"Through this engagement we’ve been able to generate significant savings, as well as bring full visibility to our cash management and banking relationships."
Challenge
Complex banking relationships & unclear bank fees
Masco, a global leader in the design, manufacture and distribution of branded home improvement and building products, faced a daunting task: enhancing the cost-effectiveness of cash management across five major banks in both the USA and UK. The complexity of their banking fees and services significantly impacted their operational clarity and financial efficiency.
Solution
A focused approach to improve transparency
To revitalize Masco’s cash management, a focused strategy was deployed. The journey began with a comprehensive audit of past banking fees and a detailed benchmarking of current service rates, ensuring every decision was backed by data.
Our engagement aimed to revolutionize Masco’s financial landscape by implementing a cash management fee optimization plan, geared towards reducing costs and preserving robust banking relationships, aligning Earnings Credit Rates (ECR) with the upward trends in the Federal funds rate, and ultimately, ensuring financial efficiency.
Additionally, we focused on examining Masco’s existing account structure and services, in order to pinpoint areas of underutilization or opportunity. Though Masco was aware of the services they were utilizing, they hadn’t recognized the significant costs these services were accumulating annually.
This insight allowed us to recommend a new internal process for their team, aimed at mitigating these expenses. In the end, we ensured that Masco was only investing in banking services that truly benefited their business, allowing them to streamline their operations and potentially save money or generate more value from their banking arrangements.
Results
Significant savings with a competitive ECR
Through meticulous analysis and strategic negotiations, the engagement with Masco led to substantial outcomes:
- We achieved a notable cost reduction, effectively optimizing service pricing while aligning with a competitive Earnings Credits Rate closely tied to the Federal Funds Rate. All bank partners agreed to this pricing structure for the next three years.
- Uniformity in bank fees was established across all accounts, ensuring consistency within each bank.
- Collaborative sessions between Masco, the banks, and Redbridge pinpointed additional services that would enhance fraud prevention.
- We pinpointed and recommended to discontinue low-activity accounts and inefficient services, cutting down on unnecessary fees.
- Masco strategically chose to initiate the engagement with Redbridge at the onset of the evolution of the federal funds rate. Towards the conclusion of their collaboration, Masco experienced significant advantages as the federal funds rate reached its peak.
