[Dublin, 20th of November 2023] – Salmon Software, a leading provider of treasury management systems, is pleased to announce LCI, a leading aviation company, as a new client. This contract further strengthens Salmon Software’s commitment to serving the aviation industry with cutting-edge financial solutions.

LCI, an innovative aviation company that is uniquely positioned across the commercial fixed-wing, helicopter and advanced air mobility sectors, selected Salmon Treasurer as their preferred Treasury Management System (TMS).  Salmon’s strong reputation for delivering sophisticated, efficient and effective TMS solutions was the significant criteria in LCI’s selection.

“We are very pleased to welcome LCI as a new client into our growing portfolio of clients in the Airline and Aircraft Leasing sector,” said John Byrne, CEO at Salmon Software. “Salmon Treasurer has unique instrument coverage and rich functionality, particularly suited to this industry.”

LCI is equally enthusiastic. “Salmon Software’s reputation as a trusted, reliable and effective TMS provider in the aviation sector is well-deserved,” said Alan O’Rourke, Chief Financial Officer at LCI. “We believe that this collaboration will provide us with the best solutions, industry knowledge and expertise to meet our Treasury needs as we grow our fleet and our business.”

—ENDS—

About Salmon Software: Salmon Software is a leading provider of Treasury Management System, offering innovative treasury solutions to organizations across various industries. With a very strong position in the aviation sector, Salmon Software has earned a reputation for delivering sophisticated treasury management software and exceptional customer service.

About LCI: LCI is a leading aviation company that is uniquely positioned across the commercial fixed-wing, helicopter and advanced air mobility sectors. Since its inception in 2004, LCI has undertaken approximately US$10 billion of aviation transactions and provides leasing services to operators, Governments and end-users.

LCI is owned by Libra Group (www.libra.com), a privately-owned international business group whose subsidiaries own and operate assets in nearly 60 countries and Sumitomo Mitsui Finance and Leasing Company, Limited (SMFL) (www.smfl.co.jp). For more information, visit www.lciaviation.com

 

For more information about Salmon Software and our TMS solution, please visit our website.

The aviation industry often uses leasing arrangements for its high-value assets. The financial complexity of these contracts requires the expert input of treasury to unravel them, but when spreadsheets are the only tool available, the task takes on new and unwelcome challenges. Conor Ward, Managing Director of MoyleRoe Corporate Services and aviation consultant to Salmon Software, has a solution.      

Leasing is a vital tool for airlines when acquiring aircraft. Many will typically have a mix of owned and leased assets. Ownership is a good investment, but a new aircraft is a huge capital expenditure. List price for the European industry workhorse Airbus A320 family, for example, starts around $101m.

By leasing rather than buying, airlines overcome the huge capital requirements of ownership, but more importantly they enable a faster response to market change, says Ward. That response time may be critical in meeting short-term capacity changes, or moving quickly into or out of certain routes. And it’s not just brand-new aircraft that are subject to leasing agreements: with planes having a typical ‘useful life’ of around 25 to 30 years, and a pre-owned example of the A320 going for an average of $25m, the used aircraft-leasing market is buoyant.

 

Increasing complexity

 

Aircraft leases typically range from three to 12 years, the tenor being steered by the airline’s strategy. In addition, leases tend to be acquired via aviation lessor or broker companies. New assets are often directly acquired from the manufacturer and then leased out to airlines. If an airline has bought an asset directly, a lessor may offer a sale-and-leaseback arrangement, in which it buys that asset from the airline and leases it back to it. Leases may be wet or dry, where dry means the aircraft and nothing else is provided, and wet includes the crew.

A lessor seeking to buy a new aircraft will usually need financing. This could be from a group of financial institutions, other investors, its own equity, or a combination of these. In leasing out an asset to an airline, commercial contracts will be negotiated, normally involving the setting of fees for rent and maintenance, the term of the contract, and the deposit of a security either in the form of cash or a bank LC. With the commercial terms established, counterparties progress to technical acceptance. This ascertains the aircraft’s fitness to fly, ensuring its unique technical log is fully up to date. Acceptance will see the lease executed.

The terms, cash flows and covenant obligations of aircraft financing can be complex, with derivatives or hedging instruments often embedded within the debt or equity instruments. In addition to the financing element, the associated operating cash flows, which include lease rentals, maintenance income or expenses, and other operating expenses, need to be managed over the ownership life of that asset.

