ResourceMain Ltd., the US subsidiary of a large multinational corporation, is considering switching to an in-house bank structure. This will replace ResourceMain Ltd.’s multiple-entity commercial bank accounts with an in-house cash pool system by using internal accounts. This in-house bank solution will provide significant savings in external bank fees and help streamline ResourceMain Ltd.’s intercompany cash flows as well as enhance its decision-making capabilities.
Aside from reducing the complexity of tracking the cash position of each business, an in-house bank will allow ResourceMain Ltd. to consolidate and manage cash faster and more efficiently. By eliminating the external bank accounts used for various businesses and replacing them with virtual accounts, ResourceMain Ltd. can reduce the number of intermediaries required for internal transactions. Through an in-house bank structure, ResourceMain can establish an in-house system that automates the funding and netting of all business cash positions.
To establish the in-house bank, ResourceMain Ltd. will need to determine which functions need to work together to implement the project. These include cash management, IT development, treasury and risk management, shared services, accounting and audit functions, along with a business entity to act as the pilot company.
In-house bank structures yield significant advantages, but they are not right for all companies and in all circumstances. Understanding the concept of an in-house bank helps you determine how it would fit into your company’s own cash operation. It can be a simple structure starting with one currency and region, or a global solution in which you include many countries and various currencies. If you are currently working with multiple bank partners and numerous entity accounts, then understanding how an in-house bank system operates will enable you to assess its feasibility within your company.
To assess whether an in-house bank is right for your company, you need to:
- Analyze the advantages of having an in-house bank.
- Identify the key areas affected by moving to an in-house bank structure.
- Determine the resources needed for this transition.
- Prepare an implementation plan and timeline for this transition.
- Propose the solution to your company’s management.
How efficiently are you managing your company’s daily cash flows? The Accenture Academy course, Adding Value with an In-House Bank, will show you how to reduce bank costs and add efficiency with an in-house bank. Take a look at your current bank accounts and determine how many exist only to separate entity cash. How many are really needed to concentrate and settle cash flows that are external to the company? This difference will give you an estimate of the potential savings from implementing an in-house bank solution.