simplifying complex treasury: replacing multiple

Simplifying Complex Treasury:Replacing Multiple Standalone SystemsReplacing Multiple Standalone Systems with One Strategic Platform

Mark LewisDirector, Corporate Treasury

Wall Street Systems

Cindy Wang, CFA CPAy g,Director, Treasury Operations & Systems

Toyota Financial Services

The Quest for Simplification ofThe Quest for Simplification of Complex Treasury

W ll St t S t id St t i T• Wall Street Systems provides Strategic Treasury Solutions to over ¼ of Top 100 Corporates

Wh t i th ld’ l di d• What are we seeing across the world’s leading and sophisticated treasuries

H ti i lti l l t d l i ith• How retiring multiple legacy systems and replacing with one strategic platform can benefit the organisation

Wh i th ti t i t i t• Why now is the time to invest in tomorrow

• Case study and benefits - Toyota Financial Services

ToyotaToyota’’s Global Businessess Global BusinessesToyotaToyota’’s Global Businessess Global Businesses

4

TMCC Products and ServicesTMCC Products and ServicesTMCC Products and ServicesTMCC Products and Services

Consumer Finance

Dealer Finance

Commercial Finance Insurance

• Retail • Lease

• Wholesale • Real Estate • WorkingCapital

• Forklift • Hino Medium Duty • Class8 HeavyDuty

• Service Agmts • Ext. Warranty • GuaranteedAuto • Working Capital

• Revolving Credit Lines

• Class 8 Heavy Duty• Retail • Lease

• Guaranteed Auto Protection

• Roadside Assistance

5

TMCC Key Business MetricsTMCC Key Business MetricsTMCC Key Business MetricsTMCC Key Business Metrics

• We employ over 3,300 associates across the country.

• We service over 2 000 dealers and close to 4 million • We service over 2,000 dealers and close to 4 million customers.

Key Business Metrics Fiscal year ended March 31, 2010

Total assets $81.2 billion

Total debt outstanding $73.0 billion

Short-/long-term ratings A-1+/AA (S&P)P-1/Aa2 (Moody’s)

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E t i Fi ld O i tiE t i Fi ld O i tiExtensive Field OrganizationExtensive Field Organization

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T F ti l O i tiT F ti l O i tiTreasury Functional OrganizationTreasury Functional Organization

Accounting

Sales & Trading

Treasury

Capital Markets Treasury Operations Treasury Risk TreasuryCash Sales & Trading

Business& Market Strategy

Debt & Derivatives

Term Debt Funding Products

Operations& Systems

Operations& Settlements

yManagement

Valuations

TreasuryControllership

Debt Accounting

Management

Cash Position

Sales & Trading

Rate Desk & Derivatives

Structured DebtProducts

SystemsManagement

Instruments& Valuations

Market Risk

International InvestmentA ti

DerivativesAccounting

Liquidity Management

RemittancePayment

Bank Products/S i

Back Office Functions

& Derivatives & Valuations Accounting

Front Office Functions Middle Office Functions

Management Services

TMCC T M tTMCC T M tTMCC Treasury ManagementTMCC Treasury Management

Diversified Funding Strategy

Prudent Risk Management

Robust Governance and Controls

Infrastructure and Organizational Alignmentg g

TMCC Funding ProgramTMCC Funding ProgramTMCC Funding Program TMCC Funding Program

TMCC is committed to:• Maintaining funding diversity and exceptional

li idit liquidity • Issuing into strong demand with attractive deals• Identifying and developing new markets and • Identifying and developing new markets and

investor relationships• Responding quickly to opportunities with best-in-p g q y pp

class executionThis requires Flexibility and Speed !

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Diversity in Debt OfferingsDiversity in Debt OfferingsDiversity in Debt OfferingsDiversity in Debt OfferingsTerm Debt Outstanding

EMTN $6 530

By Deal Type By Currency

EUR, $8 ,366

JPY, $4,500

Eurobonds, $14,118

O ther, $8,565

EMTN, $6,530

USD, $26,486 AUD, $4,0 93

CHF, $3,233

Uridashi, $7,113

Global

Public/Private ABS, $6,356

NZD, $2,294

GBP, $1,608O ther,

$1,087units in USD millions

As of June 30, 2010

MTN, $4,500

MTN, $4,486

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units in USD millionsunits in USD millionsSource: Company Reports

Wh t W H d B fWh t W H d B fWhat We Had BeforeWhat We Had Before

St d l tStand-alone systems:• Cash Management• Proprietary Bank Portals

i i

Not Integrated

• Debt & Derivative• Commercial Paper• Investment

Not Flexible

Lacks • Accounting • Valuation• Asset Liability Management

Lacks Functionality

N t S l bl• Market Data

What we lacked, we made up with manual processes and

Not Scalable

spreadsheets.