Frequently, the cost and complexity of aircraft ownership and leasing will see a special purpose company (SPC) arrangement deployed. Where one asset is owned by one SPC, it ensures no cross-collateralisation with any other asset. This may be a lender requirement, with the SPC being owned by the holding or financing company which holds the debt/equity instruments, which in turn issues an intercompany loan to the SPC acquiring the asset, mirroring the terms of the external debt or equity. It’s a necessary structure that significantly adds to the volume of instruments held by an aviation group, consequently amplifying the volume of financial data it generates.

Of course, understanding the debt/equity position of the business is just one aspect. Another fundamental aspect of aircraft ownership and leasing is the day-to-day management of core treasury elements such as bank statements, payments, and accounting. “The volume of payments and the accounting-related tasks associated with banking transactions can be overwhelming at times, especially where there is a lack of visibility over the data,” says Ward.

 

An aviation-friendly platform

 

Of course, there needs to be a better process if all transactions are to be accounted for, and payments are to be made on time. However, Ward notes that treasurers in the aviation industry are all too often beholden to a mire of spreadsheets.

“If you had one leased asset financed by a bank it would be relatively practicable to use Excel. But aviation companies have multiple assets, and therefore multiple counterparties, to manage. Basic spreadsheet software would not give treasury teams the tools to collate, track, maintain and produce the output required to present to management and relevant stakeholders in good time, but this information is fundamental to the business.”

Frustration with the lack of visibility, timeliness, and clarity of spreadsheet data is compounded by the risk of error inherent within manual processing. The answer is the deployment of a TMS, which can begin to automate the treasury activities associated with leasing, and remove the risks. With the right connectivity, a TMS also facilitates faster processing speeds and easier access to essential data.

As with most modern TMSs, Salmon Software gives users the capability to track and update loan schedules, covenants, and cash flows for all instruments. It also presents this information in real-time. “This gives treasurers and other stakeholders the ability to make quick decisions and manage their business effectively,” Ward states. “It also improves the efficiency of the accounting process two-fold.”

But while Salmon Software has for many years worked with clients across a range of industries and sectors, it has a noteworthy number of implementations in the aviation space. As such, Ward says the Salmon TMS has developed into “a very aviation-friendly” platform.

The system can, for example, record all of a client’s aircraft-related lease transactions and present its data through dashboards tailored to the industry-specific needs of its user. With the requirements of the aviation sector well understood by Salmon allied to the platform’s design flexibility, Ward says the vendor has also been able to embed groundbreaking industry-focused contracts management functionality. While he says this is not intended to replace a specialist platform, it nonetheless provides the ability for treasury and other stakeholders to monitor essential contract components.

The covenants dashboard, for instance, checks and tracks compliance, flagging any potential issues in good time. The contract management function also records and tracks other significant elements such as current securities on leases, loan-to-value ratios, and even market values of aircraft.

A further example of Salmon’s aviation-friendliness cited by Ward is its capability to log and track the serial numbers and specific data points of each leased aircraft, including those of key components such as its engines. This data is static but nonetheless important, as it is often required by different stakeholders to help them easily monitor portfolio concentrations and other relevant information, with individual aircraft data linking to the various financial instruments, and associated providers, underpinning its lease.

 

Implementing for success

 

Salmon Software did not set out to attract the aviation sector per se, but the platform’s flexibility gave it the edge when meeting the nuanced needs of that sector, notes Ward. That it is used successfully in a diverse range of industries is certainly testament to that flexibility.

Of course, any treasurer taking the TMS path will need explore in depth every system that is being short-listed before signing on the line. “Functionality, flexibility, security, and the implementation process are all areas that must be explored in depth in every selection process,” urges Ward. Integration is another key topic, he adds, noting that any existing and planned internal systems, especially ERPs, and external systems including banking platforms, must be both compatible and connected.

The successful integration and connectivity of a TMS should ensure not only that automated data transfer is unhindered but also that cash is optimally visible across the enterprise, preferably in real-time. The addition of the aforementioned industry-customisable dashboard design, and the contract management functionality, should ensure every user is able to see what they need to see, when they need to see it, aviation sector or otherwise.

But there’s even more to Salmon’s offering than a host of useful and usable tools, states Ward. “A huge selling point for us is not only our aviation-friendly system but also our ability to work with clients on their implementations,” he explains. “We support that process with our detailed knowledge of the sector, helping them to get the best out of the system. It’s our level of communication in that process that reassures each client that there is an efficient and effective process in place. This is definitely a big advantage for them.”

