Published: January 01, 2012
The company is listed in Ireland but with its holding company and headquarters in the United States. Treasury is centred in Michigan, USA. We manage our two primary regions, United States and Europe, separately, with two primary banking relationships: KBC and its subsidiaries in Europe, and Comerica in North America. We have had a relationship with KBC spanning more than 15 years ever since we first commenced our operations in Europe, initially as part of a joint venture in Belgium. At that time, we needed financing in Europe, which was provided by KBC, and the relationship has expanded since then.
Today, our European operations extend across Ireland, UK, Netherlands, Belgium, Spain, Germany, Poland and Hungary, with small businesses in Portugal and Italy. KBC is a member of our revolving credit facility, and supports our daily cash and account management activities across Europe. We have daily sweeps from our operating accounts into a master account that we use for borrowing or investment as appropriate. Most entities operate in multiple currencies, so we have an in-house bank to reduce FX exposure across the group and simplify the account structure. Due to regulatory restrictions in Hungary and Poland, HUF and PLZ are excluded from our cash management structures and positions in these currencies are not offset or pooled. Consequently, we made the decision to keep balances in these currencies in the local entities. However, excess euros in these entities are still swept into the European cash pool.
With such a diverse reach of European operations, there are inevitably challenges that need to be addressed, particularly in areas that have stricter regulatory controls, such as Central & Eastern Europe (CEE). For example, opening bank accounts can be a very long process, and in some countries, the process is becoming more rather than less arduous. With a direct presence in CEE through its subsidiaries, KBC has been able to leverage its expertise to streamline processes as far as possible. In addition, the depth of coverage that the bank offers has proved highly beneficial, supporting our local in-country needs as well as cross-border requirements. For example, it is very important to us to be able to rely on our bank for a full range of local services, such as payroll, direct debits etc. In addition, we benefit from competitive pricing for FX in currencies such as HUF.[[[PAGE]]]
When reviewing our bank relationships, we found that the larger, global banks typically lack the depth of in-country coverage that KBC has. Furthermore, the bank’s relationship model allows us to influence the bank’s products and services and the way that these are delivered. In countries where KBC works with network banks, such as Spain, we are still able to take advantage of a comprehensive range of local services, such as local payments and collections, petty cash etc. and we benefit from the same degree of integration as if working directly with KBC.
We use KBC’s electronic banking system WISE to make payments and retrieve bank statements, which is then integrated with SAP for vendor payments, and also payroll in most countries. Due to the nature of our business, we have a limited number of large collections (typically one payment per week or per month from each of our large global customers) so there is little value in integrating collections at this stage.
Although treasury is geographically remote from our European operations, and KBC as our European bank, with different timezones, communcation with the bank works very well. We have a relationship manager who works with us proactively and co-ordinates resources within the bank as necessary. We also have a defined escalation procedure but this has not been required in reality.
Looking ahead, we will be rolling out an upgraded version of SAP across our subsidiaries, some of which have joined the syncreon group through acquisition, and therefore have worked with different platforms in the past. In addition, we will enhance integration and automation of intercompany flows and establish a longer-term hedging programme.[[[PAGE]]]
Working with KBC in Europe continues to give syncreon the benefits of full-service in-country banking combined with the professionalism, scale and cross-border capabilities of a pan-European bank, including both western Europe and CEE. This combination has been very valuable in supporting our business expansion across the regions and establishing in-country operations. The bank continues takes a long-term view of its customer relationships, which has proved beneficial to both syncreon and KBC. For example, 2009 was a difficult year for our industry, so we particularly appreciated KBC’s support in helping to ride out the storm and emerge stronger and more successful.
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