Subway’s complex banking landscape exacerbated the cash visibility challenges. “We direct-draft our franchisees weekly for royalties and advertising fees, and in many places we need an in-country bank to do that,” Vienneau says. “Eventually, as the company grew, we found ourselves working with 80 different banks, and our IT team had custom-built a unique electronic funds transfer [EFT] format for each bank our homegrown ERP [enterprise resource planning] system needed to communicate with.”

Historically, these challenges were not top-of-mind for Subway’s corporate finance group. “The business operated frugally, and it was such a cash-generation machine that the lack of visibility was not a pressing concern,” Vienneau adds. “Internationally, visibility was even more of a challenge than domestically because we were dealing with so many small banks around the world, but we weren’t worried about repatriating funds. Cash just built up internationally over time.”

In 2019, the company’s new CFO targeted treasury as a prime area for modernization. “Ben Wells had been a treasurer for many years before ending up as the CFO of Burger King,” Vienneau says. “When he joined Subway, he was floored that we were collecting local currency in more than 100 countries and we had no hedging program, nor any investments of excess cash.” The company immediately began building a dedicated treasury team, consulting with banking partners on process improvements, and exploring the possibilities available with treasury management systems.

“The first major treasury initiative we undertook involved centralizing cash and repatriating it in a timely manner so that we could earn interest on it,” says Sean Stymacks, senior treasury manager. “As markets changed and interest rates rose, we wanted to take advantage of that missed opportunity. It became imperative to ensure we weren’t leaving excess cash internationally.”

Subway began hiring team members for its newly formed treasury group. At the same time, Subway began shopping for treasury software. “When we started looking at rolling out a treasury management system, our number-one priority was to achieve better visibility within our banking structure,” Vienneau says. “We saw a lot of other features that could bring value, but we didn’t have a complete vision of what our treasury function would look like years down the road, so we focused on making sure we would achieve good visibility to our cash.”

The company deliberately looked for a software-as-a-service (SaaS) solution that treasury could implement quickly. “Our CFO had prior experience with treasury management systems and understood that a SaaS solution would make connecting with our banks and getting visibility into cash through those bank connections and over SWIFT near-term–attainable,” Vienneau says.

Subway began deploying GTreasury and engaged Actualize Consulting to help optimize operations of the new treasury team. GTreasury built a host-to-host connection with Bank of America, Subway’s primary clearing bank in the United States, and subsequently rolled out host-to-host connections with several more of the company’s banks. These connections facilitate the transfer of information around account balances, transaction activity, and payment files. Then the GTreasury SaaS system passes this data to the company’s ERP system.

“Centralizing all our cash information in GTreasury has enabled us to pursue bank consolidation,” says Jeff Bryson, senior treasury manager. “We’ve reduced our number of banks from 80 to somewhere in the 20s, and we’ve consolidated the majority of our global operations with a handful of major partner banks. Changing banks is much easier now that it doesn’t involve building a brand-new, custom EFT file. Once we built the pipeline with our treasury management system, we were able to start knocking off some of those accounts.”

Concurrent with the treasury management system rollout, the company began implementing OneStream, a tool designed to perform automated reconciliations. Bryson and Stymacks worked closely with the G/L accounting team to understand the cash flows through bank statements on a monthly basis, asking questions like: What transactions are the accountants booking manually? And how are they identifying them?

“Once we understood the rules, we started training GTreasury to build out those entries on a daily basis,” Bryson says. “Eventually, OneStream will read the general ledger, as well as the transaction data GTreasury downloads from the banks. It will automatically match what it can and allow the people working on reconciliations to deal with the exceptions.” This will dramatically reduce the amount of staff time required for reconciliations.

All told, the treasury transformation initiative has revolutionized cash management at Subway; Vienneau reports that his team now has 98 percent cash visibility. “As our cash visibility improved, and we started to reduce the large pockets of cash spread throughout the world, we took advantage of the opportunity to start concentrating and investing it.” The project has directly resulted in tens of millions of dollars of earnings on cash investments.

More important, Vienneau adds, “we can now get information to senior management in a timely manner, so they can better run the company and make important decisions. Subway has undertaken a number of large initiatives recently to benefit the brand. Having insight into the company’s cash position enables the senior management group to make sound decisions.”

Visibility became even more crucial when Subway was purchased earlier this year by a private equity firm. “To finance the deal, the firm securitized our royalty streams,” Vienneau says. “This was the largest whole-firm securitization in history, and it requires us to submit weekly certifications to the banks so they can move the funds through the securitization waterfall.” These certification files require transaction details around the retained collections that are collateralizing the bonds. Subway’s treasury management system simplifies the collection of all the needed information.

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See also:

• Fabricating a Treasury Function from Scratch to Support an $18 Billion Business

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“Our sales week ends on Tuesday, and every Wednesday morning, we have a report that we can submit to the trustee banks with everything they need,” Vienneau says. Adds Bryson: “Initially, we discussed with the private equity firm how long we would need: Would we need a week or 10 days to prepare these certifications? But we have them ready on day one—and had them ready on day one of week one. On multiple occasions, our banks remarked about what an exception to the norm this was.”

The greatly enhanced cash visibility has enabled Subway to begin hedging foreign exchange (FX) risks. “We started our hedging program in 2022,” Vienneau says. “Plus, our whole approach to FX trading has changed substantially. We used to have one banking provider, and we would take whatever rate they offered. Now we shop everything out via Bloomberg to our different banking partners. That exercise alone is saving the company millions of dollars annually.” And Bloomberg links into GTreasury so that the treasury team can see Subway’s full portfolio of trades at any time.

Having visibility into global cash positions has also enabled Subway treasury to develop a cash forecasting process. “We’ve started to tag transactions within GTreasury as a first step in building cash forecasts,” Stymacks says. “We are currently pulling the data into Excel for the actual forecasting, with an eye toward making it more automated in the future. But without the initial visibility into our cash, we wouldn’t have been able to build out a usable forecast even in Excel.”

Finally, with its new treasury systems and processes, Subway was able to transform accounts payable (A/P). Before starting to build the treasury team, the company had a large A/P group manually processing tens of thousands of payments annually and executing most of them via wire transfers. “We had a hugely manual payment process, which we have streamlined,” Vienneau says. “We have automated cash account entries, along with elements of our FX trading and settlements.”

Treasury and finance processes have become more efficient across the board, but A/P may be the area where Subway is achieving the biggest time savings. For example, processing transactions formerly required a member of the A/P team to “physically log into 80 banking websites and key instructions, and then a second person would have to go in, review it all, and release the payments,” Vienneau says. “The A/P manager and one other person would tackle a stack of 100 wires every day, and it would take the better part of the day to get through that pile. Now that the payment initiation and approval workflows are automated, they get it done in about 10 minutes a day. Going from an entirely manual process to one that’s straight-through has just been huge.

“The visibility and forecasting afforded by this initiative have been crucial to our ability to build value in our new treasury function,” Vienneau concludes. “I think the key to our success was our initial focus on our biggest pain points. Other companies that are looking to transform treasury should evaluate where their biggest pain points are, then tackle those first. That sets you up for a tailored approach that ensures you address your primary needs, while enabling you to set reasonable expectations for additional benefits down the road.”