When a company makes more than 25 acquisitions a year, as Google recently did, a key cash management challenge is locking down the target company's cash as soon as the deal is signed. "When a company changes hands," notes Kenny Tse, a treasury analyst II at Google, "there's a tremendous risk of fraud. Individuals could make off with hundreds, thousands or even millions of dollars. No amount of hedging or insurance can cover losses due to poor control of funds." That's why Google treasury perfected a system that over a recent one-year period seized more than $3.5 billion in cash in more than 400 bank accounts in more than 50 countries just as soon as deals closed. Not a penny was lost.
The key to gaining quick control over cash is the clear, concise pre-close checklist that Google treasury gives to the company that has agreed to be acquired. It asks for banking documentation, signature cards, treasury workstation letters, bank portal access instructions, bank account summaries and contact details.
Once the transaction closes, treasury collects the pre-close checklist and goes after any information that is missing, Tse says. Once accounts are locked down and balances mobilized, Google treasury can proceed to optimize account structures, negotiate lower fees and introduce efficiencies to payments and collections.
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