Redesigning Riwal’s cash management structure
Backgound
Riwal is a specialist in the area of working safely and efficiently at heights with a fleet of about 19.000 Powered Access Equipment units. Riwal has operations in 16 countries throughout Europe and the Middle East, as well as India and Kazakhstan and operates 75 depots with 2.350 employees. Revenue in 2019 was EUR 302 million. The ambition is to deliver the best customer experience in the industry. Riwal has its headquarters in Dordrecht, the Netherlands.
Project definition
Riwal has a central Group Treasury function. The company is centrally financed by a syndicate of five banks. Outside the Netherlands the financing banks are the preferred partner for cash management; if these partners do not offer services in the area a local bank can be used. Also for counterparty risk mitigation purposes, Riwal has multiple bank relations in selected countries. Consequently, Riwal holds bank accounts at approximately 30 different banks worldwide.
Riwal is in the process of streamlining its group-wide payment processes and standardizing the channels used. This is being done using the central Treasury Management System, Kyriba. Banks are connected using the SWIFT network and Riwal’s own BIC address.
Riwal has decided to further optimize its cash management structure to increase cash visibility, increase efficiency and decrease overall costs. Orchard Finance has been asked to support Riwal in this process. The objective is to design an efficient and future proof cash management structure.
Project approach
Together with the Group Treasurer at Riwal, Orchard Finance visualized Riwals current cash management landscape through an international questionnaire. Based on the results, four possible cash management models were analysed:
- Regional/central cash management bank(s) with regional/central cash pool(s)
- In-house bank structure with account sweeping initiated through Riwal’s TMS system
- Virtual account structure
- Payments and Collection on behalf of (POBO/COBO) structure
The impact of the various cash management structures were discussed in order to find the best fit for the company. Important criteria in the workshop were fit within the managerial structure of Riwal, implementation effort, technological fit in Riwal’s system infrastructure, future adaptation possibilities and cost structure.
Solution
The virtual account structure offered by the current/preferred banking partners is not yet sufficiently mature, rolled out or deemed robust enough for Riwal to be considered as the main cash management model. Furthermore the COBO and POBO model doesn’t currently fit the managerial structure of the Riwal Group. The in-house bank structure is not viable with the fragmented banking landscape currently employed, but is rather taken into account with respect to future adaptation possibilities that the to be chosen cash management model needs to offer.
Finally, it was decided that the use of regional cash management banks and regional cash management pools combined with a central overlay cash pool best fits Riwal’s criteria for a cash management model.
To help implement the newly chosen cash management model, Orchard assisted Riwal with two bank selections: in the SEPA region and the Nordics. The outcome of the RFP processes resulted in an optimized cash management structure and increased control.