Andrew Goldie, Managing Director of Coprocess, was interviewed by Jack Large for a video chat on the C&TM File website.
Credits to C&TM File
The title and overall theme was Intercompany Netting – Underused and Undervalued, netting is not often talked about.
One of our clients gave a presentation along these lines, you can complete a form to download it here, Underrated and Underused: Multilateral Netting.
Or see our blog post on the same subject, Underrated and Underused: Multilateral netting.
Recent changes in the market
Andrew pointed out that recently some banks have stopped offering netting as a service (RBS stop netting & Note to Deutsche netting clients). The reasons for this might involve reduced FX revenues and that netting is best offered by a specialist. Others have stopped offering outsourcing and netting was a part of that offering. Yet netting is a key part of a corporates liquidity management. The Coprocess netting software is a standalone system, bank and TMS independent. If clients want to continue to outsource netting or give some of the netting functions to an outsourcer, then Coprocess recommends Centralis, FTI Treasury and TMS.
New functionality
Perhaps not new but important! There are many, many corporates running netting on in-house systems or spreadsheets are making work by using manual methods. The biggest improvement they could make is to move to an external system such as Coprocess. With invoice level netting and matching and a discussion and dispute process it can go a long way to avoid intercompany settlement problems. It can also be used to automate the invoice settlement process and companies benefit from savings in many other areas. The recent supply side shocks by RBS and BofAML have caused some corporates to re-evaluate the netting process. They can now take advantage of invoice level netting to help improve visibility, provide more accurate numbers in the P&L and Balance Sheet and make the whole job of consolidation that much easier.
Coprocess netting continue to improve: The latest change is the introduction of bilateral settlement (Coprocess Adds Bilateral Settlement To Coprocess Netting) and there has been much talk of Payment Factories (Centralised vendor payments) the Coprocess system also allows the upload of vendor data, invoices etc to provide net settlement to the supplier and local currency net payment for the company business units.
What of the future
Coprocess is a software provider in a niche area, in business for 25 years we are experts in writing, marketing, supporting and implementing netting. We do nothing else and it is unlikely we would ever stop doing so. One key to be able to provide a service to the market for so long is having a critical mass of clients. New entrants into the market and banks too, find the cost and revenue dynamics challenging. All Coprocess development is funded out of income, we can keep the system competitively priced, yet still provide a full service and a profitable company.
