If your bank relations and bank account structures have grown over time then it is probably a good time to take a look at bank account rationalization. Rationalizing bank relations and bank accounts will allow for the benefits as displayed.

Bank account realization is a rather straight forward process. Treasury Improvement takes the next steps in order to optimize your banking landscape:

1. Assess current and desired banking landscape
2. Assess impact on systems and interfaces
3. Define and execute the action plan

These are simple enough steps to undertake. However often the resources are not available in an organization to undertake such a project due to the complexity and time needed to change the structure. Treasury Improvement is your resource to successfully implement a lean banking structure and provide you with the immediate benefits.

We do include debit- and credit card acquiring opportunities in the assessments. Treasury Improvement is able to consolidate your card acquiring business across country borders.

Contact us for more information on bank account rationalization and card acquiring optimizations.

Read further on a case study on how bank account rationalization combined with completely redoing its credit card acquiring has helped a European retailer achieve substantial cost savings and gain control over its cash.

If your current banking landscape looks like the first picture then chances are:

• there is idle cash in the organization
• much time is spent on centralizing cash
• many electronic banking systems are in place and managed locally
• no view on bank mandates
• you do not know where all of your cash is until reported by local teams end of month
• local CFOs/Accounting teams are managing banks and bank accounts locally

As in the second picture you will have:

• very low idle cash balances
• little time is spent on cash centralization
• one or few banking system are utilized
• full view and centrally managed simplified bank mandates
• full view of cash all the time
• bank and bank account management centrally

The process of bank account rationalization is to take a stance on the banking landscape within an organization. Strategic questions that need to be answered are:

• What are the banks we are or want to be funded from?
• Are we long-term relationship based or cost driven?
• Is local bank presence necessary for the organization to execute its business?

The answers to these questions underpin a banking partner strategy. With these set guidelines we can optimize our banking structures in the organization.

First insights in the current banking structure will be made. Then the desired banking structure will be designed including the strategic decisions made. Based on the fit-gap analysis between current and desired structure and an analysis of impact on systems and interfaces an action plan will be created.

The last step in the process is executing the action plan. The activities range from bank documentation, signature amendments to implementing a consolidated bank information system or interface amendments to existing ERP or Treasury Management Systems.

As with creating a lean bank structure optimization also a lean debit- and credit card acquiring (further “card acquiring”) can be subject of rationalization. Often card acquiring is arranged for country by country. Associated with this is a banking structure that mirrors the card acquiring setup which means numerous bank relations and bank accounts to receive the cash from the card processors.

However more and more possibilities exist to set up a card acquiring structure which is lean and benefits from volume consolidation across countries. One single point of sale solution in all fixed and mobile outlets in Europe? Very possible. This also means having all the daily cash from all the points of sale into one bank account per currency. A massive step forward in cash concentration is now possible from the retail and online sales channels.

There are numerous add-ons to the physical terminals in the outlets like customer loyalty programs on the same device and online point of sale for internet sales transactions to name just two of the most important ones.

International retail organizations can benefit from a single contract with added benefits like customer loyalty programs to name one.

Treasury Improvement has experience in improving card acquiring solutions - read further in this case study.

Analyzing and optimizing the banking strategy by executing a bank account rationalization project and/or a debit- and credit card acquiring solution provides ample benefits to organizations:

• increased liquidity because cash is on fewer accounts
• more focus on the banking relationship which increases the odds of good terms and conditions on the cash management and funding contracts
• less cash management time needed on accounts because there are fewer to manage
• full cash visibility
• reduced banking costs due to fewer bank accounts and reduced overhead costs
• fewer electronic banking systems and bank mandates to maintain

Contact Treasury Improvement for an assessment of your situation.

Bank account rationalization goes hand in hand with cash pooling. However this case study is focused solely on the bank rationalization part. The reason is that often in somewhat smaller organizations it does not make sense to implement cash pooling. There is a turning point in scale and volume when cash pooling makes sense. That will be handled in the separate article on cash pool setups.

However Treasury Improvement will always take into account next steps in a bank rationalization meaning that it will be possible to step up to cash pooling in a next phase.

As part of an In House Bank setup Treasury Improvement will assess the banking landscape as a first step to make a successful In House Bank setup possible.