Indeed, in terms of keeping treasury’s feet on the ground, when the rest of the business is intent on taking off, a TMS that comes with deep-rooted sector expertise has a lot to recommend it.

 

First published by TMI.

Raiffeisen Digital Bank AG Austria selects Salmon Software’s, Salmon Treasurer Treasury Management System for their Treasury and Cash Management Operations.

• Salmon Software Limited is happy to announce another major digital banking brand as a new Salmon Treasurer customer.
• The move will help Raiffeisen Digital Bank AG to strengthen banking operations and deliver their fully digital banking service to their customers with speed and efficiency.

Salmon Software Limited today announced that Raiffeisen Digital Bank AG has selected their Treasury Management System, Salmon Treasurer, as one key IT component in their internal operations, supporting sustainable growth of their fully digital products and helping to offer banking services with convenience and speed.

Raiffeisen Digital Bank will be adopting Salmon Software’s Treasury Management System ‘Salmon Treasurer’, deployed on Microsoft Azure, allowing the organisation to scale their resources up or down as needed. This in turn can help to reduce costs and ensure that they have the resources they need to meet operational demand as the service grows.

Michael Kearney, CEO of Salmon Software commented: ‘The Global Banking market is continuing its journey towards greater banking digitisation and we’re delighted to add Raiffeisen Digital Bank AG to our growing list of Banking customers on this new digital journey. Raiffeisen Digital Bank AG customers can be confident in the knowledge that the underlying system will provide Raiffeisen Digital Bank AG with dynamic & comprehensive information to support their customers digital loan activity.’

Alexey Kapustin, CEO at Raiffeisen Digital Bank AG, added: ‘After an extensive evaluation of potential Treasury Management System providers for our new Digital Banking operations the Salmon Treasurer solution fits perfectly to our needs. With its comprehensive functionality, modular feature set, strong integration capabilities and flexible dynamic reporting tools, we are confident that Salmon Treasurer will support us in our ability to provide our customers with an efficient and effective Digital Banking service that today’s customers demand. We’re excited to work with Salmon Software on this project to successfully achieve our goals.’

Raiffeisen Digital Bank AG will go live with Salmon Treasurer in the coming months.

 

About Salmon Software

Since its foundation, Salmon Software has focused on delivering a world-class treasury management software system with functionalities that fulfil the requirements of the treasury front, middle and back offices, including integration with third-party systems ranging from dealing platforms and market data providers to ERPs and risk systems.  The solution is based upon Microsoft Azure hosting that allows every client to operate on a separate environment.  The business has achieved great success and coverage with its flagship treasury management software system ‘Salmon Treasurer’.  The system has evolved to reflect the technological innovation and increasingly complex global financial systems that have paralleled the company’s history making it one of the most sophisticated treasury software platforms in the world.  This achievement is due to the dedication of a highly skilled, multi-disciplined support and development team who focus on producing a world-class product.  These capabilities combined with meaningful ongoing client engagement enable Salmon Software to pursue a policy of continuous, customer-focused product enhancement and development.

 

About Raiffeisen Digital Bank

Raiffeisen Digital Bank AG offers digital banking products and services to private individuals with the aim to become the bank-of-choice for core customer needs that is trusted, fast, effortless and has a genuine human touch. Under the Raiffeisen brand, they currently offer various digital banking services in Poland and Romania, including current accounts and fully digital loans and that enable consumers to apply for loans in a fully digital way. Raiffeisen Digital Bank offers digital banking expertise, a state-of-the-art digital banking platform as well as banking products for international clients under a trusted brand. Raiffeisen Digital Bank AG is an Austrian bank based in Vienna, with an Austrian banking license.

 

For more information:
Louise Cassidy
Tel: +353 86 383 5727
louise@ckcomms.ie

Cash flow forecasting is a financial management tool used to predict the expected cash inflows and outflows of a business over a specific period of time. It provides a framework for companies to plan, budget and control their cash resources to meet financial obligations and manage risk. It also enables businesses to anticipate future cash shortages and surpluses and take appropriate actions to manage cash effectively. In this white paper, we will discuss the benefits, the potential pitfalls, and how companies can implement this tool effectively.

 

Benefits of Cash Flow Forecasting

Better Financial Planning

Cash flow forecasting enables businesses forecast their cash requirements accurately, which helps them to plan their budgets effectively. Companies can use the forecast to identify potential shortfalls and take corrective action before they occur. This tool also helps businesses to plan for capital expenditures, debt repayments, and other financial obligations.

