EuroFinance

In a world increasingly defined by agility and efficiency, businesses are rethinking traditional approaches to banking. Mitel Networks Corporation, a global telecommunications company, faced a daunting task with its banking services due to the complex nature of its operations and acquisitions over the years. Raul Sanchez, director of corporate treasury at Mitel, provided a comprehensive overview of their challenges at EuroFinance’s 23rd annual Global Treasury Americas Miami,

Improving efficiency

Mitel, with a portfolio spanning mid-size clients like hospitals, schools, universities, and hotels, provides telecommunications hardware and software systems. As part of its growth strategy, Mitel acquired eight companies, with seven of those in the last decade. However, these acquisitions brought a multitude of relationships, ultimately leading to a jumbled banking structure.

In the wake of these circumstances, Sanchez and his team grappled with several issues. Administrative tasks multiplied due to the abundance of banking systems, tokens, and banking relationships. Mitel global presence further amplified these issues, with the need to communicate with different banking help desks across multiple time zones. Moreover, the KYC (Know Your Customer) process posed significant challenges, requiring redundant and time-consuming verification processes that often varied from one bank to another.

One of the most critical impacts of this structure was on the operational efficiency of the treasury function. “I was spending a lot of time just trying to administer banking rather than doing core treasury activities, analysing cash forecasting, and carrying a strategic role for my company,” Sanchez shared with delegates at the conference.

To address this, the treasury team aimed to consolidate its banking structure by reducing the number of banks and migrating all operations to a single platform. The company sought to have dedicated account managers to streamline communications and enhance service efficiency. Moreover, they aspired to have real-time visibility of all their accounts and a uniform time zone across all platforms. A crucial goal was also to minimise KYC management.

Remapping the banking landscape wasn’t an easy task. As Sanchez noted, “it’s a very intensive project; it takes time.” But the benefits of doing so were hard to ignore. The process was broken down into various phases and took into account the complexities of the global banking system.

The first step they took was to map out a detailed blueprint of exactly what the treasury team wanted in their banking services. This ranged from functional requirements such as account management, transaction processing, to technological aspects like software integration and data management. Thereafter, the treasury team went through a rigorous process of approaching different banks to find the best match for their specific needs.

Eventually, they found a bank that was not only willing to provide the services they required but was also prepared to invest in them as partners. This partnership was unique, as it led to the joint development of services such as the QR code, which was not initially part of the bank’s service portfolio.

Despite having grand plans, the treasury team chose to roll out their new banking arrangements conservatively, focusing on improving intercompany transactions within just three regions instead of attempting to overhaul all nine at once. They successfully transitioned all their accounts into one consolidated system, facilitating linkage with their new partner.

A significant challenge that they faced was the unexpected need for IT resources to help move all the bank details on invoices. Initially overlooked, this turned out to be a major task, requiring a dedicated resource for several months. Moreover, they faced obstacles while setting up a new host-to-host format for various payment methods and dealing with the specific banking requirements in different countries.

Despite these hurdles, the project yielded impressive results. The company was able to reduce their number of bank accounts drastically, going from more than 218 accounts to just 52 main bank accounts. This led to a vast improvement in their operational efficiency, enhancing their global flexibility and regional structure while centrally managing everything from their Ottawa office. The consolidation also resulted in a dramatic decrease in banking fees and improved the speed of intercompany transactions.

Surprisingly, the department that benefited the most from this transition was Accounts Payable (AP). Before the transition, AP had to submit various forms of manual payments to different banks. Post-transition, the system allowed AP to execute all operations with just one button in their system. This created a single file for all payments by entity, by currency, and by type, thus increasing AP’s efficiency remarkably.

As the company moves forward, the next phase involves closing down any redundant bank accounts. Furthermore, they plan to replicate this process with companies they may acquire in the future. In the longer term, Mitel aims to automate their cash pooling and netting processes to achieve even greater efficiency in their banking operations.

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