The challenge

The scope of the project was to set up virtual bank accounts to rationalise the cash concentration structure for the subsidiaries outside the United States, considering industry best practises while meeting local requirements and reducing costs. Before the transformation, the treasury international team was running a multi-entity multi-currency notional pool for over 40 subsidiaries located in 30 different countries. The structure included 138 bank accounts with 60 pool accounts domiciled in London and the rest were connected via sweeps or standalone basis.

Treasury wanted to streamline liquidity given the following issues:

• Separate accounts for collections and disbursements with separate banking partners.

• Under-utilised bank accounts for many entities.

• Costly transfers on a daily basis, including multi-bank sweeps.

• Idle cash balances outside of pool, even in accessible jurisdictions.

• Monthly intercompany payables netting process via physical cash movements via third-party service.

• Bilateral loans required for working capital.

The solution

After some divestitures, the timing was optimal to launch the transformation project and implement internal accounts with 31 subsidiaries joining with their own virtual accounts (excluding restricted countries). To support the centralised solution, eBay chose to implement a new liquidity model with a single entity notional pool in the name of the treasury centre with 13 physical bank accounts, one per currency.

Treasury launched a request for proposal (RFP) with six global banks to identify the best solutions in the market as well as validate the cost/benefit of the business case.

In early 2022, after diligent evaluation, eBay awarded Bank of America as its new liquidity provider for all virtual and physical accounts outside of the US. The new notional pool was set up in Amsterdam, to help reduce Brexit related fees and friction. The bank provided a transparent model for interest rates and spreads, allowing eBay to better forecast and manage interest revenue on its liquidity.

A new intercompany cash management master agreement was drafted with the support of tax and legal teams, to ensure adherence to transfer pricing guidelines. Each acceding subsidiary was given one or more virtual accounts depending on currency needs, plus respective internal accounts managed out of the treasury management system (TMS). The virtual accounts enabled payments-on-behalf-of (POBO) and receipts-on-behalf-of (ROBO) for the subsidiaries without the need for additional physical bank accounts. A total of 52 virtual accounts were opened in a matter of days using the Bank of America self-service VAM platform, including KYC and documentation, compared to the traditional resource-intensive process for physical account opening.

The TMS and ERP were configured to post automatically to the internal accounts for all transactions from virtual accounts. Furthermore, the automated interest and withholding tax postings enabled transparent reporting and efficiency. Local, physical bank accounts remained only where domestic regulations required and connected automatically via a sweep to the notional pool.

The remaining 85 bank accounts were closed after successful migration of all flows: vendor payments, payroll, taxes, intercompany, FX settlements, direct debits and invoice collections.

Best practice and innovation

The treasury transformation project was set up with an official team and project plan, and strong dedication from the members. From early in the project, the treasury team worked closely with various internal stakeholders to obtain their buy-in by addressing their specific needs and including them in the RFP requirements and selection process, as well as during the implementation period.

By engaging the right IT support team, and securing availability of resources throughout the project life, leveraging technical know-how on the existing TMS and ERP systems and their capabilities resulted in minimal customisation efforts to match the project needs.

The partnership with Bank of America and a dedicated team of bank experts was assigned to eBay’s project, with close monitoring of progress and prompt issue-resolution keeping the project timeline.

Key benefits

• Cost savings and process efficiencies.

• Increased automation and improved visibility.

• Number of banking partners/bank accounts reduced.

• Manual intervention reduced.

• Increased system connectivity.

• Future-proof solution.

• Exceptional implementation (budget/time).

The following treasury team members at eBay are recognised: Susana Aristizabal, Gabriella Brezeanu, Nevin Lettens, Thierry Payot, Tomasz Wasiak, Riccardo Roberti, Raluca Costea-Vlasin and Dmitry Martynov.