Improved Liquidity Management

It gives businesses the ability to identify potential cash surpluses and deficits in advance. Companies can then use this information to manage their liquidity better, by investing surplus cash or securing additional funding to cover cash shortfalls.

Enhanced Risk Management

Cash flow forecasting helps businesses identify potential financial risks, such as cash shortages, delays in customer payments, and unexpected expenses. Companies can use the forecast to develop contingency plans, such as securing additional financing or negotiating payment terms with suppliers.

Better Decision Making

It also provides businesses with accurate and timely information about their cash position. Companies can use this information to make better decisions about investments, borrowing, and other financial activities.

 

Pitfalls of Cash Flow Forecasting

Inaccurate Data

The accuracy of a cash flow forecast depends on the quality of data used. Companies need to ensure that the data used in the forecast is accurate, up-to-date, and comprehensive. Failure to do so can result in inaccurate forecasts, leading to poor decision making.

Limited Scope

Any forecast is only as good as the assumptions made about future cash inflows and outflows. Companies need to consider a wide range of factors, including market trends, economic conditions, and customer behavior when developing their forecasts.

Poor Implementation

Forecasting demands a structured approach and a commitment to ongoing monitoring and adjustment. Companies need to have the right processes, systems, and resources in place to implement this tool effectively.

 

Implementing Cash Flow Forecasting

Identify Key Drivers

Companies need to identify the key drivers of their cash inflows and outflows. This includes factors such as customer payments, supplier payments, capital expenditures, and debt repayments.

Develop a Cash Flow Model

Businesses need to develop a cash flow model that reflects their unique cash flow drivers. This model should be based on accurate data and should include a range of scenarios to reflect potential changes in market conditions and, for example, seasonal variations.

Monitor and Adjust

Companies need to monitor their cash flow forecast regularly and make adjustments as needed. This includes updating the forecast with actual results and adjusting assumptions based on changes in market conditions.

Inter Company Communication and Collaboration

Cash flow forecasting requires collaboration and communication across different parts of the business. Companies need to involve key stakeholders, such as finance, sales, and business unit operations teams, in the forecasting process to ensure accurate data and effective decision making.

 

Conclusion

Cash flow forecasting is an essential financial management tool providing  businesses with the ability to plan, budget, and have visibility and control over their cash resources.

It helps companies manage liquidity, identify financial risks and make better decisions.

However, businesses need to be aware of the potential pitfalls of cash flow forecasting, including inaccurate data, limited scope and poor implementation that may occur with the use of Spreadsheets or accounting systems with multiple possibilities for data error entry and origin, alongside limited proactive reporting capabilities.

By following a structured approach to implementation using such solutions as a Treasury Management System supporting automated straight through processing and ongoing monitoring, businesses can benefit from the advantages of cash flow forecasting and dynamic reporting and avoid potential pitfalls.

Dechra Pharmaceuticals is a global leader in the veterinary healthcare market, with a presence in over 50 countries worldwide. Founded in the UK in 1997, Dechra has expanded rapidly over the past two decades, both organically and through acquisitions, to become a major player in the animal healthcare industry. As the company has grown, so too has its need for a robust and scalable treasury policy that can support its global operations.

Before 2014, Dechra’s treasury operations were decentralised, with each subsidiary managing its own cash and treasury functions. This approach led to a lack of visibility into the company’s consolidated cash positions and foreign exchange (FX) exposure, making it difficult to manage risk and optimize cash usage. To address these challenges, Dechra implemented a central group treasury and adopted a netting system in Europe. The cash pool became a zero balancing cash pool and also expanded into the USA when the company  implemented a Treasury Management System (TMS) from Salmon Software, known as Salmon Treasurer, to support its treasury operations.

 

Key objectives of the new treasury policy

 

The primary objectives of the TMS were to provide better transparency into Dechra’s consolidated cash positions and FX exposure, as well as to enable the company to hold intercompany positions and capture zero balancing and netting movements. To achieve these objectives, Dechra established a close relationship with Salmon Software and implemented MT-940 reporting of bank account balances and transactions. This allowed the company to account for daily interest and taxes arising from those balances and transactions.

“Dechra manages risk in its treasury operations by centralising FX risk in the UK at group treasury”, explains Steve Card, group treasurer at the pharma specialist.

“For acquisitions, Dechra matches the currency of the acquisition price with borrowings in the same currency. For transactions, we use a daily zero-balancing cash pool for the majority of our operating subsidiaries to centralise FX risk.”

