Corporate Treasury Solution Overhaul: GDF Suez
GDF Suez is the world’s largest global utility company, with 218,350 employees in nearly 70 countries and a turnover of 84.5 billion Euros in 2010. The company was formed after a merger between Gaz De France and the Suez Company in July 2008. As part of the merger process, they conducted a review of their business critical systems to ensure the appropriate tools were in place to manage the new organisation and ensure that all possible synergies would be achieved.
The business challenge
As a result of the scale of GDF Suez’s operations, the complexity of their treasury function is similar to that of a medium-sized bank. The primary challenge for the treasurer was determining how to empower subsidiaries, while ensuring they had enough transparency and control to benefit from group synergies and shared services. They needed an efficient cash management system that would support communication between the center and the regions, making sure that sufficient funds are available in the right locations, at the right time and in the right currency. Most of all, they wanted to be sure that money was not being borrowed from the market if there were surpluses in other parts of the company.
The merger between the two companies had dramatically increased transaction volumes, making their treasury operations significantly more complex. Small exception management processes in existing tools had become costly, with previously minor exposures to risk becoming sizeable. The challenge for GDF Suez was how to effectively manage this increased risk at both a regional and global level. As part of a re-evaluation of GDF Suez’s finance capabilities, the company wanted to bring the treasury function closer to the business. They wanted to establish a full payment value chain across the organisation – from the capture of payments, processing through central treasury and on to the swift network directly to the bank. They also needed to ensure they were fully IFRS compliant at both a central and regional level. The final requirement for GDF Suez was to find a partner who understood their business process and logic. They wanted to form a partnership with a supplier that had a strong local presence and would be able to advise them on business processes as well as technical requirements.
- Cash Management – including Treasury centralization, reconciliation, cash pooling, netting
- Deal management – including investment funding, debt management, IR and FX Risk, counterparty risk and swift messaging
- Regional coordination using the web portal – including, cash management, funding/investment, FX Risk and Reporting
The group can now manage their total risk position much more effectively thanks to this increased visibility. Because FusionBanking Treasury Suite is flexible enough to reflect specific company processes and workflows, the central treasury function can delegate or retain the rights to conduct specific operations and responsibilities, as required to meet company policies and business unit capabilities.
The company is fully IFRS compliant and can prove to both auditors and shareholders that the hedging of its operational cash flows is efficient. Vendeville added, “The group’s IFRS postings are automatically produced and are available through the FusionBanking Treasury Suite Web. A full straight-through-processing is now in place ensuring that once a deal is initiated in the front office, all processes are automated right through to generation of local and IFRS GAAPS. This allows us to avoid any redundant captures.”
Today, GDF Suez has better control of the payment value chain for the group. They now have the tools in place to independently manage and initiate payments with banks and partners at a variety of levels. This allows the business to achieve a greater degree of accuracy and efficiency in the way it manages the risks and needs of the organization. In addition, GDF Suez experienced the following benefits:
- Reduced operational risks
- Reduced costs
- System synergies
- Improved reporting
- Better management of capital to ensure the company remains solvent
- Regulatory compliance
Global Project Manager at GDF Suez
"We needed to put in place a global solution to manage cash positions resulting from the recording of financial flows, financial transactions and cash pools; as well as to follow the management of risks hedged by derivative products. FusionBanking Treasury Suite was the perfect fit. The solution also feeds our accounting systems and facilitates group reporting which eases monthly closures."
"The whole group’s reporting will be mapped onto the system with valuation calculations, IFRS effectiveness tests and postings as well as the management of remote subsidiaries input, all done through FusionBanking Treasury Suite web".