- Managing Cash Flow
- Make the best use of cash in hand
Delivery Hero: Transforming Visibility
Delivery Hero was originally created as a delivery company and since its creation has been highly acquisitive of other delivery businesses. More recently it has started to diversify into other areas such as grocery delivery and centralised kitchens that also deliver cooked meals. Historically, the company has allowed its various entities considerable autonomy over their financial/business technology/processes and their choice of banks. One disadvantage of this was that it left Delivery Hero's treasury in Germany with limited visibility and control of company cash, which apart from reducing potential efficiency opportunities, also effectively ruled out any meaningful form of global liquidity management.
New look treasury: objectives and RFP
This situation changed in 2017 when Delivery Hero recruited two senior treasury personnel with the intention of formalising a global treasury function. One of the first decisions taken by the new treasury team was to improve the company's cash management and a key element in this was to create a greater degree of uniformity in terms of how information was obtained, but also through consistency of pricing and services for banking.
Therefore, in H1 2018 the company decided to issue an RFP. However, before doing so, the treasury team held discussions with local teams to discover their existing banking structures and general operations, plus details of local regulations. The intent was that during any subsequent bank account opening and onboarding the treasury team would be able to impart an understanding of the company's business model and objectives to the relevant banks. This would ideally result in the banks being able to recommend the most relevant products/solutions that might add value to Delivery Hero's day to day financial operations.
As a result of the subsequent RFP, HSBC was awarded the cash management mandate for Delivery Hero's operations in Oman, Bahrain, Qatar and Saudi. In order to minimise the workload on the company's treasury team, HSBC undertook considerable streamlining of the usual documentation process for account opening, such as preventing duplicate signature and ID requests for situations where the same individual would be a signatory or have access rights on multiple accounts. The bank also put considerable effort into explaining the account opening and implementation process on a video call, so Delivery Hero's treasury were clear on the various steps involved.
Progress and relationship progression
The implementation of the first four countries began in Q4 2018 and was already running smoothly when HSBC was also asked in mid 2019 to take on Egypt, as the bank originally mandated proved unable to fulfil the necessary requirements. The company's Egypt team were extremely responsive during the account opening process, so much so that they went live in just two months.
The smooth onboarding progress and the obvious engagement by the HSBC team in wishing to understand the company's business model and how best to support it led to a progressive deepening of the relationship. So much so that when the client needed some urgent payments fulfilled it turned to HSBC, which managed to get the necessary accounts open in just four days and process the payments on time.
As a result, Delivery Hero's treasury awarded HSBC all its mandates for its MENA business early in 2020 by adding Kuwait to the list. In addition, the company is now also doing more business with HSBC at a head office level in Germany, as well as in other regions, such as Asia.
As of now, HSBC has opened 19 out of the 24 accounts across MENA that Delivery Hero will use for payments. (The bulk of Delivery Hero receivables in the region come from card payments, with merchant acquiring handled by local banks.) Both HSBC and local bank accounts are being added to HSBCnet, so that Delivery Hero’s global treasury in Germany will ultimately have 100% visibility on all entities' balances in MENA.
The new payment workflow where HSBC accounts have been opened is for the local entity to prepare payment files and then upload them to HSBCnet via secure FTP. Treasury in Germany then gives final approval for their release and execution by HSBC. (In certain countries that are not yet using XML formatted files, Delivery Hero uses file mappers for these bulk payments.) The company already uses SAP in Germany and has the longer term objective of further streamlining this process once it has implemented SAP's treasury module and multibank connector.
As Delivery Hero strives to improve its processes across the board, a separate work stream is underway for the MENA region, where the local finance system team, local finance and treasury have been looking into upgrading from Microsoft AX to the latest version of Microsoft 365.
“Achieving such milestones builds synergies across the various brands with one unique process and system, where formerly each brand had its own”, says Gerald Taylor, Senior Treasury Manager at Delivery Hero. “The next step will be to set up a host-to-host connection between HSBC and Microsoft 365, enabling teams to benefit from a full end-to-end process including automated payments, status reports and reconciliation.”
Results and reasons for success
Although the process of bank account opening and integration is still ongoing across MENA, Delivery Hero's treasury already enjoys significantly improved visibility. It has a far clearer picture of the company's total cash in the region, as well as day to day transactions and movements.
An important factor in the smooth progress to date has been dynamic relationship between HSBC and Delivery Hero, with extensive discussion of possible future company strategies and how best these might be supported from a banking perspective. This collaborative working has also been evident during the implementation, with regular weekly meetings, plus additional catch ups and messaging as required. A further benefit to this close rapport has been acceleration of the implementation timeline.
As mentioned earlier, Delivery Hero's treasury was careful to consult with local entities in MENA before embarking on the project in order to understand their processes and the reasoning behind them. This local engagement was further supplemented by HSBC running workshops with local teams to brief them in advance on the implementation process and to enable them to ask questions.
Conclusion: future possibilities
The enhanced visibility and control that Delivery Hero's treasury has now obtained forms a solid basis upon which to build. Centralised liquidity management is an obvious example in this regard, but the company is also interested in exploiting other opportunities. These include the use of faster payments to expedite the movement of cash from local acquiring banks (which is currently periodic) to a daily basis and greater adoption of APIs for enhanced connectivity. The closer working relationship with HSBC that has developed over the past 18 months means that evaluating the potential of these and other opportunities as Delivery Hero continues to grow can be collaborative, iterative and productive.