With a high growth rate over the past ten years, Esprit’s operations have been focused on organic expansion and enabling local entities to begin their sales activities as quickly as possible.

As a result, a disparate and unwieldy cash management structure had emerged, including over 130 bank accounts in Europe, more than 20 banking relationships, multiple e-banking systems and varying terms and conditions in different countries and between legal entities.

In addition, much of the technology in use was outdated, with cash transfers to Germany being initiated manually, for example.

Consequently, an ambitious plan was developed to set up a streamlined account and liquidity management structure across Europe, while implementing a new web-based electronic banking system. “A huge surplus of liquidity had been generated and we wanted to make best use of that,” says Ursula Dumsch, Manager Consolidation and Cash Management.

“We were also looking to optimise our payment and receivables flow and strengthen relationships with core bank partners. Finally, we were looking for a solution that could support Esprit’s future growth, including the establishment of a pan-European payment factory.”

To assist with developing the solution, Deutsche Bank and HSBC were appointed to analyse the existing set-up and provide consultation on the best approach, with Deutsche Bank covering 13 countries and HSBC covering four.

The solution devised by Esprit and its banking partners included an automated cross-border, multi-currency zero balancing structure. The European bank account structure was harmonised and preferred banking partners were defined to allow relationships to be developed more effectively. Meanwhile, the e-banking tools in use were reduced.

“An important requirement of the solution is its ability to support Esprit’s future development in the coming years. One key aspect of this is ensuring that all of Esprit’s legal entities (and any new entities) have the same structure and processes in place, allowing the solution to be used as a blueprint for entities in other regions in order to serve as a solid basis for the further enhancement of our Treasury function,” Ernst-Peter Vogel, Deputy CFO, pointed out.

The solution has also been developed with an eye on further improvement of Esprit’s treasury function, for example setting up a payment factory.

Following the implementation of the solution, benefits have been achieved in terms of transparent risk management, cost savings and process efficiencies. In addition, manual intervention has been significantly reduced and excess liquidity is now used more productively.

“The project was a great challenge for Esprit´s cash management team due to the very short project timeframe and the challenging project scope,” concludes Dumsch.

“The prerequisite for the success of this project was the full support of Esprit’s top management during all stages of the project, and the immediate implementation of the solution with tight milestones set – plus a dedicated team and great support provided by the selected bank partners.”