Antti Kyyrö, EMEA Treasurer at the US life science and clinical diagnostic company Bio-Rad, has spent the last three years rolling out an in-house bank (IHB) facility. The process has drawn on his expertise from ten years in Nokia’s treasury function which has a celebrated IHB structure, he tells Treasury Today in a recent interview.
Bio-Rad’s IHB covers all treasury processes including pooling, a netting service, payments-on-behalf-of (POBO), plus a centralised banking and risk management structure while liquidity management operations are now all automated, ensuring standard, day-to-day liquidity centralisation. Once the intricacies of the scale, framework and functionality were settled, Kyyrö could pass much of the build to IT and accounting teams to structure. “It has been a major focus for us in the last three years,” he says.
A next step in IHB evolution at the company aims to improve visibility and control, he explains. “At the moment, our core treasury processes run in SAP including our in-house bank operations. We would like to have better visibility and control of the transactions and functions treasury manages. We also want to build additional functionality in areas such as cash forecasting and exposure identification, so we are reviewing offerings and scoping options for SaaS TMS.”
A critical element of the process has involved liaising with US colleagues for whom IHB structures are often less known. Still, he predicts more US companies, particularly multinationals hunting efficiency and looking to free up resources for their European operations, will go down the IHB route. Moreover, the cost of building IHB solutions falls with every technological leap, reflecting software’s deflationary pull. “SaaS TMS solutions are a great example of how technology changes our industry in a democratising way. Latest finance software is no longer for the largest corporates only.”
Talking about the project reveals Kyyrö’s enthusiasm and passion for automation and his conviction that it lies at the heart of treasury’s future. Only by losing paper and manual processes, can treasury focus on ways to add value, provide the services and solutions to help companies compete, and be a true value adding partner to the business. “Automation leaves less room for treasury to hide in an ivory tower,” he says.
Treasury’s specific value-add will depend on the nature of the business in which the company is involved, he continues. For example, any fast-moving consumer goods (FMCG) or e-commerce business will look to treasury to leverage latest developments in instant payment technology, online sales channels, and mobile wallets. For a B2B business with large bulky cash flows, the focus should be in latest risk management technology or providing API based tools to optimise working capital through better integration of various finance systems.
Setting up an IHB structure has also enabled Kyyrö to continue to streamline the company’s banking group. The process began before the pandemic and aims to centralise all transactions under the umbrella of the company’s main cash management bank in Europe. “Managing fragmented banking relationships in a complex region like EMEA is not efficient,” he explains. “It’s also worth remembering that this complexity manifests in various other finance functions outside treasury like the audit.”
Re-organising the company’s banking partners has been run alongside moving to a shared service model, handing in-country banking relationships back to regional treasury for management. Only those relationships which are required from a regulation perspective, or if a local bank is providing specific tasks around, say, payroll, tax, or clearing and reporting access for counterparties, will remain. “We only have local bank relationships in case our global providers can’t provide a service in the given market; unutilised bank accounts are a cost both for the corporate and the provider,” he concludes.