewere capturing all the necessary fields.”

After researching treasury solutions, Grant-Alston pitched thecorporate treasurer and assistant treasurer on the benefits ofusing technology to streamline payments and cash management. Whenshe got treasury leadership on board, she worked with corporate ITto develop a business case.

“The first thing I did was look at how much we were spending onduplicate charges,” she explains. “Whenever a bank statement neededto be reported to both treasury and an ERP system, we would be hitwith duplicate charges. We looked at the cost of setting up eachhost-to-host solution between our various internal systems and ourcore banks. We gathered information on file transmissions and howmuch we were being charged for people to be in the banking systemspulling reports. We saw that pulling this information into a singlecentralized system could eliminate most of these costs and generatea 30 percent ROI [return on investment].”

The project team also evaluatedthe risks of fraud and of putting all treasury's eggs in a singletechnology basket. “If we are sending out millions and millions ofdollars a day, a system outage becomes catastrophic,” Grant-Alstonpoints out. “We had to understand how to make the system as secureand reliable as possible.”

On the flip side, the team saw that centralizing payments andglobal liquidity management would improve controls around theworld, streamline compliance activities anytime regulatoryrequirements changed, and facilitate faster and easier on-boardingof new businesses after a corporate merger or acquisition. Thetreasury and IT staff added a risk assessment to their ROIcalculations, then jointly pitched the project to seniormanagement.

As a result, Stanley Black & Decker deployed FIS's Quantumsoftware-as-a-service (SaaS) treasury management system and Traxpayment processing software. The combined solution automaticallyreceives daily feeds of BAI and MT940 files through the SWIFTnetwork for the majority of Stanley Black & Decker's operatingbank accounts around the world.

“We started with receiving prior-day bank balances,”Grant-Alston explains. “But in regions where we tend to have a lotof cash on the table, we started to get intraday statements.”Quantum feeds the bank information into appropriate internal ERPsystems for automated G/L entries and account reconciliations.

This process upgrade has led to substantial cost savings. “Weget the reporting in one feed, so we can stop paying for so manydifferent connections,” Grant-Alston says. More important, thesolution gives treasury a much clearer view into global liquiditythan the prior workflow of one-off emails could provide. “We cansee our global cash structure, and we can consolidate our cashappropriately. When we need to fund strategic initiatives, we cansee the holistic picture of how to do that.”

The company centralized and automated debt payments and treasurypayments within Quantum. It also centralized accounts payable (A/P)payments in Trax, enabling automated payment reconciliations andcontrols. The software can receive information in any of 90different file templates, then generate ISO 20022 payment files fortransmission to banks in the many geographic regions where StanleyBlack & Decker operates. “In the future, when acquisitions arestill using their own systems, we can just have them provide a CSV[comma-separated value] file or a flat file, and Trax will convertit to the right format,” Grant-Alston says. “That means we canimmediately bring them into the system that has automatedconnectivity to the bank.”

See also:

• Webcast: Successful Treasury Transformation and Innovationthrough Technology Excellence
• Extending Visibility and Productivity for ExtendedPayment Terms
• APIs Automate Booking of Payments that DefyStandardization

In addition, Stanley Black & Decker is utilizing Quantum tomonitor long-term debt in the system, automate accruals, journalentries, and cash accounting for Stanley Black & Decker'scorporate entity. “Whatever happens in the bank account, weautomatically generate the necessary account coding for thosetransactions,” Grant-Alston says.

Maintaining all this information in the treasury system givesexecutives greater visibility into corporate cash. “We send a dailyreport to management that shows our long-term and short-term debtas well as a snapshot of the 80 to 90 percent of our globalliquidity that is centralized,” Grant-Alston says. “When the CEO,CFO, and treasurer are looking at strategic initiatives and M&Aopportunities, this information is critical.”

The initiative has been a tremendous success, introducing bothvisibility and efficiencies to cash management processes at StanleyBlack & Decker. Grant-Alston sees these types of automation ascrucial for every modern treasury department. “The times havechanged,” she says. “Technology is an enabler, and if you do notautomate, you will get left behind.

“If you automate a task that has previously taken your employeesfour or five hours, and then it takes them only 30minutes, you've freed up time to actually implement a strategicplan for your company to grow. You can't expect to continue to growprofitably without providing efficiency for your tasks. Deployingthe right technology is essential,” she concludes.