The challenge

Due to Brexit, the company’s existing liquidity structure would not have been fit for purpose to accommodate new EEA entities into its cash pool due to revised legislation in place. Ricoh therefore sought an alternative to its UK structure as a key objective.

With well over 100 accounts already participating in the UK multi-currency notional pool, Ricoh had to carefully consider the location when looking to restructure the solution. Effectively the whole cash management relationship would also need to be reviewed as the location of accounts may be required to change. The need for additional documentation to be completed and internal practices regarding the day-to-day cash management for Ricoh had to be factored into any decision, as well as the real cost in terms of time and resources.

The solution

This was a unique opportunity for HSBC to create an innovative solution which limited change to the existing multi-currency notional pool in London whilst enabling the use of its significant investment in global liquidity solutions. It also highlighted the close relationship Ricoh has with the bank and involved significant effort from both teams. Ricoh operates a highly efficient treasury function with a key objective to recycle group cash across a significant number of operating entities in multiple regions. This solution enabled that.

Best practice and innovation

Multiple options were discussed with the Ricoh Treasury Team in London to meet their objective, this included moving the location of the UK pool to an EEA location (the Netherlands and Ireland were offered); creating a multi-entity virtual account structure or creating a sub-pool in an EEA entity that would balance the existing UK structure.

After consultation, Ricoh felt the most effective option would be to create a sub-pool as it was the path with least resistance. By creating a sub-pool in Continental Europe (Ireland was selected), this would enable the European entities to consolidate the cash positions into a location where non-resident entities could hold their EEA account. These accounts would then have a wrap-around multi-currency notional pool which would allow the UK to either fund or defund the pool based on the net balance. The chosen solution allowed HSBC Global Liquidity Solutions ‘Drain the Pool’ functionality with carefully timed sweeps to centralise as much cash across multiple currencies for the benefit of the Ricoh Group.

By creating this, it reduced the workload on the Ricoh team and delivered a streamlined liquidity structure enabling full control of cash positions across the globe whilst ensuring compliance with the enforced legislation created by Brexit.

“Myself and the team were absolutely delighted to have won this award. The amount of time and effort put into completing the project was significant for both Ricoh and HSBC, so to be recognised for this with the prestige of an Adam Smith commendation makes me feel extremely proud for the team.”

Peter Graham, Regional Treasury Manager

Key benefits

• Cost savings.

• Interest enhancement.

• Future-proof solution.

• Improved efficiencies.

The solution provided has enabled Ricoh to retain a comprehensive, effective liquidity solution whilst adhering to the new legislation. The challenges of either creating a new account structure or modifying the location would have created an abundance of man hours from both Ricoh and its bank. By utilising individuals from both the treasury unit at Ricoh and the cash management team at the bank, the company was able to mitigate the amount of time spent completing documentation to only that which was essential.

Furthermore, the solution is future-proofed which enables and supports any future Ricoh acquisition with an EEA entity component, while anything non-EEA will be added directly into the London pool.

“Regulatory changes resulting from Brexit meant that we had to find an innovative solution to accommodate our extensive M&A programme across Europe. The creation of a linked sub-pool in Ireland has enabled us to eliminate any disruption to our main London poll and to efficiently add all acquired EEA-based companies into our regional pooling structure,” says Peter Graham, Regional Treasury Manager.