Andres adds: “For all businesses that are cash generating like ours, you need to have a proper setup for retrieving the cash. Cash is essentially the yield on your investment and has to be reinvested in the overall business environment, in line with the overall strategy of the company. If you’re not able to retrieve the cash from your subsidiaries, you’re not able to actually reinvest. The only thing that you can then do is reinvest in that specific business. If you can get a better return in other investment cases, you need to do that for the investors. Also, because it’s completely automated and once a subsidiary is in the pool, they’re in the pool, you don’t need to do any separate loan agreements. If you have to retrieve cash, you don’t necessarily have to do this via a dividend either, so there’s less administration. It’s also possible through the global cash pool arrangement to set up different types of interest charges to whatever business, depending on the risks of the financing.”
International reach
The sole bank solution offered by Nordea offers a number of benefits for H+H not least a reduction of the complexity that can occur in a split bank structure.
“Multiple banks can often mean different platforms, making it harder to get a clear cash management overview. It’s nice to have one platform and with one source of information. It’s also good to know that if we ever come into a challenging situation, there’s only one interested party to talk to and not seven parties to agree on how to solve any issues. So, it’s also advantageous from a tactical point of view,” says Andres.
During the implementation, a local country manager from Nordea was on hand to help with the process in each country, visiting the subsidiaries to explain how the global cash pool is set up, assist with opening accounts and to introduce the H+H team to the Nordea platform.
Andres adds: “Having local help from Nordea has been a huge benefit, not only in reducing the workload at head office but also establish a relationship manager locally to help with any urgent matters. In countries such as Germany for example, English can sometimes be a challenge and it is still easier to communicate in the local language. Having somebody who can speak their own language and understand them is very important. This is one of the reasons that right from the initial engagement and throughout the process, it has been smooth and lean. Both H+H and Nordea did what we could in order to support everyone in the process, to be transparent and communicative and to get it up and running.”