International Cash Management Tenders

Transcription

1 International Cash Management Tenders DEN DANSKE FINANSANALYTIKERFORENING SIMON HOFFMANN, GROUP TREASURER 28 TH MAY 2013 May

2 Agenda The DFDS Group How do you decide on banks in scope? What should you include in the Request For Proposal (RFP)? What is the RFP timeline? How do you mandate the optimal bank?

3 The DFDS group The DFDS network connects Europe through: Two fully integrated divisions: DFDS Seaways & DFDS Logistics More than 500 weekly shipping departures Modern fleet of 60 vessels 10,000 trailers, containers, cassettes and swap bodies Total warehouse capacity of 140,000 m2 Integrated rail service linking shipping & logistics networks 5,900 dedicated, professional and experienced employees located in 21 countries Shareholder structure: Lauritzen Foundation: 36,3% A. P. Moller - Maersk: 31,4% Other: 32,3% Strong financial performance: Free cash flow of DKK 1.144m EBITDA of DKK 1.092m NIBD/EBITDA leverage of 1.8x 3

4 Division overview Group revenue (2012) DKKm / employees Shipping Division Revenue in 2012 (mil) DKK Employees Routes 25 Ships 45 Terminals 8 Warehouses (m²) Passengers (mil) 5.1 Lane meters shipped (mil) 25 Logistics Division Revenue in 2012 (mil) DKK Employees 1000 Logistics Office s 21 Warehouses (m²) Trailers Containers Swap bodies Trucks 200 Trailer Loads 300,000 Container Loads Rail movements / year

5 dfds route network 5

6 DFDS Group Treasury DFDS Group Treasury Team of 4 Bank relations and strategy Currency risk Interest rate risk Commodity risk (oil hedging) Liquidity management Cash management setup and strategy Funding (ships, credit, loan, bonds etc.) Loan documentation and compliance Corporate bonds Guarantees Treasury IT (Integrity, Reuters) Hedge accounting Supply-Chain Finance Leasing M&A (funding involvement) Ad hoc

7 Request For Proposal primary objectives.. Main objectives: Optimize liquidity and centralize cash positions (idle balances) Optimize Group bank setup/strategy incl. limit number of banks Optimize pricing and improve value dating Review documentation and conditions and security Prepare partner bank for future IT implementations (incl. XML formats and SEPA) But also to

8 Request For Proposal opportunities.. Improve bargaining power Give cash management business in return of e.g. Funding Show professionalism towards banks Proactively investigate newest trends / products Streamline processes Align internal Finance and IT strategy

9 Scoping your banks Banks in scope are (likely): Group Funding bank Participating in group funding Offering (or ready to offer) cash management daily credit limits Guarantee lines Credit (committed and/or uncommitted) lines Operational requirements Branch network Cash handling Cheques Direct Debit Government institution payments Local payment systems (e.g. RIBA in Italy go CLIEOP in Netherlands)

10 Scoping your banks Technical requirements SWIFT, EDIFACT, XML, AMC etc. Treasury Management System ERP FXAll, 360T etc. Other Geographical cover Bank area vs. Scope cover Too big area complicated implementation No more that 4 banks per tender Huge workload per bank Fair competition Including banks for price-pushing? Feedback Historical/political accept from management board

11 Scoping your banks heads up! Be careful not to gap over too big or too diverse an area No new countries added during tender process Might make sense to follow bank area Currency scope vs. geographical scope Tempting to scope EUR-zone due to cash pools etc. might make sense, but: E.g. is Finland part of your EUR scope or Nordic scope? Or is UK included in your European bank tender? Technical capabilities may vary between countries even within same area! Tax/Legal With-holding tax Legal perspective (e.g. cash pool)

12 So your approach to scoping your banks! 1. Analyze current relationship with your banks Funding Trading IT History (likely to be top management issue) 2. Analyze and gather operational requirements Payments/Receipts Tax Reporting IT (local system setup and requirements) Analyze and align IT and Finance strategy Interface and communication Ask your network for references and bank capabilities Ask your relationship banks that are not in scope