FX position is monitored throughout the month, with actions taken to reduce the impact of currency movements on the group P&L.

“No transaction hedging is undertaken at subsidiary level, nor is there any other translation hedging undertaken by the group. Dechra relies on the Salmon Software TMS for the processes, information, and reporting needed to execute this strategy efficiently,” Card further clarifies.

“Dechra’s approach to liquidity management and funding is reactive, using a combination of cash, committed RCF facilities, private placements, and equity funding. The company’s treasury policy requires that group leverage (total group borrowings/EBITDA) be maintained at a ratio of 2:1 or below. If the ratio rises above this, it must be returned to 2:1 or below within a 12-month period.”

Dechra’s investment strategy to date has been conservative, holding deposit funds only on a short-term basis because of the opportunistic nature of acquisitions and the desire of both the group and its rating agency to minimize outstanding debt. Dechra does not currently have any treasury KPIs in place.

 

A conservative approach to tech infrastructure

 

Card is a strong proponent of a policy-led treasury tech stack, rather than having software guide decision-making.

“Dechra is not an early adopter of new technology, and its treasury technology is based around proven technologies such as intercompany netting, TMS from Salmon Software, fed by MT-940 feeds from participating banks, and centralized daily zero-balancing cash pools,” he states. “Dechra has tailored these technologies to its particular requirements, especially in the areas of intercompany accounts, transfer pricing, FX exposure reporting, and dividend management.”

Dechra approaches capital structure management and debt management primarily at the time of assessing the funding structure of an acquisition. There are no hard and set rules, other than the leverage requirement to be 2:1 or below, which is a key element of the company’s treasury policy.

How Caldic transformed its treasury function with a new TMS

Caldic’s adoption of Salmon Treasurer helped the business to standardise processes and grow with scale, freeing up its treasury function to become a strategic part of the business

The world is changing: despite the pandemic, the cost of living crisis, the horrors in Ukraine, and the rising spectre of inflation, the business outlook for many companies remain extremely positive. Many are expanding and whatever short-term difficulties there might be, in the longer term, many are expected to grow and thrive. But this has created several problems across the global economy, for while companies grow, their treasury systems are often very out of date.

While spreadsheets had their day, they are not sufficient to cope with huge multi-national corporate’s (or even a smaller one) treasury needs. Other companies are plagued with too-small treasury teams or an ever-complex setup which means several companies require bespoke treasury management systems (TMS).

But even for the most well-established treasury teams, let alone those of start-ups and new entrants, it can be difficult to know where to start. Company needs vary enormously and there is no size fits all approach. So, what are the challenges, how did they arise, and what should a corporate do when their business is growing, and previous systems are no longer adequate for the job?

In 2017, Caldic, which provides inspiring solutions in life sciences and specialty chemicals, focussing on life sciences (food, pharmaceuticals, and consumer care) and industrial formulation markets, was bought by a private equity company. This transformed the business into a more centralised organisation, dramatically changing its treasury needs in the process.  Previously local management teams had been encouraged to take responsibility for their own profit and loss as well as funding and liquidity management, but now increased debt levels required Caldic to set up a central treasury function. Something had to change.

In 2017 Bas Baaten started as a Caldic’s first Treasury Manager in history, to ensure Caldic remained within the adequate liquidity spot and central debt servicing. After setting up a global cash pooling structure and an excel based short-term cash flow forecasting process, Caldic was ready for the next step.

Now it needed standardisation and automation, with a treasury management system that mirrored its move from essentially a family-run company to a private equity-funded level of entrepreneurship. Economic growth, fuelled by an expansion into developing markets, also spurred the need for change, specifically for a more in-depth and detailed cash overview, cash pooling, cash positioning and cash flow forecasting.

 

Choosing the right provider

 

The first need to be recognised was the need to move from local management to a more harmonised way of working. The company was expanding and needed to update its processes by implementing a system that would run the day-to-day operations. But there were challenges.

For a start, as in any company making huge shifts in how it operates, in particular the shift of taking the autonomy of the local management to arrange domestic credit lines and funding to group treasury. Although supported by cash pooling, dozens of IC loans and ample administration of those movements occurred, including the accrued interest calculations. Everyone wanted to know ‘where and when is the cash?’ Following that, Caldic had to consider which software provider was the right fit for its business.   Flexibility was the key: given Caldic was in full growth mode, any software needed to ensure it could grow and adapt with the company. At the time of making its software decision, it was making acquisitions of small companies, while merging with a similar-sized peer-based in Latin America. The merger of two different entities, combined with the ongoing acquisition programme shows that it is crucial to get a firmer grip and control of processes to stay on top of its cash positions and visibility.

