The challenge

The global healthcare solutions provider Medtronic had worked in partnership with Bank of America for many years, but the relationship began to strengthen in 2015 after the company acquired Irish-headquartered Covidien for US$42.9bn.

The bank underwrote a large portion of the initial financing tranche raised to support the acquisition. Following the acquisition, John Ng assumed the newly created position of Regional Treasurer, Asia Pacific and Greater China. The immediate uphill challenge was to assert the Medtronic treasury agenda in a predominantly in-country finance-driven environment across the organisation.

The solution

Whilst concurrently integrating platforms, systems and teams, Medtronic’s treasury also needed to consider a whole set of different challenges:

• Banking relationships were split and this needed to be managed.
• Multiple bank accounts across multiple legal entities needed reviewing to achieve full account visibility.
• Full integration of the newly acquired entities/accounts into Medtronic’s shared service centre (SSC) in order to standardise the payables and receivables processes.
• Implementation of Medtronic’s ERP platform for the newly-acquired entities, in addition to ensuring successful end-to-end processing with the bank.
• Liquidity management across both Medtronic and Covidien entities needed to be consolidated to ensure optimal usage of cash.

It was therefore imperative that Medtronic leveraged the bank to push this agenda through, working in partnership to achieve these goals to bring about further integration, optimisation and efficiencies. This was made even more challenging given that treasury’s role was new at the time and the company needed to formulate a strategy and get it done within the desired timeline.

Bank of America was able to provide the necessary support in the region to Medtronic.

Best practice and innovation

Medtronic was adamant that the bank’s relationship, service and implementation management teams had to mirror the way that it worked, in order to ensure focussed communication, clear escalation paths and minimise operational disruptions. Bank of America was able to provide this seamless relationship and service support across the region.

Its regional teams therefore had to strategically align with Medtronic’s treasury to set the overall direction and a go-live timeline, facilitated through weekly project managed calls and regular service reviews. As part of this two-way relationship, in order to support Medtronic’s SSC and in-country finance teams, it had to closely align with the bank.

Since the acquisition of Covidien, Medtronic has prided itself on good partnership working with its banking provider, rather than seeing its interactions as a purely vendor/client interaction. The company develops best practices together, and it is supported in all areas of the business – not just in treasury – even being provided with advice to support the company’s internal stakeholders and business partners.

Key examples of this partnership included Bank of America facilitating meetings for Medtronic directly with the central bank to clarify key policies and regulations. It also helped the company clear old invoices, ensuring all local regulatory requirements are met. Finally, it enabled Medtronic’s APAC treasury team to bring representatives from two competing banks to the same table.

Key benefits

The successful integration has helped cement Medtronic as the leading producer of medical equipment in the world and has provided a strong foundation for further expansion in Asia Pacific. By leveraging its banking relationship and working with Bank of America in the region Medtronic has:

• Successfully integrated a new business.
• Achieved full visibility of bank accounts.
• Optimised liquidity in the region.
• Increased automation.
• Gained 100% straight through processing.
• Reduced pricing.
• Streamlined processes, whilst maintaining a lean and effective treasury team.