Treasury Practice

Problem Solved: Mauro Prignoli, Piaggio

Published: Mar 2011

With two thirds of the company’s annual sales generated between April and September, the search was on for a way to consolidate the company’s numerous bank acounts and improve its cash management system in order to improve visibility.

Mauro Prignoli

Senior Vice President, Head of Finance

Piaggio is the largest European manufacturer of scooters and motorbikes and one of the world leaders in its industry. Piaggio is also a major international player in the light commercial vehicle business. The company, which is listed on the Italian Stock Exchange, is headquartered in Pontedera, Italy and has manufacturing plants in Spain, India, Vietnam and China, as well as in Italy. Almost two-thirds of Piaggio’s European annual sales are generated between the months of April and September, when demand for its products reaches its peak. Piaggio sells over 600,000 vehicles per year, 36% of which were sold in Asia and 60% in Europe in 2009.


The company generates approximately 66% of its sales between the months of April and September, during which period it is inundated with receivables – 250,000 in an average year. On the other hand, in the first few months of the year, the company’s cash flows go in the opposite direction as the focus is on purchasing components in time for the production peak, which starts at the end of March. This means that in the first quarter of each year cash leaves the company and little flows in the opposite direction. This shortfall is covered using revolving and factoring credit facilities.

Cash flow is predictable, but the mismatch in the phases of Piaggio’s payments/collections cycle puts a strain on the company’s working capital. The seasonality of the cash flows is a peculiarity of the European sales and is not marked in Asia.

The seasonality of Piaggio’s European business meant that it was typically faced with annual interest charges of approximately €1m on a total net debt of €352m at the end of 2009. Moreover, with manufacturing plants and sales units across Europe, the company found itself trying to keep tabs on an unwieldy number of bank accounts. “We had segmentation with the former structure,” comments Mauro Prignoli, Senior Vice President, Head of Finance. “In Spain alone, we had ten bank accounts and in Germany there were five.” The company’s treasury department therefore sought a way to consolidate the number of its bank accounts and improve its cash management system so that it could reduce its bank charges and improve visibility.


In its bid to improve control of its cash management, Prignoli’s department decided to appoint a single bank to simplify the existing arrangements and support the needs of the company’s subsidiaries. Four banks were shortlisted. Deutsche Bank came out on top because it ticked all the boxes on the list Prignoli had drawn up before he embarked on the project. “The main drivers for us were international coverage, bank relationship, flexibility of the cash management structure and reliability,” says Prignoli. “Deutsche Bank understood our needs and provided a customised solution.”

Deutsche Bank implemented a new cash management structure for Piaggio’s treasury department, leading to a reduction in bank accounts and consolidated cash management arrangements. The reduction in the number of its bank accounts by 15 (to a total of two per country) has allowed the company to reduce bank charges and interest. It has similarly reduced the amount of time that employees spend focusing on the collections procedure.

The changes have enabled Piaggio to cut out much of the duplication involved in processing payments. By integrating direct debits from Spain, Germany, France, the Netherlands, Belgium, Italy and the UK, the solution will also allow Piaggio to migrate to SEPA direct debits in due course.

In addition, Deutsche Bank has provided Piaggio with an integrated communications gateway, db direct internet, which allows the company to connect to the bank with its SAP ERP system and Piteco TMS cash management module. “Deutsche delivered a solution integrated with our current treasury workstation and information systems. It is a very secure system, which is important for us. It is well integrated,” says Prignoli. The improvements have meant Prignoli now finds it easier to manage and control the company’s cash positions, enabling further efficiencies to be implemented. In the future, Prignoli says the company will look to extend Deutsche Bank’s solution to its cross-border inter-company transactions in Asia.

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