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Best Cash Management Solution Highly Commended: TYROLIT

Published: Jul 2014

Remko Streng of RBS and Franz Bramböck of TYROLIT Schleifmittelwerke Swarovski K.G.

Photo of Remko Streng of RBS and Franz Bramböck of TYROLIT Schleifmittelwerke Swarovski K.G.


This project entails an organically grown and centralised solution which builds upon the company’s existing EUR cash pool and SEPAready infrastructure. The combination of the cash pools and the intercompany netting solution reduced intercompany transactions (through their banks) by 90%. Given that TYROLIT is a mid-sized company with a treasury department of only 1.5 full-time employees, the team has been very successful in rolling out this project in only nine months.

Franz Bramböck

Group Treasurer and Risk Management

Tyrolit

As a member of the Swarovski Group, TYROLIT is one of the world’s leading manufacturers and suppliers of innovative solutions in grinding, cutting, drilling, honing, dressing and polishing. The Austrian company has more than 50 legal entities and 29 production facilities around the globe with around 5,000 employees.

in partnership with

RBS

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.

Key benefits

  • The combination of the cash pools and the intercompany netting solution reduced intercompany transactions (through their banks) by more than 90%. Central FX management through the Group’s finance entity reduced the group’s FX exposure by 50%, due to the natural hedges the in-house bank was able to accomplish.

  • The treasury has been able to transform its operations from a cost into a profit centre, adding significant value to the group’s financial performance.

  • Through its own finance company, TYROLIT has been able to bundle all its treasury activities and service the entire group as an in-house bank. By doing this, the treasury function has been able to provide added-value not only to the group but also to each individual entity.

  • Given that TYROLIT is a mid-sized company with a very lean treasury department, the team has been very successful in rolling out this project in only nine months and, at the same time, maintaining business as usual by staying focused on its day-to-day treasury tasks.

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