Until recently, Endesa was executing its FX transactions through a multibank platform. Having received a payment request from Endesa’s administrative department, the treasury team would ask the front office to make spot purchases for this payment using Bloomberg’s FXGO multi-bank FX trading platform. Once the purchase was complete, the treasury team would be informed of the exchange rate used.
Treasury would then manually add the exchange rate into their enterprise resource planning (ERP) system. The ERP system generated a physical letter, which was digitally signed by the relevant parties. This signed letter was then downloaded from the ERP system and emailed to the banks, which would then look to settle the payment to the third party.
“Manual payments introduce more opportunities for errors, and, in turn, bring greater risks,” explains Francisco Casais Muñoz, Head of Cash Management, Endesa S.A. “Settlements were also slow because straight-through processing was not applicable using this workflow, and in most cases, the banks required a call back to confirm payment details before the payment could be executed – adding further delays to the overall process.”
“Manual payments introduce more opportunities for errors, and, in turn, bring greater risks”
Francisco Casais Muñoz, Head of Cash Management, Endesa S.A.
To navigate the operational challenges introduced by Endesa’s existing processes, the treasury team wanted to achieve flexibility of FX execution via a multi-bank platform, while utilising the FX proceeds for payments in a seamless manner. This would involve linking payments automatically to multibank trading platforms, such that the FX and payment processes were seamlessly connected in a single workflow. While this is a simple idea, achieving it is less easy.
Linking third-party payment instructions to the various trading platforms – with the aim of making the process fully automated and electronic across all banking partners – would typically require a series of bespoke changes to the existing payment files to ensure that they match the FX trade.
“We have been talking with banking partners for years on this topic and each one has a different solution to input details of the trades,” says Casais. “This would require us to develop special payment files for each bank, which is impossible to achieve within our system because it’s so complex.”