Keeping track of cash may sound like a simple task, but it can be quite an undertaking for a company with dozens, or even hundreds, of subsidiaries around the globe. That's where Alterna Technologies Group Inc.'s Auros platform comes in. It's Web-based software that gives companies a real-time picture of how much cash they have and where that cash is located. In the process, Alterna claims Auros can save users millions.
Auros also helps companies net their cash positions and payments. As information about positions and transactions flows through, the platform compiles a database that can then be accessed by as many users as the company desires. It's an ideal product for large companies, which "sit on hundreds of millions [of dollars] in bank accounts across the globe and they have no idea where it is or how to access it," says Michael Hines, vice president of marketing for Calgary, Alberta-based Alterna.
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Caroline Litchfield, director of eTreasury for pharmaceutical giant Merck & Co., notes that Auros can cut costs associated with foreign exchange by initiating payments from a subsidiary's bank account in one country to a supplier in that country, all on behalf of a subsidiary in another country. It tracks those transactions and nets the subsidiaries' exposures, which can reduce the company's foreign exchange trading volume. "That's one of the biggest selling propositions, and it's powerful," Litchfield says.
Merck, which is based in Whitehouse Station, N.J., and had $47.7 billion in 2001 revenues, has been using Auros for intercompany netting since late 1998. Now, the drug maker is introducing it as a liquidity management tool for its subsidiaries worldwide, relying on Auros to manage the processing of centralized cross-border payments, pool and centralize its cash and record financial trades with banks, Litchfield says. She estimates that using Auros will save Merck more than $4 million this year by improving its return from investing pooled cash and by reducing its foreign exchange trades.
Litchfield predicts that a global company that is just starting to use the system and wasn't already using intercompany netting and cash centralization might save "tens of millions" of dollars a year with Auros.
The U.S. operations of Canadian insurer Sun Life Financial have been using Auros since 1999 for many cash management functions and as a central database for all bank information. Sun Life Financial previously accounted for data using Excel spreadsheets, Access databases and multiple bank applications. But that involved a lot of data entry, which introduced the possibility of errors, says Tom Spataro, Sun Life's officer of treasury reporting, development and support.
Auros's ability to track and create transactions allowed Sun Life Financial to reduce the number of its bank accounts, while still giving the business units the detailed information they need, Spataro says.
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