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Focus on Bank Account Management Taking a look at how to optimise bank account management, utilising two case studies from treasurers at different stages in their bank account management optimisation projects.

Focus on Bank Account Management

by Ben Poole, Editorial Consultant, Ben Poole Editorial Services

A workshop during the Cash Management University organised by BNP Paribas examined how to optimise bank account management. This included two case studies from treasurers whose departments are at different stages of projects designed to bring efficiencies to their bank account management processes.

Getting to grips with bank relationships

The first case study came from Open Travel Service (OTS), an organisation that provides touristic services to travel companies. The company was founded in 1995, but the treasury department was only set up in February 2012. The fledgling department quickly realised that the organisation as a whole worked with 35 banks and held over 300 accounts in 15 countries.

There were number of challenges concerning bank account management that the treasury faced at this stage. The primary issue was that the decentralised way in which the company had been acquiring banking partners and accounts meant that there was no reliable overview covering global bank accounts. Payment processing and the processing of account statements into the ERP system lacked automation. The company was faced with high costs and complexity due to either bank or country specific payment methods and connectivity that had been allowed to develop over time. The different bank accounts were also managed by a wide range of different software solutions and online tools, so the documentation and audit processes could not be managed easily.

Faced with these issues, the OTS treasury outlined a number of targets for its bank account management project. These included:

  • Reduce number of bank accounts and find a small number of ‘core banks’
  • Set up a daily overview of global bank accounts
  • Automated payment processes and bank statement processes
  • Unique banking and reporting tools covering the entire group
  • Centralised straight-through processing (STP) in request and approval of signature rights and account openings

To achieve these targets, OTS has taken a number of initial steps, beginning with the founding of the central treasury department in Switzerland in February 2012. One of the first actions of the new department was to define a treasury policy. This covers areas such as bank relationship management, account opening, payment processes and internal control. The treasury has already fully migrated to the Single Euro Payments Area (SEPA) instruments. They are also identifying the small number of core banks that they wish to work with. Following this decision, they plan to discuss how they will connect with these banks. OTS is also discussing payment file formats, and plans to set up a process landscape on a country-by-country basis. On the technology side, the treasury set out to find a central bank account management and bank transfer tool that can provide them with a very clear and in-depth overview of their bank account portfolio.

The next steps

While the OTS presentation showed a company at the beginning of a bank account management process, the other case study in the workshop illustrated how important this process remains, no matter how long you have been working at it. A large multinational treasury shared its experiences of bank account management, why it can be a headache for a multinational group treasurer, and its approach to managing this important issue.

The group treasurer of a multinational with entities operating in a variety of countries and regulatory zones faces a number of bank account management issues. The first issue, simple as it may sound, is who the company is actually banking with. There can be a large number of involved parties with the potential to open bank relationships. The breadth of the banking network can include local banks and global banks. There can also be a number of reasons for banking relationships, including transaction banking needs, investment, financing, access to the markets, trade finance, and many more. These should all be considered when treasury is rationalising banking relationships. The treasurer also needs to decide on who has the authority to open and close bank accounts in the organisation.

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