When treasury at DAB Group in Italy needed to refresh its cash management structure, it turned to Banca Nazionale del Lavoro (BNL), part of BNP Paribas Group, to provide much-needed visibility and control. Here, Francesca Salmazza, Accounting Shared Services Officer – Treasury/Fixed Assets at DAB Pumps is joined by Fabrizio Conti, Cash Management Solution Sales at BNP Paribas/BNL and Alexandra Oberheid, Solution & Design Implementation – Senior Project Manager at BNP Paribas/BNL, to explain DAB Pumps’ successful journey towards cash centralisation.
DWT Holdings and DAB Pumps are the Italian counterparties - sub-holding and subsidiary respectively - of a Denmark based world leader in development, production and commercialisation of hydraulic pumps for industrial and civil sectors. Over in Italy the DAB Pumps Group, which has consolidated revenues of more than €300m, was looking for a new banking partner to better support the company’s cash management need.
Francesca Salmazza, Accounting Shared Services Officer – Treasury/Fixed Assets at DAB Pumps, explains: “Our goal was to have one cash management platform for all of our sub-companies in order to significantly improve cash visibility and control. This was especially important given that treasury manages 14 companies across 23 bank accounts. So, in 2017, we started our search for a banking partner to help us achieve our goals – and met with BNL to discuss their credentials.”
Fabrizio Conti, Cash Management Solution Sales at BNP Paribas/BNL, was involved in the initial meetings and explains the approach: “When we met with DAB Pumps, we wanted to show them how we could help them, not just in Italy but around the world, thanks to the BNP Paribas network,” he says. “With the visibility and control challenges DAB Pumps were facing, we were keen to demonstrate our channel offering, Connexis Portal, an all-in-one e-banking solution to monitor balances and to carry out transactions worldwide.” The bank also outlined how it could help to improve the company’s international cash pooling solution, transferring it across from DAB Pumps Group’s previous banking partner.
So compelling was the Connexis demonstration and the cash pooling set-up that DAB Pumps signed up to work with BNL and soon began the implementation – starting with creating a host-to-host (H2H) connection and implementing Cash and Reporting modules. Salmazza continues: “Running everything from one banking platform is the best way for us and for all our financial managers. We have a lot of sales all over the world and so any software that can help us manage this in the best way is very welcome, and we quickly understood that Connexis was an excellent solution. The implementation was extremely smooth and, thanks to the H2H connection, we have now integrated Connexis with our treasury software so that we can see all of the bank transactions for all of our subs via a single platform.”
Replacing an international cash pool
While implementing the e-banking channel, the Group decided to transfer across the international cash pool from our Italian banking partner. At the time, the structure covered Italy, the Netherlands, Belgium, Germany, Spain, Hungary and the UK.
Alexandra Oberheid, Solution & Design Implementation – Senior Project Manager at BNP Paribas/BNL was in charge of the switchover. “With such an important structure being shifted between banking partners, it was vital that this should happen without interruption to day-to-day treasury operations,” she explains.
It was made more challenging because, while DAB had its pooling structure with another Italian bank, the Danish parent group had a master account with BNP Paribas. Says Oberheid: “We could not immediately set up direct poolings to the Danish parent group. First off, we needed to open up all of the bank accounts required by DAB Group companies, in order for them to be connected to the cash pool structure. Therefore, initially we did centralise the cash from the third party bank structure to a DWT overlay account in BNL. This was necessary because we required a temporary solution while setting up the structure that would work from the minute that DAB Pumps transferred from its Italian banking partner.”
Expanding and improving
The transfer of the international cash pool optimised the liquidity management within the Group. “Previously, the Italian cash pool between DAB Group and its Danish parent group wasn’t zero balancing because the Italian structure was held by another Italian bank and the master account was managed in Denmark by BNP Paribas,” says Conti. “Now that BNP Paribas/BNL manages 100% of the flows, zero balancing has been fully achieved.”
More countries have meanwhile added to the international e-banking platform – notably Poland, Russia, South Africa, the US. The final country, Australia, is currently being connected and will also be integrated in the Cash Pool.
Great benefits have come from the Connexis implementation “Having every country on the same page when it comes to cash management has been very helpful to DAB Pumps treasury,” Conti comments.
Salmazza adds: “As far as payments are centralised in the same system, we have now an overall visibility of our subsidiaries. In the past not all the banks could be linked to the same platform: some subs had their local e-banking and we could not see their accounts. Now we can make automated payments and sweeps.”
The format functionality provided by Connexis offered additional opportunities to treasury. “Connexis provides the option to use international payment formats as well as local formats, which is very important for European subsidiaries,” says Salmazza. “At the same time, it is possible to manage accounts with the BNP Paribas group from far-flung countries such as Australia to South Africa to over in the US via the Connexis platform. It is very easy for treasury to understand and monitor the cash flow activities of all subsidiaries. Likewise, it is simple for subsidiaries to play their part as everyone has access to Connexis.”
The next level
With the cash management channel and cash pooling structure set up, DAB Pumps and BNP Paribas/BNL are now exploring where else they can expand their relationship and further optimise the company’s cash management. One area under serious discussion is corporate procurement cards.
Conti explains: “The idea is that by using procurement cards, DAB Pumps’ treasury will be able to manage all of the purchases for Italy, with the data from the cards delivered directly to their ERP. Together with the data benefits, this kind of solution should enable DAB Pumps to obtain discounts on the procurement side and their suppliers to improve their collections and consequently their working capital.”
It is an option that Salmazza and her team are reviewing. “We are currently evaluating the complete flow for the procurement card,” she explains. “It is probable that we will have some advantage in regard to the cost of the product we are buying from our supplier, but we have to understand all the phases of the project. To begin with, we want to start with two or three suppliers to evaluate the flows and all the processes, in order to test it.”
“The test could start with an amount of around €1m, monthly, with two suppliers,” Conti adds. “If it takes off, the total ceiling of a project like this one could be around €3m a month.”
Communication counts
Like all successful collaborations, the communication between DAB Pumps Group and BNP Paribas/BNL has been at the heart of achieving what this project set out to do. “From my point of view, we have had a great communication and collaboration so far,” notes Salmazza. “We were able to implement Connexis and the international cash pool in just one year, which was a great pace of implementation for us. The team from BNP Paribas has supported us extremely well.”
Oberheid agrees: “From an implementation point of view, DAB Pumps are always very open and Francesca and the group are very easy to communicate with. This helped immensely during the implementation phase as a great deal of co-ordination was required and having excellent two-way communication enabled us to iron out any creases with maximum efficiency.”
DAB Pumps has also a piloted a new format that the bank has been testing on its e-banking platform concerning Ri.Ba payments. Ri.Ba are widely used to manage Italian commercial credits through the remittance of an electronic, magnetic or paper receipt issued by the Creditor. The format is usually available only on local e-banking tools. Connexis, even though being a global platform, was able, up to now, to offer just the collection side. BNP Paribas has now developed the functionality for the payment side: Ri.Ba passive. “Francesca’s team provided us with feedback on how it was working and what needed updating at the time we were testing it, which was very helpful for us. This kind of input enables us to deliver the best possible solution, not just for DAB Pumps, but also for other clients across the globe,” concludes Oberheid.
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