Cash & Liquidity Management
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Optimising Collections and Cash Concentration at ALBA

by Sonja Brei, Head of Treasury, ALBA

ALBA is an international business operating with significant activities in Germany, Slovakia, Bosnia Herzogovina, and Poland in particular. For example, we have been active since 1995 in the Polish waste management market and have now become the third largest private waste management company in Poland. Consequently, our treasury has sophisticated domestic and cross-border cash management needs, as well as managing the full range of ALBA’s FX and interest risk management, financing, investment and working capital requirements. Although we do not manage treasury activities on behalf of INTERSEROH at present, these may be integrated into the ALBA business in the future, after confirmation of the DPLTA agreement at the general meeting and registration in the commercial register in 2011, further extending the scale and complexity of our cash and treasury management requirements. We therefore decided to embark on a project to optimise our banking and cash management solutions both in Poland and beyond, to prepare for the integration and further working capital needs as well as to position the company for future growth. 

Group treasury objectives

From a group perspective, our aim is to minimise our bank accounts as far as possible by having one account per company wherever possible, but with the aim of centralising cash at a group level so that it can be deployed as required. We already had a cash pool in place, but treasury had limited access to cash as the master account was not held by the treasury entity. Furthermore, there was no zero balancing arrangement in place within the pool, leading to a loss of value date on balances. We were therefore seeking greater visibility and control over cash balances by implementing a more efficient cash management structure. In addition to introducing enhanced external structures, we sought to improve our internal processes by implementing a new treasury management system. 

Selecting a banking partner 

We made the decision to work with UniCredit as our banking partner, including its subsidiary Bank Pekao in Poland. Following a realignment of our capital structure, we had implemented a new credit facility, with UniCredit as a key participant. The combined UniCredit and Bank Pekao proposal offered the full range of products and services that we required, and we recognised that Bank Pekao offered excellent capabilities in Poland. We needed to work with a bank that had close proximity to our Polish subsidiaries, particularly in south-east Poland, so we were attracted to Bank Pekao’s extensive branch network. Furthermore, members of the team had had positive experiences working with the bank at previous companies. We identified a series of initial objectives: 

  • To achieve visibility and control over cash across the ALBA group, centralised in Germany 
  • To achieve same-day value on transfers between group accounts to enable cash surpluses to be used to fund deficits in other group companies 
  • To enhance our collections process in Poland, including automatic reconciliation and account posting 

Implementation and outcomes 

We have opened our new master account and connected our subsidiaries to the cash pool. In parallel, we were able to eliminate bilateral financing arrangements and replace them with multilateral lending from the master account to group companies with same-day value. These transactions are automatically reflected in the treasury management system (TMS). We had completed the cash pooling process, but following a corporate restructuring, we now have a new lead company so we will need to change the owner of the master account for the cash pool. We have been very pleased with the outcomes of the project so far. For example, we have daily visibility into our Polish balances and we are in a position to manage this cash more effectively. We have achieved same-day value when transferring between accounts, enabling us to leverage positive balances to reduce deficits within the group, and to enhance our return on surplus cash. Our collections management, reconciliation and posting process is now highly innovative and automated. With Bank Pekao’s help, we have set up a virtual account number for each customer, which we give to each customer as part of our payment instructions. We can then use this virtual account code to automate the process of reconciliation and account posting.