Easy Treasury

The Simple Way to Create a Fully Functioning Treasury at a New Legal Entity

A fresh offering from BNP Paribas, Easy Treasury, provides a transitional solution for new legal entities, such as those arising from spin-offs, enabling them to have a fully operational treasury department from day one. More than that, it’s an innovative treasury-as-a-service solution which is significantly undercutting the competition in terms of pricing and outperforming on implementation speed.

A typical pain point facing large corporates in an M&A project involving a spin-off is how to set up a proper treasury organisation for that new legal entity – in a short time frame and on a budget. This vital issue tends not to be adequately addressed by the M&A team because it is not, on the surface, an essential part of the deal. As such, the treasury department of the parent company is often confronted with this challenge at short-notice, and with few additional resources at hand.

In such a scenario, the existing corporate treasury team often has to call in external expertise. This typically starts with a standard RFP process to select a treasury platform that fits the needs of a much smaller company. Naturally, the selection and implementation of this technology requires time and resources. It can also delay the closing of the M&A deal if the RFP process is not concluded on time.

Easy Treasury is a transitional solution to help spin-offs to have a treasury function in place from launch day with the right processes, people, and platform.

Vincent Marchand, Head of the Fintech Lab, Cash Management, BNP Paribas, explains: “This was a challenge that corporates kept coming to us asking for help with, which is how our Easy Treasury offering was conceived.”
In a nutshell, Easy Treasury is a transitional solution to help spin-offs to have a treasury function in place from launch day with the right processes, people, and platform. “It is a plug- and-play treasury-as-a-service solution which was co-created by our team in conjunction with our clients and platform vendor Kyriba. Built-out during 2022, it is now live, ready for corporates to leverage when they need it,” he notes.

From the get-go, the offering enables treasurers to pay employees’ salaries and suppliers’ invoices, execute basic treasury operations in areas such as spot, forward, term deposits and MMFs, and achieve full visibility and
predictability on their cash across geographies (see figure 1). Marchand adds: “In turn, this gives them breathing space to be more strategic and empowers them to determine what their ideal future treasury organisation and technology set-up should be in the new company. This enables them to seamlessly transfer from Easy Treasury to that desired model, typically in around a year or two.”

A critical issue when launching such a treasury function is the time it takes to go live.

Setting up for success

One of the reasons that setting up a new treasury in a spin-off or carve-out business has historically been so fraught is that, by their very nature, M&A projects have strict confidentiality requirements. As a result, the corporate treasury team at the multinational company (MNC), and the cash management team at the bank, tend not to find out about what is required until fairly late in the process – often too late to make a valuable contribution from day one.

It is no surprise, then, that Marchand and his team are already seeing strong interest in the Easy Treasury offering from a variety of MNCs, but also from private equity groups and M&A consultants who see the benefit of such an approach, with operational risk being under control as of day one.

Another attraction is that there is no geographical restriction on Easy Treasury. It also spans all industry verticals, although those sectors that regularly create spin-offs and carve-out businesses, such as automotives, chemical, pharmaceutical, and renewable energy industries, are naturally among the solution’s most vociferous supporters.

Nevertheless, the real sweet spot for Easy Treasury is spin- offs with a market value of between €200m and €2bn that have a presence in a small number of countries, run different accounting systems that the solution can interface with, and manage a few thousand payments a month.

“Major spin-offs or joint ventures are very complex by nature, which means that they need a completely bespoke solution,” outlines Marchand. “Whereas the idea here is to take an industrialised approach, a solution that is simple to plug in and implement, hence the name Easy Treasury. We don’t exclude its implementation in more complex structures, of course. But in that case, the implementation timeline and the pricing will be reviewed accordingly,” adds Marchand.

Taking care of business

Indeed, one of the main selling points of Easy Treasury is the speed of implementation. From start to finish, this can be done within four months, whereas the typical project timeline for this style of solution is between nine and 18 months.

“We beat the market by at least half a year, minimum,” enthuses Marchand. “That’s the idea, to be quick and efficient – right from the first day after closing. We have very aggressive pricing too. We are on average between 30% and 40% cheaper than any other offering on the market based on the benchmark we conducted with 15 of our clients.”