Treasury Vision:Treasury Vision:yySimplify the ComplexSimplify the Complex

iAutomation• Straight-through processing

Scalability

Integration Flexibility• Plug-and-play architecture

C t li tiCentralization• Banking relationship management

Global Reach

I f ti d C t li tiI f ti d C t li tiInformation and CentralizationInformation and Centralization•Question: centralize or decentralize?Question: centralize or decentralize?

Or, how do we efficiently use information?

•Which is better?C t li “ ll th k l d hi h ht t b d Centralize “all the knowledge which ought to be used but which is dispersed”

or to “convey to individuals additional knowledge in order t bl th t fit th i l ith th f th ?”to enable them to fit their plans with those of others?”

- F. Hayek

D t li d M d lD t li d M d l

Products / BANKS

Decentralized ModelDecentralized Model

Products / Processes

BANKS

C t li d M d lC t li d M d lProducts /

Centralized ModelCentralized Model

BANKSProducts / Processes

BANKS

A d B d d C dA d B d d C dAndon Boards and CordsAndon Boards and Cords

F t/Middl /B k I t tiF t/Middl /B k I t tiFront/Middle/Back IntegrationFront/Middle/Back Integration

Sales & TradingCapital Markets

Treasury Systems O ti & Accounting

Front Office Middle Office Back Office

organization alignment: functional roles and responsibilities

Capital Markets Debt & Derivatives

Operations & Settlements

gCash Management

PeoplePeople organization alignment: functional roles and responsibilities

governance: policies, procedures, separation of duties, SOX

PeoplePeople

ProcessProcess

infrastructure: system defined user right, workflow and controlsSystemSystem

Treasury Systems EnableTreasury Systems Enabley yy yProcesses & Internal ControlsProcesses & Internal Controls

OBJECTIVE: Minimize financial & operational risk through:• Segregation of duties

• Enforced through treasury system workflow design and fi ti ith i d d t it t lconfiguration with independent security controls

• SOX defines key controls within and outside system flows• Front/Middle/Back office integration

B t ti & kfl• Best practice processes & workflows• Governance/risk management• Horizontal/Cross-functional alignment & controls

B i i / h k & b l• Business review/checks & balancesF/M/B office integration supports open communication and

transparency of information which helps govern and control i k risk

Treasury Trading & Servicing Cycle Treasury Trading & Servicing Cycle --y g g yy g g yChecks & BalancesChecks & Balances

Independent monthly interest expense analysis by Treasury Risk (MO)

Treasury Policy SOX Certification & Peer Review

FO BO ACCTNG

MO

Transaction Capture /

DetailsRights &

Obligations

Financial Statement AssertionsPre Trade

Monthly review of issues with Treasury Operations & Systems (MO)

Cross-dept

review

Quarterly interest expense report by debt category for independent FO management business review

New Products & Processes Committee

Weekly Treasury Management Team

MeetingFO management business review

Structure Notes Committee

ALCO

Treasury System Enforced Controls Treasury System Enforced Controls

T h l I f t tT h l I f t tTechnology InfrastructureTechnology Infrastructure

Strategic Treasury Platform

Commercial Paper

Enterprise Accounting Systems

Treasury Accounting

Cash Management

PaperDirect Issuer

System

Market Info SWIFTTransaction & Risk Management Banks

Treasury Management System

Asset/Liability Management

System

Business Integration Interface

Internal Business Units

T M t S tT M t S tTreasury Management System Treasury Management System

C h M t Cash Management

•Web-based submission of business units’ and subsidiaries’ cash forecasts and funding requestscash forecasts and funding requests•System-enforced approval process•In-house banking, netting and payment factory capabilitiescapabilities•Automated cash reconciliation •Real-time cash positioning•Automated bank reporting and real-time transaction p gconfirmation through SWIFT•Security and Audit trail•Straight-through processing(STP)•Integrated with SWIFT for FIN and FileAct services


SWIFT

•Single portal for treasury to all the banks•Wire transfer and real time confirmation•Wire transfer and real-time confirmation•Prior day and current day Bank reporting•Secure file transmission via FileAct

•Electronic payments/receiptsElectronic payments/receipts•Confirmation•Check files•Lockbox files

B k ti•Bank reporting


Treasury Transaction Management

•STP from trade capture to settlement, accounting and valuationvaluation•Transaction workflow management•System-enforced approval process•Interfaces with market data providers•Interfaces with market data providers•Unlimited flexible portfolio structures•Counterparty set up and authorization process•Limits monitors o o•Security and Audit trail


Accounting Module

•Integrate with different Enterprise Systems used by different business unitsbusiness units•Financial sub-ledgers in multiple currencies: base, local and reporting•Transaction level accounting entries: ease of reconciliation •Transaction level accounting entries: ease of reconciliation and research•Automatic generation of journal entries & trial balances

Questions?Cindy Wang, CFA CPADirector, Treasury Operations & SystemsToyota Financial ServicesEmail: [email protected]

simplifying complex treasury: replacing multiple

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