Transaction Services
Case study
TUI Travel Plc
SEPA Direct Debits Scheme provides
centralisation efficiency in collections
UK based TUI Travel Plc is one of the world’s leading leisure travel companies, employing
approximately 53,000 people and operating in 31 key source markets worldwide. Its business
is grouped into four sectors, Mainstream, Accommodation & Destinations, Specialist & Activity
and Emerging Markets. The Accommodation & Destinations (A&D) sector has a Finance Service
Centre (FSC) providing back office services based in Mallorca, Spain. The FSC trades with over
24,000 customers and 25,000 suppliers in over 80 countries. Citi has provided TUI Travel A&D
with various cash management services since 2007.
The challenge
The FSC of TUI Travel A&D (Tui
Travel) wanted to rationalise its
banking relationships globally
and fully automate its treasury
and ERP integration in order to
standardise internal processes and
improve working capital liquidity.
Firstly, Tui Travel wanted to use
a consistent market standard
infrastructure to make payments to
over 80 countries and automatically
fund them through its liquidity
structure. With Citi’s support this
was achieved and went live in 2011.
Tui Travel started exploring other
areas that could provide further
efficiency gains, subsequently
attention turned to collections. The
challenge here was that the company
had fragmented direct debits for
collection into local currency accounts
in each market - this needed to be
made more efficient to save time,
money and enhance transparency.
The solution
TUI Travel opted for the SEPA Direct
Debit Business to Business (DD
B2B) Scheme using CitiConnect
for File SAP iDOC file format with a
collection account held in London.
This went live in February 2012.
The collections are made into the
Spanish entity account in London
which is linked to the company’s
centralised liquidity structure.
TUI Travel chose this scheme
because of its ability to manage
customer disputes. The scheme
states that debtors can claim back
funds collected up to 13 months if
done without a mandate and that
debtors have no entitlement to a
refund of an authorised transaction.
Project teams from Citi
Implementations and TUI Travel
worked closely together to ensure that
the technical requirements for SEPA
Direct Debits were followed, legal
aspects were covered and that there
was a shared understanding of the
technical and business imperatives.
During implementation, Citi’s robust
algorithm process in the UK enabled
TUI Travel to generate their unique
creditor ID (CSID) with a 48 hour
turnaround. A CSID is a collector
identification number required in
a SEPA Direct Debit scheme. It is
determined on a legal entity basis,
regardless of the the account location
or where it is generated. This provided
a huge time saving for TUI Travel.
The result
With the successful implementation
of this centralised SEPA
Direct Debit transaction, TUI
Travel now benefits from:
• Scalability: centralisation enables
the creation of shared service centre
or central treasury operations by
being able to reach across the SEPA
region (32 countries). This enables
TUI Travel to achieve banking
relationship rationalisation and
further centralisation of account
structures.
Transaction Services
• Predictable collection: of crossborder invoices enables TUI Travel to
collect from business and consumer
customers across the European
economic area.
• Harmonised standards: standardised
mandates, file formats, value dating
and processes for all 32 countries
increases efficiency. Use of BIC and
IBAN for debtor bank/account is
mandatory.
• Single legal framework: SEPA
Direct Debit is regulated by a single
institution, the European Payments
Council, setting similar rules in every
SEPA country reducing the legal
complexities.
SEPA Direct Debit is another step
forward towards treasury efficiency.
Indeed, with this framework in place,
there are now plenty of opportunities
for TUI Travel to further enhance
its treasury management.
This case study was featured in
the European Payments Council
newsletter, October 2012.
Citi Transaction Services
transactionservices.citi.com
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