The introduction to a best selling-book1 tells a story about the fact that drawing up a good strategy is not enough for chief executive officers (CEOs) to be successful. The real challenge is the actual, timely and full implementation of the chosen strategy. Top managers who think that their role ends with the definition and formalisation of vision, mission and strategy are at risk.
For a corporate treasurer or chief financial officer (CFO) needing to realise complex international projects in the area of cash management, the same applies. Initiatives such as building up a payment factory, concentrating liquidity management within specific geographic areas, turning European payments to the single euro payments area (SEPA) standard, and setting up an in-house bank do have a strategic impact on their group. They can affect a company’s financials and competitive position – it’s also very likely that the related decisions and investments cannot be changed in the short term. That’s why treasurers and CFOs have to pay considerable attention to the right approach to the implementation of these projects. In fact ‘…depending on the sophistication of the solution you have chosen, and the degree of change that this involves for you, this step [implementation] is probably the longest and hardest one to take in order to reap the benefits of your chosen strategy’.2
The three main issues in international cash management projects are:
- External environment constraints such as country-specific legal and tax hurdles and infrastructures.
- Internal constraints such investments/net asset value (NAV) of the project, coherence with the corporate strategy, support from IT and the co-operation of subsidiaries.
- Choice of the right internal project team, external consultants, and bank(s).
The last element, the choice of the bank(s), is of great importance when you undertake international cash management projects, but it’s seldom seen in terms of its implementation and post-implementation support capabilities. Ultimately, the bank is here the main – perhaps the only – external provider. Request for proposals (RFPs) almost always focus on product range and pricing, as well as the general service model and geographic presence of the banks’ network. But banks can differ greatly in how they approach international corporates in terms of providing a professional project, implementation and support service. And the differences can actually result in effective projects implementation on the treasurer/CFO side, where the two parameters should mean actual, timely and full implementation of the corporate treasury strategy.
Does the bank have a dedicated cash management project and implementation team? What is its track record? Is implementation managed with a strong centralised approach (i.e. one team for all the EMEA operations) or a decentralised one (i.e. each bank in the geographic area has a team acting as a single point of entry)? How many people are involved, what are their skills in project management and what is their product expertise? Do they use structured tools such as project plans and defined checklists? Is the implementation team able to look after all the projects phases, coordinating all the internal departments of their banks (such as legal)? Do they use global contracts and processes within the respective geographic areas? Does the project and implementation team measure the quality of their output and of the relationship established with treasurer, IT and lawyers within the corporate’s organisation? How does the bank perform its inquiry and investigation service?
These are crucial questions, and the answer to them can make a difference – for banks, in terms of competitive advantage, and for corporates, in terms of the successful realisation of corporate treasury projects. As mentioned above, this aspect should be emphasised more when selecting a bank, since the focus very often remains on the commercial part of the story.
Cash Management Project Implementation
Cash management project implementation involves the concept of client onboarding. It extends beyond this, however, relating not only to efficient technical setup and documents/contracts management, but involving a discipline (project management) and a precise choice in terms of service to the customers and of the type of relationship model to be established.
Figure 1 describes the necessity for execution processes to be linked not only to the sales and consultancy phase, involving cash management sales and relationship managers), but also to product development and innovation. The existence of a clear awareness of this necessary interaction, and an explicit commitment from the banks’ organisation is essential. In fact, on one hand, the constant and close contact between implementation teams and corporates is a valuable source of information that can trigger new ideas and solutions in terms of products and services. Despite the willingness of banks to provide only a standard offering, especially in terms of documentations and contracts, multinationals and international corporates often ask for customisations and adaptations.
In this case, there are some key elements that make the difference:
- A real commitment on the part of the bank to develop long-term business relationships with such international counterparts, that lead to the availability, readiness and capability to deliver specified customisations, for example product features and contracts, with a certain degree of flexibility.
- The professional skills and effectiveness of the implementation. Managers need to negotiate what can and cannot be done with the corporates, and in coordinating the internal departments of the bank and of the respective bank group with reference to the required adaptations of products, contracts and so on.
Banks have to reflect upon these two points if they really want to win business and competitive advantage. Corporates should also consider these parameters when choosing their bank.
When considering the implementation of cash management projects, corporates expect banks to be able to deliver innovation in an efficient and highly qualitative manner. And the level of customer service experienced here is the most important factor for multinationals choosing their cash management partner bank.3
Europe-based banks competing in the international cash management products and services market dedicate specific resources to cash management customer projects, implementation and support, but with very different emphasis. The professional profile of managers and employees dedicated to this area can be seen as representing back office support to the sales force or as representing the highest degree of professionalism within cash management/transaction banking. All banks embrace the ‘single point of entry’ concept, but with a different approach, offering either a ‘unique centralised implementation team’ or ‘decentralised but coordinated network of teams’. Additional elements offered can include structured workflow management, dedicated software tools for contracts and document management and a uniform European contract.
1 L. Bossidy, R. Charan, and C. Burck, ‘ Execution: the art of getting things done’, Crown Business, 2002.
2 M. Dolfe, A Koritz, ‘European cash management’, J Wiley & Sons, 1999, p. 185.
3 JP Morgan Global cash management survey 2008, p. 9, McKinsey Quarterly n.3, November 2008, p. 38.
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