TSS Case study Opus Capita: Liquidity management

Maximum output with minimum input

Moelven is Norway’s largest woodprocessing group. Recently, the company noted that, from time to time, it had a significant amount of extra liquidity in its six cash pools, and long and short term credit facilities varied heavily. “Forecasting was difficult because information from the banking system and Treasury Management was gathered manually. In addition, the information in ERPs and AR/AP systems was not used in forecasts at all. Our goal was to move all of the information we were sitting on into active use,” says Anita Hagen, Financial Manager, Risk and Treasury Operations at Moelven Industrier ASA.

Integration with all ERP systems

Moelven wanted to improve its liquidity control and the quality of its information, and needed a system providing daily updates on group liquidity. “In addition, our subsidiaries needed a system for cash flow forecasting,” Anita Hagen explains. A higher level of automation was a prerequisite for maximising the quality of output. Increased automation also means minimising the manual input of economic or financial staff and thus reducing the margin of error. After due consideration and evaluation, Moelven Group opted for OpusCapita Liquidity. “The reason for choosing the OpusCapita Liquidity was that it could be integrated with all ERP systems in the Group, and subsidiaries are included in forecasts,” says Anita Hagen.

Automation under control

Moelven Group consists of 44 subsidiaries with several types of systems. In order to update the situation on a daily basis, OpusCapita fetches payable and receivable files from the ERP systems once a day, and from the Treasury Management System twice a day. In addition, OpusCapita fetches cash balances from the banks. Although much of the system is based on automation, the Group Treasury is aware of the ongoing processes. “Every morning, we are provided with a log of all file transfers and can see that transaction files have been successfully fetched. If there are failures, the technical staff is informed and they work out the problem,” explains Hagen. The integration-based automation of processes saves a lot of time for subsidiaries. The only manual input subsidiaries need to perform includes monthly recurring payments, such as salaries and taxes, which is done through a web-based reporting tool. “Each subsidiary spends a maximum of 30 minutes a week on this manual input operation. The positive outcome is that the Group Treasury and the subsidiaries may use the system on a daily basis or whenever they need information on their liquidity forecasts,” Hagen points out. The goal is reached! As a result, Moelven Group now has a fast and accurate estimate of future cash flows. “We are especially satisfied with the reports, which show the net total after the allocated internal limit in SEK/NOK. Our goal, deposits of a maximum of SEK and NOK 10 million in our cash pools, has been achieved,” Hagen enthuses. In addition, the system helps to avoid inflating the balance sheet. “It minimises the external interest rate, which in turn reduces the lending rate to our subsidiaries.” According to Anita Hagen, the biggest challenge was the integration of all ERP systems. Although the project took longer than initially planned, the overall implementation went well and bore testimony to the good co-operation between Moelven and OpusCapita. “With all this experience behind us, I would like to point out that it is important that technical staff be included from the beginning. We did this, and it was a good experience!”