It was becoming increasingly complex with every acquisition, and full visibility was needed, along with the ability to have daily reporting and monthly profit and loss statements. In the wider economy, cash was also becoming more expensive, another element that had to be factored in. At the same time, any new treasury software provider would also need to cope with existing processes and procedures that could not be changed overnight.

The specific needs for applications centred on visible cash management with real-time reposting and interfacing with bank portals. There was a requirement to centralise FX hedging, including central execution and deal capturing, which included an automated settlement process. Forecasting played an important role too, including data aggregation and data analysis over different time periods (weekly, monthly, and annually), comparing it to the allotted budgets. Another important function was monitoring positions and risk exposures, both on the FX and intercompany (IC) loan administration front. Caldic also required there to be an audit function, a third-party account for future changes to payment processing on the FX side.

After reviewing several potential providers, Caldic opted to partner with Salmon Software. A boutique TMS provider, Salmon offered to provide Caldic with the individual attention required during a treasury overhaul.  Unlike much of the competition, the company was able to offer a TMS that would fit with Caldic’s needs, as opposed to the other way around.

Many systems offer a prescribed way of working, a variation of Henry Ford’s dictum about the cars he would sell: “Any colour as long as it’s black.” To avoid that Caldic’s shortlist would be restricted to TMS systems that Bas worked with before in his career, Bas decided to team up with Dutch-based Treasury consultants Orchard Finance. After discussing Caldic’s functional and technical requirements, a TMS vendor selection process was executed. Several TMS vendors were identified as possibilities, but in the end, it was Salmon that won through.

The reasonable price and quality of the option of course played a role, but perhaps the most important element was the flexibility in both the software and with regards to flexible implementation approach. During weekly progress calls between Caldic, Orchard Finance and Salmon, implementation progress was monitored, and workload adjusted to Bas Baaten’s availability. Flexible interfacing was based off Microsoft’s cloud hosting service, Azure, allowing Caldic to operate in a separate environment, while also providing the ability to aggregate various sources to maximise efforts. Scalability, when new acquisitions are made, is also part of the system. Both incoming and outgoing sources can work with any file format required. Interfaces can be automated meaning no user intervention, while it also provided better cash visibility, making it easier to have in-depth insights on cash positions.

Perhaps the biggest benefit of the new TMS was it freed Treasury Manager Bas Baaten from the minutia of the day-to-day running of the function which gave him more time to concentrate on strategic decisions. It also allowed the treasury function to move from a reactive to a more proactive approach.

The system also created a central connectivity point, important for a company rapidly expanding. Local finance directors were able to input data from their business and geographical area, which could then be used in a logical manner in the TMS. Specific tools across the board also supplied not just connectivity but conversion to make data standardised across the board. Furthermore, the TMS also made it possible to take data from other systems. A core reason for choosing Salmon was its user interface – Caldic needed a system that existing subsidiaries could switch to without impacting their working practices. Salmons’ software did just that and allowed new subsidiaries – bought on through acquisition – to also latch on without problems.

Another benefit was improved cash visibility. When Baaten – or anyone else – walks into an office and turns on a computer, whatever he wanted to see would be there on the screen. Previously this had entailed a lot of work and now it was done in the back office overnight. There is now one system with a single source, which has created dashboards that provide a complete view.

 

Benefits enshrined

 

Since adopting Salmon’s platform, Caldic has seen its processes harmonised, centralised, standardised, and benefited from its scalability as it has continued to grow and acquire other companies. From the automation of cash flow reporting between the ERP and Salmon Treasurer to improved visibility of the daily FX process workflow, Caldic’s treasury function has been enhanced.

The adoption of Salmon’s software has had an impact on Caldic’s bottom line. Treasury, who were previously bogged down with tediously manual tasks, can now take a greater role in the strategic decision-making so crucial to today’s treasury function. And this is only the beginning: Caldic plans to expand its treasury function further – as it does, new products will be needed.

TMS systems are crucial for today’s treasurers, but companies should take their time choosing the provider who is right for them. A provider should be there for implementation and be able to adapt its offering to each client’s specific needs.