13 A complete banker tender includes Operational requirements Treasury/cash management requirements Technical requirements Funding considerations Documentation requirements Scope considerations (nr of banks / geographical) Overdraft credit requirements Pricing perspective (incl. float) Time perspective Service Level Agreements (SLAs) Analysis and evaluation method Presentations (Beauty-contest) Implementation Guarantees But all this needs to be structured

14 Structure the RFP 1. Actual RFP document - Project scope, Timeline and Evaluation - Country-by-country description - Proposal structure and minimum requirements - Payment/Receipts - Account structure and cash pool solution(s) - Pricing (fees, float, cut-offs) - Technical chapter 2. Appendix A: Price template (transactions, interest conditions and bank charges) 3. Appendix B: Location template (bank branch knowledge) 4. Appendix C: Questionnaire (excellent tool to commit banks!) 5. Appendix D: Technical questionnaire

15 Pricing - Main management focus - Often your benchmark whether the banks likes it or not - Lower pricing can be a success factor - Sign-offs releases! - History (likely through top management) - Some bank price RFPs based on full scope mandate - Some prices are hidden - Watch the float make the calculation - Is cherry-picking countries acceptable if so communicate clearly! - Do not worry the bank will make money on you! - Affiliate business including - Trading - Guarantees - Funding - Credit cards - Investments - etc

16 Steering committee - Steering committee - Group CFO and/or VP Finance - Group Treasurer - Project Manager - Not!?! Country Finance Manager Scoped bank evaluation and price benchmark Steering Committee Project managerment Evaluation committee Possibly included in Evaluation committee Group Funding Country Finance Mng IT Bank Back office/ssc Relationship sign-off Operational sign-off Technical sign-off Price sign-off SLA sign-off

17 Tender timeline and processes Group Treasury tasks If needed, price nego with pre-selected banks Selection of bank(s) Kick-off mail distributed to relevant receivers; Fin. Mngs, local contact; other Onsite visit to align/understand float and evaluate data Finalize RfP and distribute to scoped banks Bank Q&A deadline Analysis of proposals Recommendation to Steering Committee followed by meeting where decision is made Negotiation of documentation (lawyers) Implementation Go-live 4-7 month * Information gathering Local/bank tasks Banks to return with proposals Sign-off by: Banks pricing * Finance Managers capabilities IT technical issues Account opening * Implementation * Local Finance Managers resource needed

18 Mandating the bank Develop presentation and present your findings to Steering Committee PRICING FUNDING CAPABILITIES RISK Transaction fees Syndicated fac. Operational Market risk Fixed fees Revolver Technical Credit risk Setup costs Guarantees Liquidity Business risk Maintenance fees Legal Accounting Bank risk Portfolio fees Implementation Bank guarantees Float Interest Transition costs Presentation to Steering Committee

19 Mandating the optimal bank 1. Operational capable ask your local finance managers to sign-off 2. IT capable ask your IT department to sign-off 3. Funding/credit capable ask your legal department to sign-off 4. Bank requirements ask your bank to sign-off!!! Presentation to Steering Committee short and precise - Objective - Scope - Current banks - Liquidity setup - Evaluation points - Risks - Cost - Mandate recommendation

20 Mandating the bank communication and feedback Communication to banks - Only communicate written mandate decision - Do not go into details in written mandate decision - Propose tele-confs or meeting if bank is eager to learn why not chosen - Stall communication to local banks - Make sure all communication is routed via Group Treasury Scorecards - Scorecards can lead to misunderstandings - Scorecards will create as many questions as they answer - Banks often rate various services different than corporates - If scorecard are used make sure you can share results (anonymously with banks) Documentation - Make sure complete bank tender process is documented

21 Questions/Contact Simon Hoffmann Rene Group Treasurer M: D: DFDS A/S Sundkrogsgade 11 DK-2100 Copenhagen Ø Denmark T: