GTreasury Logo

Frequently Asked Questions

Questions for Netting

How much time do we need to implement?

Typically 3 months. Ask for the Implementation plan in the Resource Centre.

I hear it takes a lot of time to run the netting? I don’t have Treasury staff to run this?

Netting is of course a tool to help settle intercompany. The system itself probably saves a lot of time that is being spent today running the processes manually, this can be offset against the time to run the netting. We estimate the netting takes no more than ½ day per month to run. You may of course be running a hedging program, dealing with the funding of subsidiaries, managing FX etc. All these tasks continue of course but you now have a system to help manage the settlement process and a lot more cooperation from the subsidiary users now that invoices and payments are more visible and there are fewer issues on intercompany now.

I don’t have Treasury staff to manage the intercompany process, I want to run netting and centralize functions. How can you help me?

You can always outsource the running and administration of the netting to one of our partners, Centralis Group, FTI Treasury in Ireland and TMSA Switzerland and/or in combination with bank partners, PNC and another major US bank.

What do you mean when you talk about a Pool?

A pool to us is a grouping of subsidiaries. The grouping is structured so that it will be better if they settle with a sub net (the pool leader) rather than directly with the Netting Centre (NC), the pool leader then settles the net of the pool with the Netting Centre (NC). This technique is also known as Sub Netting Centres or Domestic netting) This technique reduces both the number of cross border payments that would otherwise have taken place and makes further reductions to the total amount. In addition the local pool master can take care of the settlement locally and with time differences in a global netting this can also be helpful. We have two types of pool, local and global. • A local pool allows a multiple participants to settle with its pool leader in various currencies, perhaps pooling some currencies and settling others directly with the Netting Centre outside the pool. • A global pool allows a number of subsidiaries to receive a single currency through the a common bank account for the whole pool. Many of our clients use pools, please request this example, an educational by one of our clients Diebold.

Can I use my FX dealing platform to trade the FX?

Yes, we have a process and features of the system that allows the netting to be dealt using the common FX dealing platforms such as FXall and 360T.

Can I send a file of payments to the bank using my current banking package?

Yes, we provide a file in the correct format for upload into your current banking package. These days however we encourage clients to move to an XML format file so called ISO 20022. This can be securely delivered (via SFTP) from our servers directly to your bank and has the flexibility to provide many local and cross border payment methods

How do I introduce the concept of netting within my company?

We provide a number of resources to show how other Treasurers have introduced netting. Some key thoughts are to talk this over and involve stakeholders such as the CFO, Accounting/Finance, Shared Service Centre, Corporate Controller etc. Depending on the current issues with intercompany settlement you will find positive response from those suffering with problems today. The Business Units for example are probably reconciling the company ledgers using a variety of manual and automated processes. The Coprocess system should be welcome because it will save a lot of time in this areas such as • Matching • Not having to chase payments • Booking invoices • …And more Coprocess will help introduce netting to your company by producing by providing guidance, a project plan, helping with the business case, demonstrating the system to various stakeholders, those mentioned above and to IT, Legal, Audit etc. We are often at various conferences such as the ACT, AFP and Eurofinance and run a bi-annual user group meeting where one can meet many of our clients. To help assess savings please try our netting savings calculator or perhaps request one of the client presentations explaining more about the benefits of netting Developments in Multilateral Netting

Does Coprocess train the whole company on the use of the system?

We assign a project manager to you and they will work through the process with you. We will train the netting centre staff (usually Treasury) normally 2 half day session is sufficient. The system is intuitive and easy to use so it is not normally necessary to provide subsidiary training. However if this is desired we also provide this via short group webinar sessions (typically 1 -2 hours). We will also work with you on the netting process and documentation for the subsidiaries. Coprocess provides 2 manuals for the system, one for the subsidiaries and one for the netting Centre. We also help write ‘cheat sheets’ for the subs and it is very simple to implement.

Do I need to purchase any particular hardware or software to install the system?

No. The system is designed to work via a browser. If we host there is no more hardware or software for your company to buy. If you choose to run the system in-house we will advise you on the required hardware/software and maintenance procedures.

You mention a shared environment that you host. Are there any security concerns I should raise with my IT?

We can provide comprehensive answers to any questions on the security of the application, the hosting, product development, password use etc. In addition, since 2012, we have engaged Deloitte SA to run an annual SSAE18 type 2 audit report (including penetration testing). We can provide you with a copy of this report is you wish.

Too many ERP systems / too much Interfacing

Actually today for Coprocess, interfacing with external system is a fairly straight forward process. With the Interface Builder as part of the application the user is able to create interfaces if needed. Coprocess Support can help with the process and would normally not charge for this service.

Can I include all my subsidiaries in the netting?

All countries where settlement is possible can be included. There are specific rules about which countries and currencies can be netted and our current clients can help us here with up to date information. In general the Coprocess netting system has a number of features to overcome and/or reflect any country or currency requirements. Coprocess netting can also be used to help in the process of settlement by holding up payments to countries until a later date, for example where the country has capital controls or indeed hold up payment until some payment process needs to be completed, such as presenting documentation to the central bank before funds can be released. We have added an Excluded module to cater for countries that can no be part of net settlement. Using built in rules the Coprocess multilateral netting system will automatically convert AR or AP transactions (or both) to excluded items. Credit notes can be handled differently to payables or receivables and certain currencies can be excluded or the reverse. certain currencies can be included but all others are excluded. In the system for matching, archive, reporting but then using bilateral settlement. Also with the Coprocess Reconciliation module you can include entities where settlement is not required.

Why don’t I do everything in SAP

Coprocess has more Customers using SAP than any other ERP system. Out of the box SAP does not provide a netting solution. In order to give the same level of functionality that our plug and play solution offers, you are going to have to spend heavily on SAP. We can have you up and running in a couple of months. Also the issue of how would you cater for a Non SAP entity? What happens if you merge or buy another group that does not use SAP? Where Coprocess Netting differs from an SAP solution Coprocess offers integrated and flexible FX Management. Invoices in any currency can be converted into the Home currency of the participating entity and the FX Worksheet is instantaneously updated to show the resulting exposure. The system is real time so whenever a new invoice is uploaded the FX exposure is visible for the people concerned. The Coprocess system offers more options on a entity level such as: settle in the currency of the invoice or pay on Gross (no netting) to integrate more counties into the clearing etc. How do i interface with SAP? The upload of invoices can be done with a very straight forward CSV File. Invoices are visible to the counterparty as soon as they are uploaded to the system. Both sides of intercompany can be uploaded (AR and AP) and the system does an automated matching with the possibility to discuss invoice by invoice between the entities. After the payment run in netting (either via SAP, TMS or bank) files can be delivered back to SAP in order to clear the open invoices in AR and AP

Coprocess v TMS netting module

Because it is not the main focus for a TMS provider, most TMS netting modules normally offer only a basic netting solution. They do not in general deal with the detail and (changing) requirements that a corporate may have. For example, a calendar with cutoffs- many do not even have this, similarly flagging and matching, invoice level netting, it is therefore difficult if not impossible to consider receivable driven netting solution. The netting will not normally be a live (on-line) system, they may not even have subsidiary access through the browser In fact a TMS is designed as a central software solution. It was not designed for access by all the subs in the group, the whole handling of user access and the segregation of roles etc required for netting is not necessarily part of a TMS. Indeed there may be very good reason why you DON’T want your subs having access to the TMS even in a restricted manner. One customer of Coprocess stopped using our netting system and started using the module of a well known TMS provider, within a short time they were back with Coprocess because even though it has been promised that it could do what they wanted in reality it was very limited both in terms of functionality and performance. Other aspect to consider: Change of TMS means changing netting for all. The questions to ask the TMS provider are: a. How many customers do you have today running the netting module?. Can we speak to a reference client? b. Are they running at a balance level or uploading invoices? c. It is a pure browser system with access for all subs? Is Citrix required? d. How does it handle use by Shared Service Centre responsible for a region or group of companies? e. Does the module include a netting calendar that enforces cut offs, i.e. the user is able to upload data until a certain date and time defined in a netting calendar? f. If I wanted to use the netting to clean up my intercompany, does your system have the ability to: i. Upload Invoices? And separate them for payment based on the due date? ii. Upload both payables receivables and to matches one against the other? iii. Dispute an invoice. If so what happens to the invoice? g. Can I flag and discuss individual invoices in the system? How would the counterparty be notified? Can I attach a document to an invoice? h. Is there an audit log? Does it log for example a change of a rate? The modification of a subsidiary’s details? etc. i. Can I look at last month or last year’s netting data? j. What happens if I want a new report? For example if I wanted a report that showed me the number of disputes over the last year as a percentage of the total number of invoice, how would that be done?

Why should I not build it in Excel?

Just because you build something in Excel does NOT mean that the usual rules do not apply. Issues such as Change Control, Access control, Input Control, Security and integrity of data, Segregation of duties are all still valid and frequently ignored when building a quick fix spreadsheet solution. This creates risk. How are changes to the Excel system managed? What happens when the person who created the macros leave? Is it documented? Are changes logged etc. Whether you build it in Excel of buy a netting product the system should be subject to the same controls. What would be the result of an IT audit? Should you be using such a system to be making payments of this size? Issues such as: Maintenance, Testing, Documentation, Support, Functionality, Time spent to built, to maintain should all be factored in. The Coprocess solution is sold as a PAY AS YOU GO with a minimum commitment of 12 months. When you factor all this in we are absolutely clear: the cheaper and better solution is to use Coprocess.

