Published: November 01, 2008
Konica Minolta Business Solutions is a leading provider of advanced document solutions and networking/imaging technologies for use from the desktop to the print shop. With 27 subsidiaries operating across Europe, each with its own profit centre, the company identified a need to improve its existing cash management structure and selected RBS to develop the solution.
Konica Minolta Business Solutions combines award-winning colour printers and multifunctional copiers with powerful software tools to deliver integrated imaging and document management solutions to customers. Our European business is headquartered in Langenhagen, Germany, with subsidiaries across the region. Whereas some subsidiaries were cash rich, others required local bank financing. Being able to gain central oversight of cash positions, and mobilise cash across the region, were therefore key priorities. We sought a ‘lean and mean’ cash management structure, with a centralized approach to liquidity management across Europe. Our main goals were to:
By being able to pay down debt in one part of the organisation with spare cash lying elsewhere, we could maximise internal cash to reduce interest charges. In addition, a Europe-wide rationalisation of our banking relationships would help to reduce banking fees and administrative costs.
We recognized the benefit of adopting a regionally centralised liquidity management structure and we needed a bank with the geographical reach and advanced solutions to help us achieve this goal successfully. We had clear criteria for our cash management bank. We were looking for a bank committed to partnership, with a proven track record in liquidity management and a global footprint combined with regional expertise. After detailed discussions with selected banks, Konica Minolta mandated RBS as our bank for multi-currency European liquidity management. Among the key factors behind our decision to select RBS were the bank’s competitive pricing, systems capability and geographical coverage. RBS’s ability to provide strategic advice on the solution was also a major point in their favour. [[[PAGE]]]
RBS supported us closely to help win the buy-in of local subsidiaries- a key factor in accelerating the efficiency gains of the new solution.
The resulting cross-border European liquidity management solution has been rolled out to 19 major countries in Europe. The solution centralises cash positions automatically, netting cash balances against debts to reduce interest costs and enhance the balance sheet. Balances from local accounts are swept via cross-border zero balancing to a cross-currency notional overlay, currently incorporating nine currencies. This overlay involves mirror accounts in the Netherlands for each in-country local currency account. Where we need to retain accounts with other local banks, these third party balances are incorporated into the overall structure through RBS’s multi-bank cash concentration solution. This tool generates an automatic request to transfer surplus funds from third-party accounts into the notional pool. Overall, the solution delivers regionally centralised liquidity, enabling Konica Minolta to use consolidated currency positions to mobilise working capital to pay down debt or send to other parts of the group, and optimise group liquidity.
The solution includes the roll out of RBS’s online cash management portal Access Online, enabling bank account reporting and payment initiation at both a group and subsidiary level. By providing a consolidated view of group transactional flows, including third-party balances, Access Online supports our goal of achieving greater transparency for its treasury operations. We use another web-based tool to enable FX transactions and money market investments. From a client service perspective, we work with a central, dedicated team at RBS, in addition to having access to local language support when needed.
A partnership approach was key to implementation. RBS supported us closely to help win the buy-in of local subsidiaries – a key factor in accelerating the efficiency gains of the new solution. We formed joint teams that visited each local subsidiary to explain the solution and involve them in planning – an initiative that supported the fast and faultless roll-out of the solution.
We are extremely satisfied with the relationship we have developed with RBS. The systems capability and geographic reach met our requirements. We were impressed with the partnership approach which helped us develop an ideal solution and, just as importantly, roll it out successfully across Europe and gain the support of everyone involved. We look forward to working together to further optimise and extend our liquidity management arrangements in future.
Konica Minolta has achieved tremendous efficiencies through group cash pooling – by the end of the last fiscal year, it had reduced its consolidated European interest-bearing debt by EUR 45 million. In addition, local subsidiaries have less administrative burden, with treasury representatives being able to reduce the amount of administrative work they must undertake.
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