AMD Treasury Gets a Green Light to Modernize and Streamline Processes

Treasury collaborated with finance, IT, and operations on a needs assessment that identified pain points around inefficiency, unnecessary complexity, and process delays. Based on this assessment, treasury set goals including enhancing groupwide cash visibility and forecasting, streamlining payment processes, centralizing and optimizing cash management, automating critical financial processes, and accelerating the financial close.

“At the time, our treasury operations department consisted of two people; now we have three,” says Zeenat Fatehi, senior manager, treasury operations. “To support a company of AMD’s size, we need to streamline workflows, and the urgency for that increased with the Xilinx acquisition.” They started rolling out S/4HANA prior to closing the transaction with Xilinx. “Then, as we went through the acquisition, we added the Xilinx entities to the scope of our treasury management system implementation. Our bank account structure nearly doubled in size, and we definitely saw the benefit of having a more automated system in place.”

The deployment included SAP’s bank account management (BAM) capabilities. “The system stores all our banking details,” On says. “By concentrating that information in our ERP system, we get better visibility to the account hierarchy. Accounts are identified by entity and can aggregate the cash balance at the entity level, versus having to pull bank balances from various banks and then take the extra step of identifying the entity. Now it’s all in one place.” Plus, adds Huang, “it brings the creation and management of accounts back to treasury.”

S/4HANA has direct connections to several of the company’s banks, including its primary global banking partner, and it has dramatically reduced the time AMD treasury requires to pull together the corporate cash position. Automated data feeds bring in cash flow information, without human intervention, both at the end of each day and, in some cases, intraday. This ensures the treasury system has nearly real-time cash balance data for accounts across all regions.

“We can see globally—by account, by entity, by region—exactly where all our cash is sitting on a daily basis,” Fatehi says. “We never had that visibility aggregated in real time before, and it has been very helpful in minimizing cash balances in entities and countries where cash built up previously. Every day, we can see where we need to initiate dividends or drive intercompany processes to reduce cash balances. This enables AMD to then tax-efficiently repatriate cash back to the U.S., where we can use it for strategic purposes like M&A or capital return.” Treasury’s ability to see where AMD’s cash is sitting globally has enabled the company to increase interest income by $15 million annually.

Having “cash forecasting with real-time daily updates on cash balances across the regions has really enhanced our financing and investment planning,” On says. “In areas where we tend to have trapped cash, like China and India, we can evaluate our investment options.”

The project also expanded AMD’s cash pooling and zero-balance account (ZBA) structures. AMD deployed SAP In-House Banking for ZBA, which involves setting up a central account that automatically sweeps funds daily to and from subsidiary accounts, maintaining a zero balance in the subaccounts. This process requires configuring SAP’s In-House Cash module, defining the company’s central “house bank” in the system, and establishing the rules for automatic cash sweeps to a main account. This structure helps AMD manage liquidity centrally by consolidating cash across subsidiaries and using the In-House Banking feature to handle intercompany payments and cash pooling.

In fact, across the company, intercompany payments have become much more efficient. Previously, “regional teams would pull data from the ERP system to determine what intercompany invoices were and how much needed to be settled,” Fatehi says. “Then they were sending emails back and forth, aligning on the amount and getting approvals.” After receiving requests through email, treasury would initiate an intercompany payment in the appropriate bank portal.

“The pain points were keeping track of all those emails and understanding when treasury needed to initiate and approve intercompany settlements,” Fatehi explains. “All those amounts that tied out to invoices were calculated manually in Excel.” On concurs: “Sorting through all those emails on a daily basis was very time-consuming. Then we would have to pull the data out of SAP, put it in Excel, and then turn around and enter the payments into our banking portal for processing. There was a lot of back and forth that was not efficient.”

By contrast, treasury can now initiate payments through the treasury management system. “SAP will generate an auto-posting and auto-clearing on the back end, whereas in the past that was all manual,” Huang says. “In addition, as a small treasury team, we rely on regional teams to initiate some payments. They can initiate a payment directly in SAP, and we can approve it in SAP as well. That is a much more streamlined workflow than what we had before.”

One area in which AMD modified SAP’s treasury management module was in documentation supporting payment requests. “We worked with our IT team to add attachment functionality in areas where it wasn’t there out of the box,” Fatehi says. “Teams can add supporting documentation and required approvals directly to the payment request. That’s really helped to reduce the email traffic. It’s also helped from an audit perspective. Now we have all the information within a single system. If our auditors ask for proof that we’ve followed our policy, we no longer have to go back and search through emails for that evidence. That’s another huge win for us.”

Posting journal entries is now more efficient, as well. “Previously, one person had to prepare journal entries and then another person had to review them, line by line, before posting them,” On says. “Now the reconciliation workflow provides a mapping post and matches the transaction to the G/L and open items in A/P [accounts payable] or A/R [accounts receivable]. As long as the entry matches properly, it will automatically post. We have been growing dramatically, and having our treasury system create matching entries and handle them accordingly really cuts down on a lot of manual journal work for us.

“The approval flow is also within the system,” she adds. “So we’re not waiting on another person to check emails or open a file somewhere else. It’s in one place. Once all the entries are prepared properly, they automatically route through a manager on the team to double-check and post.” On estimates that across the treasury group, staff are saving several hundred hours a year, thanks to the new system. “This project has enabled us to be more focused on strategic things that can help drive the business, rather than being stuck in the manual day-to-day grind,” she says.

The team completed the deployment on an aggressive timeline. “This type of project requires strong cross-functional collaboration with groups like G/L, tax, A/P, A/R, and even our banking partners,” Fatehi says. “It involved a lot of scoping, implementing, and testing. It was a lot of work, and it was on top of our day jobs. But at the end of the day, it pays to have a systematic way of managing cash flows.”

The impacts have been felt throughout AMD. “Our CFO and VP of treasury have increased confidence in our processes,” On says. “Management now feels good about where we’re placing money in terms of investments and how we are tracking cash balances, and we have gotten a green light to continue to evolve what we are doing with the treasury management system.”