The challenge

Latin America is a key market for Baker Hughes, representing more than US$2bn in revenue. Its biggest market is the region is Brazil.

In Brazil, Baker Hughes inherited a diverse banking structure from the two companies with a significant number of accounts. This presented the perfect opportunity to simplify the banking landscape, optimise liquidity and automate manual processes.

The team wanted a banking partner that could offer state-of-the-art technology solutions that would integrate connectivity with the company, eliminating manual processes and facilitating greater automation and standardisation around payments and collections.

By harmonising the company’s banking relationship, treasury hoped to rationalise shared bank accounts and centralise cash, which in turn would provide improved cash management visibility and simplify reconciliation.

The solution

Baker Hughes’ treasury team took an innovative approach to selecting a single banking partner. Rather than the traditional request for proposal (RFP) approach, the team elected to issue a request for information (RFI) to a select group of international banking partners who already had relationships with the company.

This process would encourage a dialogue between the candidate banks, allowing a robust exchange of ideas and more of a solution-based dialogue rather than a review of static proposals. Furthermore, because all of the candidates already had a trusted relationship with Baker Hughes, the process was more about solving specific problems rather than establishing credibility. This allowed for an expedited process, which was critically important to the business.

Ultimately, Bank of America was chosen because of the bank’s ability to leverage SWIFT connectivity that minimises Baker Hughes’ IT resources, thereby speeding up the project’s go-live date. In addition, Bank of America’s continued investment and innovation in Brazil, as well as the bank’s process automation for daily liquidity investing, and the elimination of manual processes such electronic document signing, all of which reduced operational risk, were important reasons for the bank’s selection.

“We have been able to meet our treasury management needs by utilising the bank’s global online portal, which provides robust visibility and control. And the bank’s unique tri-lingual shared service centre, along with well-coordinated local and global coverage teams, were instrumental in providing ongoing advisory support,” explains Varun Wadhwa, Deputy Treasurer.

The company operates three different legal entities in Brazil, each with distinctly different needs and operating profiles. By moving to a single banking provider, treasury is able to more effectively support each of the three entities, creating far greater efficiencies, which in turn frees up resources for more strategic objectives.

Best practice and innovation

This centralisation in Brazil is noteworthy for a number of reasons, not least of which is that it was executed in the midst of tremendous change for the company, as it was setting up new systems and processes. While this change presented numerous challenges, it also offered important opportunities to drive greater treasury efficiency through modernisation.

The treasury team leveraged this initiative to harmonise the company’s banking relationships, rationalising shared bank accounts, and centralising cash. The treasury team has put in place a best in class treasury operation that leverages SWIFT-based payments and collections, enabling automation of many processes.

Key benefits

• Improved visibility over cash.
• FTE savings.
• Increased automation.
• Bank accounts reduced.
• Operational risk reduced.
• Manual signatures replaced.

“Ultimately, this innovative centralisation initiative has put treasury in a far stronger position to support the business more effectively in Brazil and across Latin America,” concludes Wadhwa.

The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2021 Awards attracted a record-breaking 309 nominations spanning 40 countries. To find out more please visit: https://treasurytoday.com/adam-smith-awards.