CBI Treasury Management Review
Survey Report or Treasury Management Review?
Treasury Management Reviews serve a different niche than CBI’s 2009 Survey of Canadian Bank Pricing.
CBI’s 2009 Survey of Canadian Bank Pricing is primarily concerned with providing information to financial executives that will enable them to negotiate better bank pricing. The Survey Report provides an overview of bank negotiating practices, an explanation of how principled negotiating and benchmarking work, as well as benchmarking data that’s invaluable in renewal negotiations. Te Report is a resource that’s designed to help companies negotiate fair and equitable banking arrangements. It levels the “paying field” in bank negotiations.
In some companies, this is enough. In others, pricing discrepancies aren’t the only source of bank cost savings. These organizations recognize that fine-tuning the interface between their banking systems and treasury strategy can yield substantial gains.
Qualifying Treasury Management Reviews
Would your company benefit from a CBI Treasury Management Review? It depends on the situation.
Managing the banking/treasury interface is an arcane specialty. Although there are significant dollars involved, the subject only gets passing mention in business administration or professional accounting programs. Financial executives with reputations as authorities in the area are few and far between. Most CFO’s openly acknowledge that, in this particular area, they are anything but experts. It’s a field where you learn by doing.
Managing the banking/treasury interface is also not a priority in most companies. Again and again, CBI talks to financial executives who believe that, if you’re looking for cost savings, distant fields are greener. Again and again, we show them the potential of opportunities in their own back yard. These opportunities lie dormant because there’s neither the in-house expertise nor resources to identify and qualify them.
CBI provides the needed expertise and resources. Treasury Management Reviews are performed by specialists who have “been there, done that” treasury experience with Canadian Top 1000 companies. They have the knowledge and experience that delivers results.
Three Candidate Company Types
Over the years, CBI has fined tuned its Treasury Management Review Program to meet the needs of three types of companies.
The obvious candidates for a CBI Treasury Management Review are large companies ($100+ million in sales) that have complex treasury requirements. In these organizations a Treasury Management Review offers a fresh way of looking at banking issues. It uncovers invisible cost saving opportunities by looking beyond “what is” to “what should be.”
Recently CBI performed a Treasury Management Review for a Canadian company with debt secured by Canadian assets. The company also had US operations with cash surpluses. However, it had no US assets and no US credit facility. CBI recommended creating a US credit facility based on a Canadian LG. The company then was able to repatriate US surplus cash to pay down Canadian debt. Annualized cost savings associated with this simple arrangement exceeded $200,000.
Large Canadian companies that have profited from a Treasury Management Review by CBI principals include well known corporations such as General Motors of Canada, ICI Canada, DuPont Canada, George Weston Limited, AOL Canada and Sony Music.
Less obvious candidates for a Treasury Management Review are smaller companies ($35+ million in sales) that have never had a formal treasury management review. Frequently, CFO’s are brought into these companies to bring financial order to chaotic growth. These financial executives have operational backgrounds. For them, treasury management is neither an area of expertise, nor an interest, nor a priority. Nonetheless they recognize its importance. For these CFO’s a CBI Treasury Management Review offers peace of mind. It’s a cost effective way to ensure that their treasury function is properly structured. The resulting cost savings are icing on the cake.
The surprising candidates for Treasury Management Reviews are Canadian subsidiaries of American corporations. In these companies the problem is oversight – in both senses of the word. Because Canadian banking is a small part of a much larger US banking picture, Canadian banking arrangements get lost in the shuffle. Differences between Canadian and US banking practices further muddy the waters. Head office personnel frequently lack the time and the expertise to give Canadian banking arrangements their due. For US companies a CBI Treasury Management Review is a cost effective way to ensure that subsidiaries’ banking arrangements are properly structured and competitively priced.
CBI Treasury Management Review Pricing
CBI performs Treasury Management Reviews on a contingency fee basis. Out-of-pocket costs associated with travel are extra. The contingency fee is 50% of first year cost savings and 25% of second year cost savings. Fees are paid on an “as earned” basis.
CBI charges a $5,000 non-refundable deposit to begin the Treasury Management Review process. If CBI does not identify cost savings in excess of $7,500 no contingency fee payment is due.
At the conclusion of the Treasury Review process, CBI delivers a written report. The report starts with a review of pricing for existing banking programs. It also analyzes a company’s treasury systems from both efficiency and effectiveness viewpoints. The Review concludes by detailing cost saving opportunities and treasury management recommendations, as well as presenting a formal negotiating strategy to deal with banking issues.