What’s more, Easy Treasury comes with a complete control framework from day one, another key consideration for new entities. And the multibank Kyriba platform, an integral part of the offering, takes care of the operational risk. BNP Paribas selected Kyriba as its trusted Easy Treasury partner through a comprehensive RFP process that it commissioned an independent consultancy to run.

“Kyriba have a modular approach, so we spent the summer of 2022 selecting the modules that fit the needs of a new legal entity,” outlines Marchand. “It has to be simple, standardised and easy to use. The beauty of the offer is that we also provide a certified Kyriba treasurer to manage the platform. They will be at the client’s disposal when they need them during that crucial first year of their activity. So, it’s not just technology, it’s human intelligence too.”

The risk management element is essential to a new treasury function and yet can be overlooked or lost on the ‘to-do’ list as the parent treasury organisation struggles to get the new firm’s processes up and running.

Manuela de Coune, Business Solutions Manager, Cash Management Competence Centre, BNP Paribas, reveals: “Talking to clients, even if they implement a treasury in a new legal entity in nine months, they rarely have the time to look at the risk map of their processes. This means that when they go live, there is limited or even no risk control, and errors will be made with reconciliation and formatting, for example. Easy Treasury deploys everything in advance, which provides much-needed reassurance to both the parent company and the spin-off.”

This functionality is one reason the bank has already had great interest from private equity companies – keen M&A participants – regarding Easy Treasury, as they understand that controlling risk from day one is critical.

Marchand elaborates: “Private equity firms often acquire companies with little or no idea where their cash is. They tend to have very poor cash visibility and are still working on Excel spreadsheets. And while they may have some expertise in treasury, it is typically not that comprehensive. Having that risk control framework in place from day one makes a huge difference.”

Fig 1 | Easy Treasury Overview

Moreover, “As Easy Treasury is already live, it really is plug and play,” underlines de Coune. “Usually, when a company starts working with a fintech or another tech vendor, they will have to start with a big assessment and have the full workbook of exactly what the client needs. That single step can take a few months, but we’ve already completed that. Everything is already integrated into our global connectivity hub within BNP Paribas, saving months of project time for the client. With all services – integration, technology, resources, and servicing – in a single contract with the bank.”

The idea here is to take an industrialised approach, a solution that is simple to plug in and implement, hence the name Easy Treasury.

Critical considerations

Despite the clear benefits on offer, one question that treasurers might have around the Easy Treasury offering is about BNP Paribas managing the treasury platform and being the banking partner at the same time. The bank has proactively moved to solve this issue by putting Easy Treasury in a separate legal entity of BNP Paribas to the cash management business. In addition, the fact that Easy Treasury is a temporary solution, managed by an HR partner in treasury, has helped to assuage any concerns.

Marchand emphasises: “We are there to help clients set up a working treasury function quickly and professionally, as well as giving them the time and resources to think about the target architecture and organisation for the new legal entity. These two points – that a separate legal entity manages it, and that it is a temporary solution – have more than satisfied the clients we have spoken to.”

Commenting further on the transitional nature of Easy Treasury, Marchand says that another critical feature of the offering is its offboarding element. “There is a dedicated BNP Paribas team available to offboard the client when they decide to unplug the solution and move to their permanent treasury ecosystem. Importantly, the client can keep the history of all the transactions from the platform and either transfer it to a standalone Kyriba platform if they want to continue that relationship, or to another TMS if they want to switch,” notes Marchand.

With the platform comes a fully- certified treasurer – so there are human resources included in the solution too, alongside a control framework.

Full steam ahead

Looking to the solution’s own future, Marchand says that while the main focus of Easy Treasury is currently to help to establish a fully functioning treasury department in new legal entities, there is significant room for development. “This is a solution that was born out of co-creation. And collaborative creativity will undoubtedly shape its future. BNP Paribas has partnerships with fintechs that could easily enable it to plug in additional services around cash flow forecasting, hedging, and fraud management, for example, depending on client needs. So, watch this space!”

De Coune agrees, concluding that “This project started with a mindset of collaboration and agility. We absolutely want to continue co-creating with clients and certain corporates have already shared their ideas for development with us. You can be sure that Easy Treasury will grow and adapt, always with the aim of making our clients’ lives more straightforward.”