Why buy when I can build?

Risk Netting is about Structure and Discipline, which is something we know our Tested and Proven solution has. With over 100 corporates worldwide using it every day, it is far more reliable and efficient than any DIY spreadsheet ever can be. Will the person that created the spreadsheet always be available for support and maintenance? Now and in the future? Audit Spreadsheets are now a sub category of the operational risk and are being audited both from an IT and a Financial perspective. Should you really handle the group’s liquidity based on a homemade spreadsheet? Will it pass the audit? Cost Is it really cheaper to build and not buy? Most companies would say: “No” to that. It will definitely be more labour intense. Features Displays the invoices, allows you to match AP against AR. Can handle all your future netting needs. Third party payments. Reconciliation. etc Availability Full 24/7 Web access. Changes can be made by the users – not Treasury. Security Access, User Rights and the Calendar with cut-offs are predefined in our system. Also remember that the maximum commitment is 12 months. SAAS model is pay as you go. No large capital investment. If it doesn’t do what you want stop after 12 months – How bad can it be?

Is it possible for a participant to settle netting on an internal or external (bank) account?

Yes, instructions can be created in Coprocess by the Netting Centre for PAY & RECEIVE (cash settlement) and DEBIT & CREDIT (non-cash). Typically these instructions are output in different formats, one for direct transmission to a bank and the other for import into a system such as a Treasury Management System (TMS). Please also see the FAQ regarding a Pool which allows the calculation of positions and post netting settlement within a defined grouping of business units. This allows for cash of non-cash settlement with a Subnet Centre before settlement with the Netting Centre. For a further discussion of cash and non-cash settlement and pooling you may like to read this presentation by our client Diebold and others; Netting, Pooling and the IHB

Is there an archive of settled cycles and is it available to view online?

Yes, settled cycles are available and kept online for 4 years. The data is then held offline in perpetuity. The settled cycle archive contains the complete searchable history of the transactions in that period including rates, transaction details, netting statements and audit logs.

Questions for Centralized Vendor Payments

What are the chief benefits of centralizing your vendor payments?

There are many, including liquidity and risk improvements. The FX risk is easier to manage centrally, the flows can be seen and managed. Treasury generally has more expertise in managing and dealing. Treasury can use other cash management techniques in conjunction such as settling via inter-company loans. The counterparty risk is reduced as the company no longer needs to hold cash in-country to pay bills (some legal restrictions as to the type of payment apply), there are less issues around segregation of duties or availability of management level staff in country. Costs and fees can be reduced because FX requirements are netted and aggregated, avoiding in country small FX deals and payments and receipts made by various entities in the same currencies can be offset. Payments can be made from the domicile of the currency, thus turning many cross border payments in local payments.

What would you say are the difficulties when implementing?

There are issues to overcome, not all countries will allow ‘payment by order of’, in a disparate group, companies may be running many ERP systems, there has to be a common naming convention to identify vendors (a common naming convention when dealing with external vendors).

Do you have customers that we can talk to?

Yes please contact us and we can ask our current clients if they are happy to answer your questions.

Questions for Month End Reconciliation

What differentiates your reconciliation solution?

Cost and flexibility. Our standard business model and shared hosting environment ensures the absolute best cost benefit. Flexibility, because other systems available are linked to or are a part of particular ERP. In a world where companies have many ERP systems this leads to considerable interfacing issues. Loading data into our platform gives one group-wide common platform, maybe the only common platform in the company where ledger data can be seen and compared. We provide not only the mismatch balance, which we can upload to the consolidation system, but also all the invoices that make up that mismatch. This is absolutely key when trying to determine the reason for the mismatch.

Where do I see the added value?

In a number of different areas: the visibility of transactions means at last that discussions and disputes can be raised and solved. The functionality in the Coprocess system is purpose designed to help resolve issues with matching of transactions at detail level. This can help resolve many of the issues within intercompany that can affect the accuracy of numbers in the P&L and Balance Sheet. It helps with the automation of the matching and reconciliation process by linking to the ERP. It can drive the accounting entries and if used on AP & AR can be used to help the booking, harmonizing of intercompany procedures and more.

What is the optimal way to link the netting and recon calendar?

The optimal way is to reflect in the calendar of the system the way that your company works. Many companies have a month end process starting on the end of the month and closing a few days into the next month, this then leaves time to add new transactions before putting new invoices into the system for settlement in the netting.

See GTreasury in Action

Get connected with supportive experts, comprehensive solutions, and untapped possibility today.