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?
How do I present centralizing cash management to my colleagues in Europe?
Answers
Tim,
I faced this exact same challenge in my
I hope this helps.
Ernie
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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Cash Management