Nevertheless, when Burke joined the company two and a half years ago, it did not have a treasury department or much financial process automation. "All treasury-related functions were handled by local finance and accounting teams, and they were largely manual," she says. "Automation of payment processes would have been complex to implement because it would have had to take into consideration not only local practices and staffing, but also the country-specific banking protocols required to facilitate two-way communication with banks."

That said, the lack of centralization, standardization, or automation in payment processes created risk that payments, or payment confirmations, might be delayed. BDP's local finance and accounting teams were managing more than 450 bank accounts around the world and 56-plus banking relationships. The path to streamlining certain processes, like global payment disbursements, was riddled with both technological and operational complexities.

One of Burke's first projects as BDP's new treasurer was to rationalize the bank account structure. "The number of accounts was extraordinary," she says. "I spent a lot of time getting familiar with how the company operates. I wanted to understand all the cash flows, from billing to invoices to receivables, and then on the disbursement side, I needed to know how payments were executed." She eliminated excess bank accounts; centralized the company's banking relationships with three major global banks, instead of the 56 it used previously; and reduced costs significantly. Then, she turned her attention to process automation.

"Several months after I started, BDP was purchased by a private equity firm," Burke says. "I had worked with private equity firms before and understood that they would expect efficiency and cost reduction." As a result, she set out to develop a standardized, straight-through payment process that BDP could use in every jurisdiction around the world.

"I wanted BDP to execute batch payments from the ERP [enterprise resource planning] system and deliver corresponding payment files to banking partners across the world with straight-through processing," she says. "Likewise, I wanted to automate the processes for cash application—collecting payment confirmations from our banking partners, posting the transactions to the ERP system, and our bank account reconciliation process."

To establish two-way communication with banks, BDP decided to deploy a cloud-based solution from German provider Treasury Intelligence Solutions (TIS). Offloading management of the country-specific banking protocols to the service provider relieved BDP's internal developers of a complex component of the project, freeing them up to focus on configuring the solution to perform as Burke envisioned.

Today, payments created in BDP's ERP system are automatically sent first to the TIS platform and then on to the appropriate banking partner. In the other direction, TIS automatically receives payment confirmations and other transaction information from banks around the world in MT940 format. From TIS, an application programming interface (API) brings payment data directly into BDP's ERP system, which updates the ERP system and generates an email notification to the appropriate counterparties with payment advice. These emails include details necessary to prove the payment has been executed, such as transaction reference numbers, so counterparties can immediately release shipments on behalf of the BDP customer.

The new process has greatly reduced the amount of manual work required of the company's local finance teams, while improving and accelerating visibility into payment workflows. "If anybody with the proper permissions wants to see our payments, they can do so within the TIS solution," Burke says. "They can view details on the transaction, as well as which A/P [accounts payable] invoices have been paid—with payment confirmations on hand—and which incoming A/R [accounts receivable] payments have cleared. Shipments are no longer held up as a result of lapses in human-driven processes, which enhances relationships throughout our supply chain."

Another benefit of the straight-through process for bank communications is that BDP eliminated most of the security risks inherent in its legacy approach. The initiation of payments is standardized and centralized across the company's locations and entities, increasing controls and adding visibility across all outflows. And the new method for delivering batch payment files to banks prevents those files from being intercepted or manipulated, and eliminates the need to utilize local banking portals.

In addition to the greatly improved payment technology infrastructure, Burke also built a treasury team consisting of herself and three other individuals. "We have a treasury manager for Asia, a treasury manager for Europe and the Middle East, and a treasury manager for the Americas," she says. "They are responsible for managing liquidity to meet the business's needs. Within that realm of responsibility, they are involved in cash forecasting, managing bank relationships and intercompany settlements, overseeing our compliance with debt and credit agreements, and mitigating FX [foreign exchange] exposures."

Because the company now has a specialized treasury team, and because that team has better visibility into cash flows as a result of the technology project, "on the A/P side, we're able to control our DPO [days payables outstanding] and manage the working capital between DSO [days sales outstanding] and DPO more efficiently," Burke says. "We have much more discipline around these processes now."

The new treasury group is also supporting conversations around cash repatriation. "A lot of companies are focusing on bringing their cash back to the U.S.," Burke adds. "We now have visibility into our global cash positions, which allows us to see where we have excess cash. We can then find ways to utilize those funds more efficiently, instead of leaving idle cash sitting in certain regions."

Burke attributes the success of the treasury transformation, in part, to her early efforts to build both understanding and rapport with teams throughout the company. "This project was much bigger than just the treasury group," she says. "It involved many, many individuals. So it was very important for me to engage as many people as I could, selling the idea to them, to get their buy-in.

"Treasurers need to spend time with individuals at different levels of the organization, to really understand how the processes work," she adds. "The payment processes that we automated actually fall under areas that don't report to me. If I had not spent time with the payables team and the cash applications team and the accountants, understanding BDP's cash flow timeline, I would not have been able to make this initiative happen."

See also:

• Increasing Treasury's Bandwidth by Harnessing Accessible Tech
• Efficient Access Management for Bank Portals Around the World
• A New Approach to Invoicing Forecasts
• On-demand webcast celebrating our four winning projects: Treasury Transformation: Get the Keys to Success

And join Treasury & Risk for a webcast celebrating the winners of our 2021 Alexander Hamilton Awards in Working Capital Management: Partner Impact! The live virtual event will take place on May 5 at 12pmET. Register today.