Published: May 09, 2023
The treasury team at global logistics giant C. H. Robinson set out to reinvent its cash and liquidity management structure within Europe. To do so, they enlisted BNP Paribas for a strategy focused on automation and process efficiencies across key European treasury activities.
C.H. Robinson Worldwide is one of the largest global logistics companies, providing multimodal transportation and logistics solutions using technology tools it develops in-house.
Mary Walker, Assistant Treasurer, C. H. Robinson, outlines: “We are one of the world’s largest logistics platforms, with 20 million annual shipments, $30bn of freight under management, and our consolidated total revenues for 2022 were $24.7bn.”
The company’s core treasury functions are led by a small team in Eden Prairie, Minnesota. The team oversees everything from global cash positioning and cash forecasting to capital allocation strategy, and capital markets. Additionally, local finance team members handle cash management responsibilities in the Europe, Asia, Oceania and Latin America regions.
Before the new structure was created, the European finance team resources were being tested, and there was an opportunity to automate some manual tasks to drive efficiencies for the business. For example, the company’s euro cash pool had only a limited auto sweep across its various legal entities, with the cash pool primarily managed through manual sweeping.
With a clear vision of what the treasury team wanted to achieve, the team put out an RFP that detailed their requirements.
“We had four main objectives with this RFP,” reveals Walker. “We were searching for a bank that had a presence in the European countries where we operated and was able to service us, could handle our payments in all the countries and currencies that we needed, would be willing to become a lender to our organisation, if not already, and could offer excellent customer service while partnering with us to drive efficiencies and successful business outcomes.”
The granular details of the RFP included lowering overall costs, eliminating cash collateral on the firm’s bank guarantees, and having a more proactive customer service with digital capabilities. Automation was a prime focus. There was a desire to remove the operational burden on treasury through standardised and fully automated transactional activities using industry-standard formats. This would result in a reduction of risk and time associated with manual activities of booking, settling, accounting, and reporting of intercompany loans.
Nathalie Bursens, Senior Manager Finance Europe (Accounting - Tax - Treasury), C. H. Robinson, comments: “We wanted to have more visibility and transparency on transactions and reporting. We are coming from a set-up where we have almost 100 bank accounts with more than 10 different banks in Europe. We wanted to bring that all together in one platform to automatically improve visibility. It also gives us better reporting options, to report back to Mary and the team in the U.S., and for our internal use within the finance department in Europe.”
On the cash side, the objectives included reducing idle cash and the company’s liquidity buffer with a fully automated zero balance account (ZBA) structure and concentration of liquidity across Europe. Treasury wanted to readily access liquidity in a single currency for further deployment and significantly reduce the costs associated with FX trades.
“In the past, we had only cash pooling for our euro accounts, and not all accounts were linked to it because of the different banks we worked with,” explains Bursens. “That means we had to transfer funds from one account to the other all the time, otherwise payments couldn’t go through because the account was not sufficiently funded. So, the notional pooling was the main idea that was new to me when we entered the RFP.”
Having gone to the market with an RFP that would transform the business’s treasury operations in Europe, the team decided to award the mandate to BNP Paribas. BNP was able to demonstrate that it could meet all the company’s expectations regarding the RFP objectives, which was supported by Walker’s previous knowledge of the bank.
“I had experience of working with BNP Paribas at my former employer,” Walker recalls. “Back then, we used all the same services and products, and I knew the customer service levels quite well. I had first-hand experience with this partnership and knew the bank could support everything we were looking for.”
Bart Steen, EMEA Cash Management Sales, BNP Paribas, notes that communication and collaboration are essential as far as BNP Paribas is concerned, starting as soon as the RFP is received. “There are some critical requirements we always see in RFPs – rationalisation, visibility, liquidity – but it’s vital to dial in and try to understand from the client’s perspective what they need at this stage in their treasury journey,” Steen emphasises. “For us, winning this mandate was only the start of a longer journey.”
An essential part of the selection process for C. H. Robinson was finding a bank that could match its European presence, rather than relying on various banks in different countries. Paul van Gelder, Director EMEA Coverage, Head of Team, BNP Paribas, notes: “Many US corporates, like C. H. Robinson, are looking for banks in Europe that have a meaningful presence. The geographical presence of BNP Paribas, particularly with our services in many markets across Europe, is a perfect overlap with the presence of C. H. Robinson.”
For Mohammad Bari, Director - International Cash Management, Transaction Banking Americas, BNP Paribas, the chance to provide value to a new corporate client was incredibly satisfying. “Our job as a bank is to use our capabilities and products, but also to provide thought leadership on trends across the treasury world, liquidity, and the best-in-class solutions out there,” Bari notes. “This has been a great collaboration with C. H. Robinson, the way we have approached this RFP, and the solution we have come up with, speaks volumes about the partnership we have built together.”
