Strategic Treasury

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Using the RFP Process to Enhance Your Banking Partnerships It is vital for corporates to have banking partners best suited to their needs, and a Request for Proposal is a way of pricing a potential service or product in an ethical and professional manner.

Using the RFP Process to Enhance Your Banking Partnerships

Using the RFP Process to Enhance Your Banking Partnerships 
by Sheetal Shah, Managing Partner, Africa Treasury Management Company

There are a few constants in the life of a corporate, one of them being the company’s bankers. A corporate’s banker is usually a corporate’s first business partner; the first lender and the keeper of their most trusted asset: their cash. Given the current challenges facing the banking industry globally, it is becoming more and more difficult for corporates to build long term relationships with its bankers. Meanwhile, banks are constantly upgrading their back end systems and processes with the latest in products and technology. What worked for a corporate a few years ago may not exist or may no longer be valid. An RFP (Request for Proposal) process allows corporates to review technology, products, services, efficiencies and savings periodically – plus, it keeps your bankers to their toes! 

Good treasury management practice uses RFPs as a way of giving your banking partners an opportunity to put in a proposal and price for a service or product in an ethical and professional manner. The RFP process is all about starting a formal dialogue with a pool of potential banking partners who you feel are best suited to respond to your needs. 

We find more and more corporates in Africa are choosing to work with a combination of both local and international banks for their treasury requirements to get the benefits of both. Africa is such a diverse region – be it regulatory, policies, exchange rates, people or culture, and corporates are increasingly expanding their businesses into more markets across the continent. This consolidation of banks has its benefits in this unique environment. Banks are interestingly getting more creative to provide regional solutions that are unique to the African business.

Why should treasurers issue an RFP? 

  • To prepare the company for strategic long-term opportunities. RFPs will incorporate both current and future requirements of companies. Strategic planning will ensure the end solution is futuristic and incorporates all aspects of the business including technology, people, expansion plans, regulation and the role of the treasury itself.
  • To achieve operational efficiencies and improve risk management
  • To unlock inventory and receivables on the company balance sheet
  • To be more competitive in the market
  • Straight-through processing: treasurers prefer to have their transactions processed directly and quickly.
  • Regulatory: government regulations across Africa are constantly changing and evolving. Keeping up with this is a challenge and you need a partner who is up to date with this. The impact of these regulations on the business is a key concern for treasurers.
  • To understand new products and services in the industry which will benefit the company
  • To improve liquidity management, have access to internal cash and get efficiencies in cash management.
  • To reduce cost of banking services by leveraging the scale of the company
  • Risk management strategies in order to select stable banks.

Increasingly, counterparty risk, compliance and corporate governance are critical to the success of an organisation. A methodical, transparent and structured RFP process will ensure the banking partner chosen will deliver the efficiencies and benefits you require. 

Step 1 – Prep

It is important to prepare the company before issuing an RFP. The RFP process is often overlooked and not given the importance it requires. This is possibly because it can be time- consuming and cumbersome given that the treasurer has many other responsibilities. It is therefore important to engage other stakeholders within the company to understand their needs and try to incorporate that into the RFP process. This way, you have internal buy-in. It is also important to keep in mind that you will need to incorporate both the current needs of the company and any future requirements. It is likely this you may not repeat this process for another three to four years after this. 

Most RFPs will require you to provide the banks with some basic information about your company, its size, corporate structure, number of markets it operates in, geographical footprint, and volumes of collections and payments.

During the preparation process, appoint a Project Lead or identify a senior Project Sponsor. This could be a member of your team internally, or an external consultant may be appointed who could run with this project for its duration. This allows for focus and frees up your staff to continue with their roles without eating into their time. The Project Lead will be responsible for identifying internal requirements, dealing with both internal and external stakeholders and issuing, awarding and implementing the RFP.


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