Adam Smith Award winner World Vision International outlines how it streamlined its banking operations and the benefits this created for the company.

Bank accounts are necessary for businesses to operate. However, most businesses probably do not need as many bank accounts as they have. Indeed, as organisations grow, expanding into new markets around the world, bank accounts are often opened up simply as a matter of immediate convenience.

As a result, companies can end up owning hundreds, if not thousands, of bank accounts around the world. This is not ideal. It is expensive. It can impact the treasury department’s ability to have visibility and effectively manage the group’s cash. It also exposes the organisation to an increased risk of fraud.

This was a very real problem for US-based humanitarian aid organisation, World Vision International (WVI). The charity’s expansion over the years had left it with over 2,000 bank accounts with over 200 banking partners.

“This untenable situation posed a potential risk to the organisation in the form of fraud, liquidity, inefficiencies, controls and cost,” says Peter Dong, Director, Global Cash Management at WVI. To address this problem, WVI’s treasury team started a bank account rationalisation project. It also aimed to consolidate its banking partners by creating a smaller group of global banks whose footprint better matched that of WVI.

Global partners

To kick off the project, WVI issued an RFP to many of its banking partners. This was aimed at finding those that were financially stable, had strong correspondent banking networks, were able to demonstrate innovative cash management solutions and which had geographical footprints complementary to that of WVI.

To ensure that the banks remained competitive across all countries (rather than ‘cherry-picking’ the most desirable countries), treasury divided WVI’s country operations into clusters that overlapped multiple banks’ footprints. It then instructed banks to bid on clusters rather than individual countries. Thus, banks were required to be competitive in countries such as Somalia and South Sudan if they wanted to win high-value countries such as Kenya.

Due diligence

Once selected, the eight global partner banks were invited to WVI’s local offices to learn how each office was using banking services and listen to the challenges they faced. The banks were then asked to evaluate each country office’s cash management needs and footprint, and recommend appropriate solutions.

“We named this our due diligence process,” says Dong. “And by doing this we learnt that most of our bank accounts simply existed to access cash to fund operations and pay vendors. Consolidating these proved an opportunity to create greater efficiencies and improve safety for staff.”

Cash management focus

Once the due diligence process was completed, the global partner banks crafted cash management solutions customised to each World Vision office with guidance and broad objectives provided by WVI Global Treasury. The new solutions consolidated all bank accounts in each country into one partner bank, maintaining only those bank accounts deemed operationally necessary.

“Where applicable, the new cash management solutions provided more efficient payment methods such as electronic, mobile, and prepaid cards in lieu of cash and cheques,” says Kimberly Floyd, Senior Analyst, Global Cash Management at WVI. “The new solutions also included centralising all payments in one office and eliminating the need for separate Accounts Payable accounts at each project location. The result: World Vision is saving money by making our banking processes more efficient and manageable.”

Company-wide involvement

For Floyd, one of the most important aspects of WVI’s bank rationalisation work has been how the whole organisation has been engaged in the project. “We developed an approach that addressed change management with emphasis on collaboration and communication amongst all impacted offices, the global partner banks and global treasury,” she says.

Core to this was the use of a three-stage iterative approach in forming the best cash management solution and account structure. Floyd explains that this saw the banks provide the new solution to the global treasury team, the regional finance directors and the national finance directors.

“This process allowed the solution to be vetted multiple times to meet project objectives and operational requirements and include all stakeholders in the process,” she says. “By including as many parties in the decision-making process as possible, our bank rationalisation solution is the product of a team effort rather than a top-down management approach.”

Long lasting benefits

Dong notes that rationalising banking partners and bank accounts “is a time-intensive project”. However, “in hindsight, the benefits far outweigh the time and energy cost”.

Indeed, improved efficiency, security for employees, visibility, transparency, cost savings and enhanced account management are just some of World Vision’s successes realised through its bank rationalisation project.