The mandate that C. H. Robinson awarded to BNP Paribas is significant. It is now the cash management bank for the company across 16 different countries in EMEA. The project kicked off in May 2022 with the two teams getting to know each other, discussing the intricate details of the project and sharing fresh ideas. By June, the KYC processes to open all bank accounts with BNP Paribas had begun.
“We split the account openings into two main waves,” outlines Bursens. “Wave one was fully finished by August, and wave two by the end of December 2022. In these two blocks of time, we opened all the accounts in 16 different countries. It was an intense but very smooth process. From January 2023, we started using the accounts, uploading payments, and everything is very close to ‘business as usual’.”
To ensure the best levels of cash management connectivity, C. H. Robinson uses BNP Paribas’ Connexis Cash Gateway, which it has been using intensively since January. Bursens adds: “All our outgoing payments are now completed through the system. We have a host-to-host connection with our accounting platform Oracle, meaning we have automatic payment matching. We had to upload manually in the past, so this is a huge efficiency gain.”
The core treasury and finance team received training from the bank to use Connexis to its best advantage. Then, internally, the finance team has been training the various business units using the platform. These include shared services centres that have to upload payments or download statements, for example, and HR, which uploads payroll files.
“We had to do a lot of testing to be sure that all files were adjusted properly, but that went very well,” enthuses Bursens. “We’ve had great support from the bank’s implementation team.”
The automated approach of the transformation has also enabled more intelligent and agile working for the C. H. Robinson team, as Bursens outlines: “Another good thing about Connexis Cash is that we can download specific transaction details. In the past, we had to do a data download dump into Excel and then start working on that, so this is much more efficient. Also, I like that I can authorise payments through my mobile phone, even on vacation days. I can just pick my phone and sign off on them. It is a far more modern way of working than we were used to.”
On the liquidity management side, the implementation has fulfilled the RFP’s ZBA needs by establishing a cross-border ZBA from in-country accounts to master accounts at C. H. Robinson’s European entity. There is one account per currency across 10 currencies, which are held with BNP Paribas in the Netherlands. The bank has established a single entity multicurrency notional pool as a liquidity overlay and provided C. H. Robinson with an uncommitted multicurrency overdraft facility.
“The notional pooling has delivered a lot of automation for us,” enthuses Bursens. “Obviously, we do not have to fund accounts daily, but it also delivers great efficiencies when it comes to the cash pool interest for intercompany transactions. We’re talking about a cash pool between 16 legal entities within the group. All the automation there represents a huge step forward for us in the monthly closing.”
Another central pillar of the original RFP was a more efficient bank-guarantee facility than C. H. Robinson was used to experiencing. Currently, the business has bank guarantees in Europe that support building leases, customs, and tax obligations.
“Our prior provider required cash collateral for the guarantees we issued,” explains Walker. “That tied up a vast amount of cash, and so, from where I sit, that’s a bad deal. With BNP Paribas, we no longer have to endure that. We have a facility where we can issue those bank guarantees as we need, and they are not backed by cash. From a cash management perspective, this will greatly benefit the organisation.”
Throughout the implementation of C. H. Robinson’s treasury transformation, BNP Paribas focused on providing excellent service for its new client. The implementation team allocated to this project is centrally driven and managed but also closely connected to all the local groups that the bank has across the countries covered by the project.
“That’s also exactly how we would like to proceed post-implementation phase,” reveals van Gelder. “We’ll ensure there is a central servicing team in place with a dedicated person allocated to C. H. Robinson who can help with all operational payments issues and questions. This team can also reach out to local teams if and when needed in case of any specifics. We take a central approach but have many boots on the ground locally to give in-country support as and when needed.”
The strength of the service model that BNP Paribas deploys is that the bank purposely looks to dovetail with the set-up of its clients. “On the service side, we have a very centralised offering, but we mirror our clients,” explains Bari. “We’ve set up the servicing for C. H. Robinson to be the best fit for them. They have a global treasury and regional finance teams, so we provide escalation points across the bank to ensure they will be well taken care of going forward.”
Indeed, the centralised service team has been a critical part of C. H. Robinson’s treasury transformation project, according to Bursens. “I like that the implementation team is centralised. We always send many questions to them, which get answered directly or are forwarded to in-house specialists. Most importantly, we don’t have to worry about who to contact, we just go directly to the centralised team. They’re truly advising us on a daily basis.”
Walker echoes this positive sentiment, underlining how helpful that level of service is to treasury departments running a lean and efficiency-focused team. “I expect a certain level of service and so far, I have absolutely no complaints. If there is a concern, they’re quick to react, respond and resolve things. For me, that’s key. Time is at a premium, so making sure things run smoothly is extremely important to us.”
At the time of going to press, C. H. Robinson and BNP Paribas are running the day-to-day operations of the treasury and finance team in parallel with the roll-out of what is left of the initial implementation. This is the most immediate item to be ticked off the company’s transformation wish list.
“I will be happy when all the accounts are open and active, and we have all the efficiencies we’re looking for,” smiles Bursens. “We are already noticing this happening, of course, but it’s still a lot of work for everyone.”
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