Going to the Clouds. What comes after implementing an In-house Bank? Palle Dedenroth, Danfoss Group Treasury, 9/ Group Treasury/ /PD

Transcription

1 Going to the Clouds What comes after implementing an In-house Bank? Palle Dedenroth, Danfoss Group Treasury, 9/ Group Treasury/ /PD

2 Agenda About Danfoss Our Current Setup; Danfoss In-house Bank Bank Connectivity Treasury Management System What comes next? Short intro... Examples Danske In-House Bank by Henrik Kring Rasmussen Questions 2 Group Treasury/ /PD

3 Our global markets Share of net sales per region 2015 North America 24% Eastern Europe 9% Western Europe 39% Latin America 5% Africa/Middle East 3% Asia-Pacific 20% Employees 23,400 Worldwide sales more than 100 countries Factories 61 in 20 countries Top 3 markets USA, Germany & China Ownership Privately held Headquarters Nordborg, Denmark Net Sales 38,0bn / 5,1bn EBIT 4,1bn / 549m Free Cash Flow 3,4bn /456m 3 Group Treasury/ /PD

4 Current Setup - Danfoss In-house Bank - Bank Connectivity - Treasury Management System

5 Danfoss In-House Bank (SAP) Internal Danfoss Vendors Internal Danfoss Customers Internal Payments In-House Bank Loan** Current account* Deposit** External Customers Cash Pool External bank acc. Ext. Payments Ext. Vendors Salary, Tax *) In-house Bank account, One single account per entity in local currency **) Treasury Management system 5 Group Treasury/ /PD

6 Danfoss Bank Connectivity (SAP) All payments Internal and External are to the extend possible handled via Danfoss In-House Bank 6 Group Treasury/ /PD

7 Danfoss In-House Bank (SAP) One Current Account per Entity (local ccy) Short term Intercompany deposits & funding (current account) Cash Pool administration Intercompany payments Full utilization in non-restricted Countries Gross model for restricted Countries (Ukraine, China Russia) External Payments Payments on behalf (to non-restricted Countries) 7 Group Treasury/ /PD

8 Cash Pool Coverage Restrictive countries Danfoss not represented CNY and INR is domestic pooling only 8 Group Treasury/ /PD

9 Danfoss In-house Bank coverage Danfoss In-House Bank coverage Restrictive countries Danfoss not represented 9 Group Treasury/ /PD

10 Intercompany Payments - Gross Model China (Resident CNY accounts) CN1 CN2 IC Payments (Gross In/out) Denmark Danfoss In-House Bank Receive On behalf Payment on behalf Overseas IC Buyer IC Supplier CN3 CN4 Direct Payments 3 rd Party Supplier 3 rd Party Buyer Incoming Payments Outgoing Payments 10 Group Treasury/ /PD

11 Treasury Management System (SAP) Basic functionalities Intercompany Loans and deposits External Credit Facilities Hedging activity (FX, IRR) Full integration to accounting Hedge accounting (in conjunction with excel) Exposure analysis (in conjunction with excel) Relatively many manual processes 11 Group Treasury/ /PD

12 What comes next? 12 Group Treasury/ /PD

13 Benchmarking We aspire to be World Class Benchmark against the best Constantly challenge the status quo and drive process improvement Best Practice matters to us Maximum Score 13 Group Treasury/ /PD

14 What comes Next? We have identified some interesting areas Examples: Danske In-House Bank Cloud based Bank Connectivity Cloud based Treasury Management System Cash Forecasting 14 Group Treasury/ /PD

15 Full In-house Bank solution

16 In-house Bank - Basic - Real time USD USD Bank accounts We make you better 16

17 Transaction account Cash Pool - Basic structure Company Holding A/S NOK NOK GBP GBP PLN PLN USD USD Subsidiary Industry A/S USD Company A/S NOK GBP PLN USD Company consumer Prod. USD Company Marketing Company Data NOK GBP Production holding Industry Holding Detail Holding PLN Subsidiary DK Company Partners Subsidiary 2 Subsidiary 3 Company Production NOK USD USD USD Subsidiary 4 Inst. Holding Company International Company Consumer Prod. NOK NOK GBP GBP PLN PLN USD USD Company Logistic DK Company AB Subsidiary 5 Subsidiary SE Subsidiary X GBP USD Subsidiary Y. Subsidiary as Company UK Ltd. Project P Aps NOK GBP 17

18 Transaction account Cash Pool - Extenden structure Company Holding A/S NOK NOK GBP GBP PLN USD Subsidiary Industry A/S Company A/S Company consumer Prod. Company Marketing Company Data Production holding Industry Holding Detail Holding Subsidiary DK Company Partners Subsidiary 2 Subsidiary 3 Company Produktion Subsidiary 4 Inst. Holding Company International Company Consumer Prod. Company Logistic DK Company AB Subsidiary 5 Subsidiary SE Subsidiary X Subsidiary Y. Subsidiary as NOK Company UK Ltd. GBP Project P Aps 18

