To RFP or not to RFP: How should you do it?

Deciding to go ahead with a RFP and knowing what you need are important steps, but how should the actual process be undertaken and what are some of the challenges?

Sometimes it is necessary to issue a request for proposal (RFP) to update your systems, especially if a company is operationally inefficient or if existing mandates were awarded long ago. But this can be when the tough questions need to be asked: how should you initiate a RFP and what are some of the challenges you might expect?

RFPs can be tedious and complicated, and less experienced senior finance executives may turn to templates to aid them through the process. While templates can simplify procedures, they can also be very lengthy and fail to address the needs of the specific business. Sending off a long RFP to multiple banks also risks the headache of having to filter out irrelevant information when they are returned.

Jack Spitzer, assistant treasurer at Starwood Hotels and Resorts, believes they should only act as a guidance before you design your own RFP. “Templates are good for reading and making you think, but many questions asked in a template may not be valid for your business because they are a combination of multiple RFPs, so try to have a very narrow and concise RFP,” he said.

“At the end of the day you need to know why you are issuing a RFP. You can use a template, but create your own one for that particular RFP because each RFP is unique,” added Lay Perk Toh, regional treasury manager of Honeywell Singapore.

Thierry Cairus, director of global treasury at Japan Tobacco International agrees that treasurers should avoid overly complicated RFPs, and that companies should not necessarily rely on mathematical models when selecting a partner bank. “Make sure you know why you are selecting [the bank] and keep it very simple,” he explained.

“We have a list of criteria and score [potential banking partners] according to their capabilities,” said Toh. “For banks ranked in our top three, we will also run a reference check with their existing customers to see if we have scored them accurately.”

How to go through with the RFP process is just one concern for senior finance executives. Additionally, there are various challenges related with the process and the implementation stage once a banking partner is selected. Toh sometimes finds it difficult to find a partner bank for countries where Honeywell has a smaller presence, so she offers a buy-one-get-one-free package. In other words, Toh awards mandates in countries where her company has a more established presence to the partner bank, but packages them with mandates in countries where it has a smaller business.

For Spitzer, cultural differences were the main challenge when centralising a multi-banked hotel business into a regional treasury office. “Culturally it was hard to deal with old bank relationships because we had different hotels that had very good relationships with different banks in the past,” he explained.

The RFP process is a very important phase of a company’s development, especially for those that are beginning to expand cross-border. It is vital that the process is completed efficiently and on time to make sure your company can take full advantage of any new systems or solutions partner banks are able to offer.

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