Fast-Growing Irish Financial Software Business Secures Investment to Support Continued Strong Growth

 

Dublin, 1 April 2022: Leading Irish private equity firm, Melior Equity Partners, has agreed an investment in Salmon Software, a fast-growing financial software business that provides customers with a world-class treasury management software system.  Founded by CEO John Byrne, Dublin-headquartered Salmon Software employs a total of 30 staff across its operations in Ireland and the Czech Republic.

Since its foundation, the company’s treasury management software system has evolved into one of the world’s most sophisticated treasury management products, reflecting the global financial industry’s technological innovation and increasingly complex nature.  The company’s software system enables customers to automate treasury management processes, providing information on debt, derivatives, foreign exchange, banking, cash management and payments which deliver efficiencies that save costs, ensure full regulatory compliance and provide real-time business insights.  Salmon Software’s treasury management system supports a range of blue-chip customers including global businesses such as CRH, Avolon, Dechra Pharmaceuticals, DP World and Ryanair.

Salmon Software’s decision to partner with Melior was driven by the firm’s strategic experience in growing similar Irish technology businesses, its unique global network, and notable investor base.  The investment from Melior will support the future growth of Salmon Software, facilitating further product innovation and the delivery of an even more comprehensive service for new and existing customers.

Salmon Software’s existing management team, including John Byrne, will remain in their current leadership roles and continue as significant shareholders in the business.  Fiona Timmons, an experienced software industry finance executive, has joined the company as Chief Financial Officer (CFO) and will work closely with John Byrne and the existing senior management team.

Commenting on the announcement, John Byrne, CEO and Founder of Salmon Software, said, “The investment by Melior is an exciting development for both our customers and employees.  We have developed a world-class treasury management software system with deep product functionality that receives the ongoing support of a loyal blue-chip customer base.  The Melior investment will allow us to grow and invest further in our team, extend our support and sales infrastructure, and deliver product enhancements including a superior cloud-hosted offering.  This investment will provide exciting career development opportunities for our existing employees, see new talent join the company and will significantly benefit current and future customers.”

Jonathan Cosgrave, Co-Founder of Melior Equity Partners, said, “We are excited to partner with John and his team, who have successfully grown Salmon Software into a world-class provider of treasury management software systems through continued product innovation, customer engagement and market-leading organic growth.  The global treasury management software system market is valued at €1 billion and is forecast to grow strongly over the coming years.  As a leading independent provider with strong reference customers, Salmon Software is ideally placed to meet this demand.”

Melior Equity Partners was founded in 2019 by Jonathan Cosgrave and Peter Garvey.  Melior Equity Partners Fund II is backed by a pool of local and international blue-chip investors and invests capital in, and provides support to, businesses across Ireland to achieve their growth ambitions.  Salmon Software is the second investment from Melior Equity Partners Fund II following the completion of an investment during 2021 in BHP Insurance, a leading independent Irish insurance brokerage focusing on the not-for-profit sector.  Prior to establishing Melior Equity Partners, Cosgrave and Garvey led an Ireland-focused private equity fund for The Carlyle Group investing in companies such as AA Ireland, Carroll Cuisine, GSLS, Learning Pool, Lily O’Brien’s, McCauley Pharmacy, Payzone, Sports Surgery Clinic and The City Bin Co.

 

For further information contact:

Louise Cassidy: louise@ckcomms.ie / +353 (0)86 383 5727

Claire Keane: claire@ckcomms.ie / +353 (0)87 121 4140

 

About Salmon Software:

Since its foundation, Salmon Software has focused on delivering a world-class treasury management software system with functionalities that fulfil the requirements of the treasury front, middle and back offices, including integration with third-party systems ranging from dealing platforms and market data providers to ERPs and risk systems.  The solution is based upon Microsoft Azure hosting that allows every client to operate on a separate environment.  The business has achieved great success and coverage with its flagship treasury management software system ‘Salmon Treasurer’.  The system has evolved to reflect the technological innovation and increasingly complex global financial systems that have paralleled the company’s history making it one of the most sophisticated treasury software platforms in the world.  This achievement is due to the dedication of a highly skilled, multi-disciplined support and development team who focus on producing a world-class product.  These capabilities combined with meaningful ongoing client engagement enable Salmon Software to pursue a policy of continuous, customer-focused product enhancement and development.

 

About Melior Equity Partners:

Melior Equity Partners (“Melior”) is a leading Irish private equity investment firm headquartered in Dublin with a strong track record of supporting Irish management teams and investing in small to medium sized private businesses in Ireland.

