Deutsche Bank: Integration Now - Axel-Peter Ohse

With liquidity now at a premium, companies are increasingly looking to optimise their working capital management. Deutsche Bank's Axel-Peter Ohse tells Elly Earls about the purpose-designed IT platform that helps the C-Suite streamline their processes and gain access to crucial funding.

In 2009, companies began to realise the importance of working capital management optimisation. An issue that had previously only been considered by the treasurer and the CFO has now become one of the CEO's top priorities, given its effect on share price development.

The contraction of available credit has led to a significant increase in the supply chain financing sector with solutions such as eBills, a collaborative platform operated by Deutsche Bank, setting the benchmark. "It's a platform where buyers meet sellers, which integrates the flow of data with funding requests." Axel-Peter Ohse, head of Trade Finance Germany at Deutsche Bank, explains. "We aim to integrate workflows on the physical side of the supply chain with financing, and it can all be done online."

Deutsche Bank offers a consultancy service to further optimise companies' work flows. "Our approach is, first of all, talking to the managers in the various silos of the company," says Ohse. "For example, if we were working with a corporate client to optimise their procurement business, we'd talk to the procurement officer, the logistics manager and the sales managers."

The objective is to understand at which point of the value chain the company makes decisions as well as ascertaining how integrated this decision-making process is across corporate silos. "After a thorough analysis, it is possible to think about what to optimise and where to optimise," Ohse notes. "Basically, we're talking about a swap of mutual advantages, something that is only possible if a company is integrated internally and with its partners."

Visibility is key to this process, mitigating the level of risk for both the bank providing funding and the company depending on its suppliers. "We perceive liquidity management as risk management," Ohse says. "And the platform makes the information very visible and transparent. The higher the transparency, the more comfortable you feel, and this is one of the main reasons we decided to invest in our own platform rather than engaging in an existing third party service."

The key differentiator between eBills and third-party providers is simple – Deutsche Bank offers funding and process management in a one-stop-shop. "This means that if the supplier sees that an invoice is confirmed, he can depend on Deutsche Bank to receive his money," Ohse explains. The third-party operator, however, relies on banks or investors to provide funds, a practice that became increasingly unrealistic during and following the economic crisis.

Indeed, the recession stressed the importance of the adage 'cash is king', as well as the value of the relationship between a client and its bank. "Who gets liquidity first in a crisis?" asks Ohse. "It's your key relationship clients. And while banks take care of their relationships by providing funding, we also like to offer other services. This is why the platform needs to be collaborative; there are certain services we simply cannot provide such as logistical support."

In order to streamline processes, it is essential to invest in IT, yet, with liquidity running tight, many companies are unwilling to spend money on the next wave of technology acquisition. Deutsche Bank, however, has already invested in eBills, meaning that companies are able to forgo substantial expenditure on IT. "They can dock onto a bank without worrying about necessary security features because it's all built-in," adds Ohse.

The future of supply chain financing will see solutions become even more integrated. On top of invoices, purchase orders will be made available on the IT platform, allowing Deutsche Bank to match purchase data with invoice data. "It further increases transparency and helps the reconciliation process as well as allowing companies to request funding based on a purchase order, which is pre-shipment," Ohse explains. "Basically, we're trying to expand the scope for finance."

Deutsche Bank will integrate TSU (the trade service utility of SWIFTNet) into the platform, which will permit clients to use the service indirectly with other banks. Moreover, the bank is extending its services in global sourcing by syndicating funding structures. "We are simply trying to make it easier for clients to have everything available through one channel," Ohse concludes. "They will be able to manage liquidity requirements with foreign trade requirements, foreign exchange requirements, interest fixings and raw material price fixings."

This new financial supply chain management portal will be launched in Q3 of 2010, allowing its users to exchange supply chain data with buyers or suppliers located anywhere across the globe.