The request for proposal (RFP) process can be a complex and lengthy process, especially when going through the replies from potential banking partners. Some companies use the process as a tool to keep an eye on market prices and changes in banking capabilities, but is a frequent RFP process always healthy for a company?
“We do an RFP roughly every five years,” said Jack Spitzer, assistant treasurer at Starwood Hotels and Resorts, which runs more than 1,000 hotels in more than 100 countries globally. “By the third or fourth year when the relationship [with the bank] has peaked and is stable, you need to check if there is anything in the business that you have missed. You also need to check on the capabilities of the banks and the pricing, which is usually only locked down for two years.”
For Spitzer, one RFP every five years seems reasonable to keep up to date and monitor banking services. However, Lay Perk Toh, regional treasury manager of Honeywell Singapore, believes an RFP process should be done every three to five years. She has issued four RFPs in just three years because “when there is a business opportunity we want to reward the business to our partner banks.”
Issuing an RFP on average every nine months can be considered a mammoth task, especially for a company like Honeywell which has around 150 legal entities employing more than 130,000 staff across 100 countries. On the other hand, Theirry Cairus, director of global treasury operations at Japan Tobacco International, thinks even once every five years is still too often for an RFP.
“We don’t do an RFP every year because for us it’s a major move,” said Cairus, whose company is the third largest tobacco company globally, employing more than 40,000 staff. “We first choose a bank that we want to work with globally before we even issue an RFP. If a bank wins us then they win us for a very long time if they deliver on their promises.”
For Cairus, utilising services and implementing new solutions from a different bank is too time consuming. He highlighted the arduous process of implementing an SAP solution, which although works well for his company, is not “plug and play” because it took a great deal of time to fully implement. His strategy is not to issue an RFP to monitor any changes in banking capabilities but rather to regularly meet with partner banks to ensure everything is up to date. “We don’t like to change our partner banks but we still like to improve,” he said.
RFPs can be a useful tool to make sure you are getting the best deal or for keeping track on the latest developments in banking capabilities for companies like Honeywell. However, for Japan Tobacco International, making use of alternative practices can save both time and cost in the long run.
