Is Your Operation Seizing the North American Advantage?
A shift is taking place. A few years ago, many of the companies we speak with were moving their operations outside of North America, with production cost as the main driver behind the decision. Now, more firms are reevaluating their priorities and are taking advantage of the benefits in cross-border U.S.-Canadian operations.
But a blind spot remains. That is, many companies tend to treat their treasury operations on either side of the border as separate entities rather than a seamless cross-border unit. Taking this approach leads to inefficiencies, such as managing duplicate systems. It also results in opportunistic loss, with employees performing duplicated tasks when they could be working on revenue-generating activities.
After all, compared with other countries, there are plenty of advantages in expanding across the Canadian-U.S. border. Along with proximity, the countries share a similar culture, and the language barrier is low. As BMO CEO Darryl White explained recently, there’s a distinct North American advantage.
Taking an integrated North American approach—with your organizational structure, treasury operations and key partners—can help eliminate these inefficiencies.
Seamless integration
A good place to start is ensuring your cross-border transactions are integrated into your working capital position, which can help you deploy cash more efficiently, generate yield and provide savings in your payables and receivables processes. Leveraging technology can be a great asset in facilitating this.
Using a treasury system that allows you to process transactions and view your accounts in both countries on an integrated North American platform, and with real-time payment rails in both the U.S. and Canada, will help you run your treasury functions more efficiently. Internally, you may want to evaluate whether you need to upgrade or replace your current ERP system, particularly to make sure it’s ISO-compliant and capable of integrating with your bank’s system. You may also want to find out if your banking partner offers application programming interfaces, or APIs, which streamline otherwise manual processes. APIs can help automate tasks such as verifying account information, initiating and tracking payments, and accessing real-time account and transaction data.
Conducting business across the border shouldn’t feel like you’re banking internationally. Transferring funds between your accounts can be as simple as transferring money to and from your domestic accounts, instead of wiring funds, which is the common mode for international transactions.
A new perspective
Creating a seamless U.S.-Canada operation not only requires implementing the right systems and developing relationships with the right partners, it also means cultivating the right behaviours.
|
Current Behaviour |
Desired Behaviour |
|---|---|
|
My Canadian vendors need to be paid by our Canadian accounts payables team for consistent currency and tax considerations. |
All vendors should be paid out of a central payables system that provides real-time currency conversion and tax calculation. |
|
My company cannot open a bank account in Canada because we do not have a physical office in the country. |
You do not need a physical presence in Canada to open accounts, thanks to recent technologies and process improvements. |
|
I have treasury teams in the U.S. and Canada that each work with local banking partners. |
I have a single relationship manager who is my point person for both the U.S. and Canada, providing a full North American view of your relationship. |
Understanding your needs: a case study
An engineering and construction firm based in the Southwestern U.S. with multiple locations across the globe, including several offices in Canada wanted to find efficiencies within their current banking structure and maximize cash flow with as little foreign exchange exposure as possible. Specifically, due to changes in clearing cheque deposits between Canada and the U.S., the company had been experiencing delays when sending payments to their customers, causing them to send costly wire payments instead.
They were able to save time and money by automating their payment functions using the new ISO industry standard. Additionally, after examining their account structure, they were able to pare down their accounts from 16 to 10. And with all their accounts accessible on a single online system, the company’s treasury team has greater visibility, leading to improved reporting capabilities and cashflow forecasting.
It’s worth exploring whether your cross-border treasury operations and organizational structure are similarly unified to make the most of the North American advantage.
Raul Gonzalez, Managing Director & Team Lead – Cross Border, Treasury & Payment Solutions, contributed to this article.
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Susan Witteveen
Senior Vice President & Head, Treasury & Payment Solutions
Susan Witteveen is an accomplished executive within the financial industry across North America, having spent over 20 years in a variety of leadership roles. …(..)
View Full Profile >A shift is taking place. A few years ago, many of the companies we speak with were moving their operations outside of North America, with production cost as the main driver behind the decision. Now, more firms are reevaluating their priorities and are taking advantage of the benefits in cross-border U.S.-Canadian operations.
But a blind spot remains. That is, many companies tend to treat their treasury operations on either side of the border as separate entities rather than a seamless cross-border unit. Taking this approach leads to inefficiencies, such as managing duplicate systems. It also results in opportunistic loss, with employees performing duplicated tasks when they could be working on revenue-generating activities.
After all, compared with other countries, there are plenty of advantages in expanding across the Canadian-U.S. border. Along with proximity, the countries share a similar culture, and the language barrier is low. As BMO CEO Darryl White explained recently, there’s a distinct North American advantage.
Taking an integrated North American approach—with your organizational structure, treasury operations and key partners—can help eliminate these inefficiencies.
Seamless integration
A good place to start is ensuring your cross-border transactions are integrated into your working capital position, which can help you deploy cash more efficiently, generate yield and provide savings in your payables and receivables processes. Leveraging technology can be a great asset in facilitating this.
Using a treasury system that allows you to process transactions and view your accounts in both countries on an integrated North American platform, and with real-time payment rails in both the U.S. and Canada, will help you run your treasury functions more efficiently. Internally, you may want to evaluate whether you need to upgrade or replace your current ERP system, particularly to make sure it’s ISO-compliant and capable of integrating with your bank’s system. You may also want to find out if your banking partner offers application programming interfaces, or APIs, which streamline otherwise manual processes. APIs can help automate tasks such as verifying account information, initiating and tracking payments, and accessing real-time account and transaction data.
Conducting business across the border shouldn’t feel like you’re banking internationally. Transferring funds between your accounts can be as simple as transferring money to and from your domestic accounts, instead of wiring funds, which is the common mode for international transactions.
A new perspective
Creating a seamless U.S.-Canada operation not only requires implementing the right systems and developing relationships with the right partners, it also means cultivating the right behaviours.
|
Current Behaviour |
Desired Behaviour |
|---|---|
|
My Canadian vendors need to be paid by our Canadian accounts payables team for consistent currency and tax considerations. |
All vendors should be paid out of a central payables system that provides real-time currency conversion and tax calculation. |
|
My company cannot open a bank account in Canada because we do not have a physical office in the country. |
You do not need a physical presence in Canada to open accounts, thanks to recent technologies and process improvements. |
|
I have treasury teams in the U.S. and Canada that each work with local banking partners. |
I have a single relationship manager who is my point person for both the U.S. and Canada, providing a full North American view of your relationship. |
Understanding your needs: a case study
An engineering and construction firm based in the Southwestern U.S. with multiple locations across the globe, including several offices in Canada wanted to find efficiencies within their current banking structure and maximize cash flow with as little foreign exchange exposure as possible. Specifically, due to changes in clearing cheque deposits between Canada and the U.S., the company had been experiencing delays when sending payments to their customers, causing them to send costly wire payments instead.
They were able to save time and money by automating their payment functions using the new ISO industry standard. Additionally, after examining their account structure, they were able to pare down their accounts from 16 to 10. And with all their accounts accessible on a single online system, the company’s treasury team has greater visibility, leading to improved reporting capabilities and cashflow forecasting.
It’s worth exploring whether your cross-border treasury operations and organizational structure are similarly unified to make the most of the North American advantage.
Raul Gonzalez, Managing Director & Team Lead – Cross Border, Treasury & Payment Solutions, contributed to this article.
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