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Best AP Solution Winner: Euro-Center Holding SE

Photo of Pavel Machacka, Citi, Irena Žáčková and Michaela Zelenkova, Euro-Center Holding SE

With expansive operations, sometimes requiring urgent payments in exotic currencies, Euro-Center Holding faced mounting AP complexity. Here’s how it tackled the issues.

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Photo of Pavel Machacka, Citi, Irena Žáčková and Michaela Zelenkova, Euro-Center Holding SE.

Irena Žáčková

CFO

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Praha, Czech Republic

Euro-Center Holding (ECH) is one of the world’s leading medical assistance and claims handling service providers. A subsidiary of the Munich Re Group, ECH acts as a local gateway to a worldwide service and assistance network for travel insurance and assistance companies, annually processing over 210,000 cases around the globe.

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Bank consolidation reduces complexity and opens up process automation opportunities

The challenge

Euro-Center Holding (ECH) services are provided via subsidiaries/contractual relationships located in 13 hubs across the globe.

ECH’s annual revenues doubled between 2011 and 2017, with over €100m made in annual payments to providers in more than 45,000 payment transactions executed in 55 currencies, including exotic currencies such as Zambian Kwacha, Samoan Tala and Swaziland Lilangeni.

As a result of growth, an efficient and flexible cash management solution was required. The key challenges ECH faced included bank relationship management, where cash management was fragmented, with transactions processed via eight different banks. Further, with more than 40,000 providers (hospital, clinics, air ambulance and others) across the globe, ECH initiates payments in 50+ global currencies.

In some emergency situations, such as covering the cost of an air-ambulance or in territories where the use of standard bank transfer is limited, ECH relies on online commercial card payments. In certain countries this exposed ECH to card fraud due to insufficient security features. Additionally, standardising and automating processes related to payment processing initiation, authorisation and reconciliation, while eliminating risk of fraud, presented a key challenge.

With ECH’s payments executed from 13 hubs across the globe, 24-7 access to funds for immediate payment initiation is key. Limited access to liquidity could result in failing to fulfil the obligation to the medical service provider and in turn put patients at risk. With no efficient method to ensure full value transfers and transparent FX and transaction costs, ECH faced further inefficiencies.

The solution

Considering its growth, ECH decided to fundamentally restructure the way its treasury centre operated. In 2015/2016, four banks were assessed and invited to the tender. Citibank Prague was awarded the contract.

With 13 ECH locations across the globe, all accounts are now held with Citi in the Czech Republic in single currency (EUR). All receivables are streamlined into a single Citi branch, enabling fully automated reconciliation. Disbursements are no longer processed via various bank accounts held in different global locations, they are also fully centralised in a single location.

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Best practice and innovation

ECH reduced the number of relationship banks from eight to one, allowing ECH to achieve efficiencies by significantly reducing employee workload and administration related to performing regular third-party due diligence, as well as reducing costs related to bank account management, accounting and reconciliation. By reducing the number of banks used for claim payments, ECH lowered its bank fees. Savings of 30% on costs related to banking services were made in 2017 compared to 2015.

Centralising cross currency payables in 40+ currencies occurs by processing payments via Citi’s platforms, CitiDirect BE® and WordLink® as Cross Border ACH, Cross Border Wires and Onsite cheques. ECH minimised transaction costs and replaced its manual USD cheque issuance process with a fully automated solution.

Complete end-to-end automation of transaction processing has been made possible via a single file import from payment initiation, cheque issuance to reconciliation. Secure urgent payments can be made online, initiated using Citi’s Virtual Card Accounts (VCA) portal with defined parameters for such as single or multi use, maximum transaction amount, validity period or merchant category limit.

ECH has also incorporated into its solution a host of other benefits, such as efficient liquidity management, full control over costs, access to 130+ currencies, reduced financing and transaction costs, lowered fraud risk and secure online payments via the VCA solution.

Key benefits

  • Complete end-to-end automation of transaction processing.

  • Reduced employee workload and administration.

  • Reduced bank account management, accounting and reconciliation costs.

  • Lowered bank fees by 30%.

  • Secure urgent payments made online with virtual card solution.

Key learning point

The main learning point is that such a complex solution with dozens of currencies and a comprehensive cash pool can be centralised and yet flexible enough to respect specific local requirements such as cheques, virtual cards, special types of bank transfers and time zones.

Portrait of Irena Žáčková

Irena Žáčková

CFO

Irena Žáčková started as a certified auditor and tax advisor. After ten years in CFO positions in the Czech petrochemical industry and a petrol station network, she continued as the country CFO at ABB Czech Republic. Since 2012, she has worked as the CFO of Euro-Center Holding SE. The main challenge was relocating the company from Denmark to the Czech Republic.