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TSS Case Study | ION

Petrofac - From PDFs and Excel to Treasury Disruptor

Thanks to a long-term partnership with with ION’s Treasury Reval, the treasury function at energy services company Petrofac has undergone a radical pivot – from PDFs and Excel to embracing arti­ficial intelligence and robotic process automation. Now, the company’s treasury organisation is among the world’s elite, setting and de­fining new benchmarks across the industry, as well as disrupting two critical pain points for practitioners: bank account management and the trade con­firmation process beyond FX. This transformation journey was a worthy winner of TMI’s 2019 Corporate Recognition Award for ‘Best TMS Solution’.

Headquartered in London, and with another 24 o­ffices in various countries around the world, Petrofac is a leading service provider of oil‑field services that designs, builds, operates, and maintains oil and gas facilities.

In 2010, Petrofac onboarded a team of two professionals mandated to create a treasury function. During their initial discovery, the team uncovered over 600 different bank accounts across various banking partners, FX trading executed in silos, and a spider web of intercompany loans that had to be unpicked and unravelled.

Matt Norris, Petrofac’s Assistant Group Treasurer, comments: “We started to build trust with the business, but processes were very manual. So, with activity starting to ramp up, we needed a partner that we could bring on-board to build a treasury model.”

The company went to market for a treasury management system (TMS), and selected Reval, a software-as-a-service (SaaS) offering to improve security and visibility, and eliminate redundancies. As a result, Petrofac was able to realise the following benefits and accomplishments:

· Automate trade imports by using Reval’s connection to 360T – this reduced manual effort required to upload FX and money market trades.

· Launch a global cash management programme: Petrofac defined a solution to move cash back to the centre from anywhere around the world on a same day basis.

· Capture daily sweeps: Treasury implemented a programme across the organisation for capturing this information globally and automated the auto-posting and auto-reconciliation.

· Introduce a new model for liquidity management, providing visibility to all senior management and the business. Petrofac currently uses a range of Reval’s 470 standard reports, some of which are automatically sent to the wider business community. This helps to promote internal transparency and saves time on manual reporting. Previously these reports were created using Excel, which left room for manual error and required many hours of design and maintenance.

· Improve guarantee management: Many of Petrofac’s projects require performance guarantees and advanced payment guarantees. With Reval, the treasury organisation has been able to take ownership of this activity, which was previously managed by the business.

· Rationalise the banking structure: Petrofac had more than 70 different bank partners. Treasury was able to reduce this to 30, leading to a considerable year-on-year saving.

· Automate treasury reporting with automatic linking to 360T, ICD, and more, providing straight-through processing.

2020 and beyond

With the treasury function up and running and driving benefits for the organisation, the Group Treasury team has kicked off two major projects that will have significant implications across the industry. First is bank reconciliation and bank account management.

Many organisations spend hundreds of thousands, or even millions, on bank transaction service fees every year. Yet without proper oversight, fees are paid without validation, leading to potential overpayments. At Petrofac, the business manages its bank accounts separately from treasury. The treasury team wants to create a single source of truth of all banking information. To do so, they need one workflow methodology that can be implemented across the organisation.

As such, the team has begun using ION Treasury’s Reval and Oracle Fusion for all their bank account management information across the organisation. To accomplish this, they have engaged Reval to work with Petrofac and the Oracle team to manage both systems data, account, and bank information through the ION Bank Account Management (IBAM) product.

The second project the team has embarked on is using robotic process automation (RPA) to streamline trade confirmation processes beyond FX, such as commodities. Matching and confirmation for commodities trades can be challenging.

Petrofac, ION and Reval experts are therefore working together to use RPA to take confirmations sent via emails or faxes from banks, and automatically read these notifications. By incorporating an RPA solution to compare trade details against Reval, Petrofac can effectively create its own matching and confirmation system.

In addition, Petrofac will leverage the power of the ION Treasury community – comprising more than 50,000 TMS users, leaders, and practitioners – as it works to solve problems and drive change in the two major areas identified, as well as other processes. “It is the ability to reach out to that network and say, this is what we are trying to do. For example, we are looking at cloud and Reval to optimise our procure-to-pay processes. Being able to reach out to 50,000 people who are members of the ION TMS community, and to ask them if they’ve done this, and using those connections, is what we are really looking forward to,” concludes Norris. ■

Author: Eleanor Hill, TMI Issue 273

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