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How do I present centralizing cash management to my colleagues in Europe?

Tim Williams's Profile

We are working to centalize control of cash and my colleagues in Europe are used to managing and controlling their own cash. How do I engage them to be cooperative and "buy in" to this initiative?

Answers

(Agent, JKS Solutions, Inc.) |

Tim,

I faced this exact same challenge in my career. First you need to be sure that you understand how your colleagues currently manage cash (including all systems and procredures) and why they currently manage cash they way they do now. That will give you the ability to fully understand the efforts on their end that will need to take place to comply that changes associated with centralizing cash will mean for them. You also need to be sure that you explian to them how centralization benefits the company in terms of lower bank fees, better working capital management, etc. Also, if possible you should be very "hand on" in any training in new systems and procedures that your colleagues need to learn. Just showing them that you really undersatnd what these changes mean for them and that you are trying to make any chnages as easy as possible will go miles towards obtaining "buy in" and their support for the initiative.

I hope this helps.

Ernie

Martin Sadleder
Title: Owner
Company: Treamo Business Consulting
(Owner, Treamo Business Consulting) |

Hi Tim,

in addition to Ernie's comment a few words, assuming that you are based in the US. You might be facing a situation in Europe that might be surprising for you, especially in terms of legislation and taxes (thin capitalization rules, insolvency laws, withholding taxes, etc., just to name a few).

I think that the selling argument to buy in your European colleagues is to proof that you are aware of the individual hurdles, that you have a waterproof concept, showing both the economic advantages for the entire group as well as a concept how to support the centralization from a technical point of view. If you intend to centralize the daily cash management you need to make sure that sufficient and efficient processes are in place to provide funds whenever they are needed, certainly upon request.

You say that you want to centralize control of cash - to me, control starts by visualizing cash (Where is it? Which bank? What are the interest rates? Is it properly managed? No debit and credit balances at the same time?) and ends up in a physical concentration of cash. The latter involves a lot of measures to be taken in advance, decribing all of them might take too long. As soon as you have done your homework and present a convincing concept, you might be able to buy them in. There will always be certain levels of resistance, but this is normal. At the end you need to make them aware who the effective owner of the funds is. This is sometimes something finance people in subsidiaries tend to forget.

Kind regards,

Martin

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