The challenge
TYROLIT’s cash management and payments processes were fragmented, with each of the company’s subsidiaries maintaining its own banking relationships. The introduction of the Eurozone provided a first opportunity to consolidate the banking landscape and optimise the payment processes of the company’s seven entities within the zone.
SEPA was seen as a further chance not only to optimise the company’s cash management set-up in the SEPA area but worldwide. The objectives were clear: TYROLIT wanted to further harmonise its banking landscape, optimise its treasury processes to support the group’s ambitious growth plans, and generate significant savings as a result. The company decided to bring its cash management structure to another level in 2013.
The toughest challenge TYROLIT faced was managing these projects with its existing headcount.
The solution
The solution entails an organically grown and centralised set-up, which builds upon the company’s existing euro cash pool and SEPA-ready infrastructure.
In order to introduce more efficiency to the organisation’s payment process, an intercompany netting solution was implemented and integrated with the existing euro cash pool. As a result, fully automated and free of charge accounting processes have replaced expensive cross-border intercompany bank transactions for all TYROLIT companies participating in both intercompany netting and cash pooling. On the back of this, a new TMS was introduced to enable the treasury to manage individual solutions as one, and with more efficiency by eliminating significant payment volumes. TM5, combined with a single-bank online channel, provides better quality and visibility in the organisation’s cash-flow and future planning and as a side effect the group’s worldwide FX Exposure has been centralised.
To increase efficiency, TYROLIT partnered with RBS with the aim of enhancing the structure further and providing the group with more control and efficient use of its global liquidity. Enhancements were made by centralising the euro flows of the Asia and Middle East regions into the existing cash pool structure.
The treasury also leveraged the group’s second largest currency, USD, by centralising this from regional pooling hubs in North America (where an overlay structure is used), Asia, Europe and the Middle East, into Amsterdam.
Best practice and innovation
This solution stands out because of its holistic and highly automated nature. It combines several solutions:
- Cash pooling.
- Intercompany netting.
- Centralised FX management.
The lean treasury department has been transformed from a cost centre into a profit centre.
Furthermore, the solution is an excellent platform for future evolvement, such as a payment on behalf model.
“Currently we at TYROLIT are investigating if this makes sense economically and the group is ready for the additional consolidation of tasks to centralise more control to central treasury,” explains Franz Bramböck, Group Treasurer and Risk Management.
