Cash & Liquidity Management
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A Centralised Approach to Cash Management at Menarini Group

by Alessandro Nesti, Financial Activities Corporate Director, Menarini Group

Pharmaceutical company Menarini Group has a strong reputation for quality and innovation across the 100 countries in which it has operations, developed over many years. To support the ongoing expansion of the business, Menarini’s group treasury embarked on a project in 2012 with UniCredit to rationalise bank relationships, centralise cash and liquidity management, and streamline financial processes both in Eastern Europe and in Italy. In this article, Alessandro Nesti, Financial Activities Corporate Director, Menarini Group describes the background to the project, Menarini’s achievements and future plans.

Project background

Before embarking on this project, we had a decentralised approach to cash and liquidity management in our major Central & Eastern European (CEE) locations that are part of our subsidiary company Berlin Chemie, with local operations in each subsidiary, and cash held in a large number of bank accounts with multiple banks and in different currencies. This created particular challenges, as it was difficult to establish consistent, complete visibility over cash, and to leverage group liquidity effectively. For example, cash surpluses in one entity needed to be transferred manually to fund deficits in another, resulting in considerable administrative effort and inefficiency. Furthermore, there were credit and operational risks associated with holding balances in local entities and accounts. In Italy, although cash management for the ten Italian subsidiaries was centralised, we lacked the ability to sweep cash balances into a single account automatically. It therefore took considerable time and resources to undertake this process manually, with a high probability of error.

Adopting a centralised approach

In 2012, we decided to launch a project to centralise funds across the Berlin Chemie subsidiaries in Central & Eastern Europe (CEE), and to automate cash centralisation in Italy. Our aim was to establish timely, accurate visibility and control over cash, increase financial efficiency and reduce risk. In addition we would be able to rationalise our banking relationships, close a large number of redundant bank accounts, and extend our relationship with UniCredit from being our domestic partner bank in Italy to become our CEE cash management bank. We already had a well-established relationship with UniCredit, and recognised the bank’s experience in designing and implementing efficient liquidity management structures. The bank’s network matched the Berlin Chemie footprint in CEE, which includes Austria, Romania, Slovenia, Czech Republic and Poland.