19 In-house Bank - Extended One MultiCurrency Overdraft /Intraday Facility Multi Currency Cash Pool Account USD USD Treasury fixing / 7.44 /USD 1.12 / /GBP ,200, Treasury, Treasury, Treasury, Sub 1, Sub 2, Sub 3, Sub 4, Sub 5, Sub 6, Sub 7, Sub 8, Sub 9 USD, Treasury USD, Sub 10 USD, Sub ,000 Subsidiary has ONE multicurrency account Full control of all FX trades FX rates set by treasury Margin set by treasury No external trade on subsidiary level Cross border transfers converted to local payment ERP independent 2 1, Subsidiary 2 1,000 from sub 2 4 We make you better 19

20 In-house Bank - Extended USD USD, Treasury, Treasury, Treasury USD, Treasury Treasury fixing / 7.44 /USD 1.12 / /GBP ,214, Sub 1, Sub 2, Sub 3, Sub 4, Sub 5, Sub 6, Sub 7, Sub 8, Sub 9 USD, Sub 10 Subsidiaries only need one account for all USD, Sub 11 invoices 3 USD 1,000 Full report / statement to subsidiary (Amount, FX rates, fees, remittance information) for reconciliation 2 4 Subsidiary 2 We make you better USD 1,000 for sub

21 In-house Bank - ERP independent Subsidiary 1 Subsidiary 2 Treasury Subsidiary 3 Subsidiary 4 Subsidiary 5 Subsidiary X No ERP dependency Full online for subsidiaries and treasury (PC, tablet, Smartphone) Full range of formats and communication channels for file transfers FX and cash flow forecast on In-house Bank transactions We make you better 21

22 Example: - Danske In-House Bank 22 Group Treasury/ /PD

23 Without Danske In-House Bank Intercompany Payments Entity A Treasury Accounts Entity B USD ZAR TRY USD ZAR TRY USD ZAR TRY Argen tina Turkey South Africa South Africa Turkey Argen tina 23 Group Treasury/ /PD

24 With Danske In-House Bank Intercompany Payments Entity A Treasury Accounts Entity B CP CP USD CP USD CP TRY ZAR Argen tina Turkey South Africa South Africa Turkey Argen tina 24 Group Treasury/ /PD

25 Danske In-House Bank It supplements our existing In-house Bank setup perfectly: Simplifies Intercompany Payments from restricted Countries without a need of additional currency accounts Danske In-house Bank gives many of the same benefits as our internal setup An efficient solution: Less Bank accounts (Less account to reconcile) In full control of Currency conversion Easy to setup - No additional work for our Subsidiaries (and only little for Treasury/Centrally) New members of the group (M&A) only need one single bank account regardless number of invoicing currencies Reduces overall Complexity It s very much comparable with a Cloud based In-house Bank 25 Group Treasury/ /PD

26 Example - Cloud based Bank Connectivity solution 26 Group Treasury/ /PD

27 Current Connectivity setup On-premises 27 Group Treasury/ /PD

28 Future Connectivity setup In the Clouds Formats Communication Protocol Security 28 Group Treasury/ /PD

29 System overview Cloud Connectivity 29 Group Treasury/ /PD

30 Details Cloud Connectivity 30 Group Treasury/ /PD

31 Going to the Clouds - Why? - Future Proof? 31 Group Treasury/ /PD

32 Going to the Clouds Why? Benefits Outsourcing of time consuming tasks Cloud Vendor can re-use Technology, Security, Formats etc. on all their customers Easy to connect to the Cloud solution High Security Standards Will always run the newest version Complexity reduction Efficiency (cost & time) Flexibility Scalability Best Practice will in the future be Cloud based 32 Group Treasury/ /PD

33 Example: Bank Connectivity Speed in implementation SAP BCM/SWIFT Q2, 2010 Implementation started Q2, nd bank live External Payments and bank statements (US + PL) Q1, st bank live External Payments and bank statements (DK, NO, SE, FI, UK, EU) Q2, rd bank live External Payments ( + CH) Cloud Solution Jan 2016 Project Kick-off Q1, 2017 Stmts.: 95% Core Banks live Pmt.: 3x 100% + 1x 75% completed for Core Banks Q4, 2016 Stmts.: 90% Core Banks Pmt.: 3x 100% + 1x 33% completed for Core Banks 33 Group Treasury/ /PD

34 Cost Perspective On-Premises vs Cloud 34 Group Treasury/ /PD

35 Is Cloud the future? Expected Cloud Penetration - Financial industry 35 Group Treasury/ /PD

36 36 Group Treasury/ /PD

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