With global operations and its products distributed in more than 200 countries, well known shaving supplies company, Gillette’s cash management structure included over 30 bank relationships. The company found a single banking partner, Deutsche Bank, to handle Gillette’s pan-European activities.

Problem…

Gillette’s treasury is divided between two locations. The Boston treasury manages longer term transactions such as intercompany pricing, long-term financing, strategic hedging, insurance and risk management, while the Zurich treasury manages short-term transactions and acts as Gillette’s in-house bank. As well as dealing with centralised exposure hedging and executing inter-company transactions, the Zurich treasury acts as a payment factory, handling cross-border payments for the Gillette entities worldwide.

At the beginning of the millennium, Gillette found itself with a cash management structure including over 30 bank relationships and an unwieldy assortment of systems. The Zurich treasury team was keen to find a centralised solution in order to streamline processes and reduce costs. Furthermore, Gillette had decided to implement a Shared Service Centre project in order to concentrate domestic accounts payables and banking management to one location based on a single SAP instance for the entire region. The goal was to drive further efficiencies in the A/P and A/R processes. However, the focus was on finding a single banking partner that could meet their technology requirements necessary to implement an effective centralisation solution.

…Solved

After considering various banks’ proposals, Gillette decided that Deutsche Bank was the best match for their requirements. Deutsche offered a comprehensive solution based on advanced systems and processing capabilities, especially when it came to directly interfacing with the treasury and SAP platform, satisfying the needs of both the in-house bank and the Shared Service Centre set-up. So Deutsche Bank was appointed to execute Gillette’s pan-European activities, including the cash pooling structure and A/P and A/R activities throughout the region.

In terms of the pure treasury activities, all FX settlement payments are now processed through Deutsche Bank in Frankfurt and managed by Gillette’s in-house bank in Zurich. Local third-party payments have been moved to a central solution, improving the FX management and control and providing an improved cash management pricing structure.

Meanwhile, the A/P and A/R activities of the company throughout Western Europe have been centralised at Gillette’s Financial Shared Service Centre (FSSC) in the UK in order to manage the bank accounts for more than 20 European entities centrally based on SAP. Mike Widmer, Director of Global Cash Management in Zurich, explains: “The FSSC centralised all the financial activities that remain in the entities but are not directly treasury related – like accounts payable and bank reconciliations.” Before the FSSC was in place, more than 30 different banks were being used, as well as a wide range of different software packages and interfaces with the accounting systems. By choosing to go with a single provider, Gillette established an account structure across Western Europe with Deutsche Bank so that the accounts could be managed centrally through one standardised SAP IDOC interface. FSSC now manages all European domestic payables and receivables via just one file format and file transfer link through Deutsche Bank’s browser-based electronic banking platform, db-direct internet, without the need for any file conversion on the Gillette side.

The implementation process was not without its challenges. “We had to deal with a lot of country-specific regulations,” explains Karin Amacher, Assistant Director of Global Cash Management at Gillette. However, Widmer and Amacher were impressed by Deutsche Bank’s flexibility in managing such a complex project and by their committed approach to feedback.

From Widmer’s point of view, there is always an element of risk involved in using just one bank to implement a large-scale cash management programme. “In a pan-European solution you lose a certain amount of flexibility and when you want to change banks it’s a huge project. So that’s another good reason to be really careful about which bank you go for.” But Widmer feels that he did his homework and got the results he wanted. “The benefits of having one bank are huge.” Furthermore, both Amacher and Widmer have been impressed by the level of customer service Deutsche Bank offers. “They don’t ask the customer to adjust to the banking system – they really try to adjust wherever they can to accommodate all the customer’s requirements. Even by setting up a new process.”