Melior was founded in 2019 by Jonathan Cosgrave and Peter Garvey who previously co-headed the management of a €292 million Ireland dedicated private equity fund for The Carlyle Group.  The Melior team members invested this fund for The Carlyle Group from 2014 to 2019 and are one of the most experienced private equity investment teams in the Irish market.

Melior combines best-in-class international standards and far-reaching networks developed at leading global investment firms, with a deep knowledge of the local marketplace to bring a unique approach to investing and partnering with management teams in Ireland.

The Melior team is currently deploying capital out of Melior Equity Partners II, a fund which is backed by a pool of local and international blue-chip investors including The Carlyle Group, the European Investment Fund, Ireland Strategic Investment Fund, Bank of Ireland and AIB.  The breadth and nature of its investors provide Melior with significant capacity to fund transactions of any scale in the Irish market.

 

Transaction Advisers:

Melior was advised by KPMG and William Fry while Salmon Software and its shareholders were advised by Mazars Corporate Finance and Hayes Solicitors.

Intercompany netting is well known to reduce settlement and currency risk. But the use of a netting centre also poses huge growth potential for companies conducting business globally.

The world is an increasingly complex place and so is its commercial network: there are estimated to be about 60,000 multinational corporations worldwide, controlling more than 500,000 subsidiaries, imposing an onerous set of obligations upon those company’s treasury operation.

The same applies to companies which only operate in one country; they may also have a network of subsidiaries with labyrinthine funding needs which have grown exponentially over the decades.

One of the structures put in place to deal with hugely complicated treasury functions is ‘intercompany netting’: an arrangement between the subsidiaries in a corporation in which each makes payments to, or receives payments from, a clearing house (the netting centre) for net obligations from fellow subsidiaries.

Namely, it is the offsetting of accounts receivable and accounts payable between all business entities within the same organisation.

This not only increases efficiency but also reduces credit/settlement risk. The bank fees involved are also lower. At a time when both transaction fees and currency exchange risk is growing, and lack of transparency is commonplace, netting could be the answer.

Intercompany netting comes in many forms. Firstly, there is bi-lateral (two companies) and multi-lateral (three or more companies) netting which is used in the management of cross-border payments where net receipts or payments can be settled in their local or preferred currency.

Multinational companies often perform transactions with their own subsidiaries or with non-group companies based in different countries. Because of this, companies must keep currency exchange rates in mind. Currency, or foreign exchange, netting allows corporates to offset accounts payable in one currency with accounts receivable in the same currency.

For example, a German entity operating in euros may need to settle with a Singapore entity in Singapore dollars, while the same Singapore entity may need to settle and invoice with a UK entity in pound sterling. The German company might owe S$1,500,000, the equivalent of just over €1,000,000, while the Singapore entity might owe £5 million.

These are separate transactions, all involving forex and transaction risks. Were the FX exchanges involved in the transactions, the FX exposures and requirements would no longer be the responsibility of individual entities, but for the group as a whole. Clearly, this is especially useful for multinational corporations.

At the centre of all this sits the netting centre, which determines the amounts owed or due, and makes the fund transfers. The counterparties involved send their invoices to the netting centre, which are then verified, and any disputes resolved. Once the invoices have been tallied, the netting centre will make the appropriate payments in the appropriate currency. Money owed will be used for payments elsewhere.

Setting up a multilateral netting centre and system means all the exposures are consolidated at a group level, and treasury teams have a clear picture of those exposures and what is required to settle them for all the entities. Foreign exchange risk, therefore, is centralised, and treasury departments will likely spend less time on transactions and managing foreign exchange risk as a result.

Foreign exchange risk can be better hedged and mitigated; rather than spread across a network of subsidiaries it can be centralised in the netting centre. The parent company will almost certainly be able to operate on better terms than a subsidiary and there is no further need for an external foreign exchange centre.

 

Why intercompany netting?

 

The benefits of netting are clear and extensive. In the first instance, fees are lower and treasury officials can better allocate their time due to efficiency gains.

For example, netting results in potential mistakes coming to light much more quickly. In general, treasury departments set up rules for managing disputes when setting up a netting system.

When subsidiaries fail to submit payables, a discrepancy in the payment process is logged. Administrators are then able to set up automated escalation protocols, which will alert upper management to payment issues based on pre-defined metrics. As a result, treasury teams can spend less time dealing with disputes due to an automated process being in place.

Netting also increases transparency. When subsidiaries are engaged in bulk payments, treasury departments may struggle to react to liquidity or financing challenges if company-wide visibility is lacking. This can lead to bulk payments backloading, in turn causing cash flow problems.

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