Creating & Issuing Effective Request for Proposals

Carla Huelsmann, Deutsche Bank & CTMfile

The process of creating and issuing a Request for Proposal (RfP) starts when there is a realisation in the corporate treasury department that a new solution is required for a corporate treasury problem or issue, e.g. improving cash management in Asia-Pacific.

Effective Requests for Proposals (RfPs) make a difference for both the service provider/bank receiving the request and the prospective corporate buyer by making clear the real purpose of the project under review and the vision for its end results.

There are four stages in the development of a new solution:

realising there is a problem requiring a new solution
creating and issuing an RfP to send to chosen system and/or service providers
evaluating and choosing the provider
implementing the new solution.

Creating and issuing an RfP requires considerable internal analysis and research in order to provide the bidders with a clear and concise view of your requirements. This checklist is split into two parts, the first covering the company’s internal analysis and research, which can take considerable resources and time (sometimes several months) to carryout but is a critical to the success of the process for procuring a new solution that will work for your company, and the second the structure and content of the RfP to ensure that the providers/banks understand your requirements and how to respond.

This checklist is intended to guide the corporate treasury department through the key questions to be answered, the issues to be considered and the main actions required in creating and issuing an RfP.

A - Internal analysis and research

Appoint an RfP working group made up of:

representatives from the business units and departments affected by the problem/issues requiring the new solution
an RfP project manager
consultants (if necessary)

N.B. this working group often remains in place during the supplier selection and solution implementation phases.

Prepare a high-level description of what the solution should address, e.g.:

board concerns about trapped cash
cost cutting with improved control
reduction in the number of accounts, payments, etc.

Carryout detailed research on current procedures & required improvements by all business units and legal entities to be covered by the new solution, e.g.:

the processes and business transactions carried out by the business units and at head office
an evaluation of the quality and nature of the current customer service and support
the pros and cons of the current provider/bank
the requirements and priorities of the departments and units that will be indirectly affected by the solution

N.B. This research phase is time and resource consuming, and may take several months to complete.

Agree on the scope of the new solution, including:

the countries and currencies to be covered
the type of transactions to be included
the controls required
the standards to be met
the requirements for the new solution
the overall budget and time deadlines (plus contingency plans if possible)
the selection criteria and weightings to be used in the tender evaluations

N.B. Documenting all agreements reached with the business units and other departments can be useful.

Obtain senior management approval* for the proposed RfP and decide which suppliers/banks to invite to tender:

current provider only, current and new providers, new providers only (carryout intensive research, review buyer guides and talk to your peers to be sure you invite the providers who can supply the solution you require.)
for new providers, Requests for Information could give the working group a better understanding of the market and the main players.

N.B. Reflect carefully on which and how many providers to request for proposals, typically a maximum of three to five (more will create an unwieldy and unnecessary workload for the selection process).

(* If none of the working group members have sufficient seniority.)

B – RfP structure and content

An overview of the nature and size of your company:

major lines of business and turnover; global/regional coverage; types of customer; annual sales or revenue; and, if appropriate, an annual report or other relevant financial information
cash management / treasury management set-up
corporate treasury department size and organisation, and responsibilities

Reasons for issuing the RfP, for example:

expanding into new region
problems with current technology

High level description of the new solution:

i. purpose, the problems to be solved by the new solution

ii. results required of the new solution, e.g.

reduction in number of accounts
cuts in processing costs
increased control, e.g. global visibility of cash balances
diversification of risk, e.g. minimising counter-party risk

iii. the planned dates (if known) in the development of the new solution:

implementation kick off date
envisaged go-live date

Operational requirements, for example:

the envisaged target operating model (roles and responsibilities within your organization)
the main systems, connectivity interfaces and integration required
the countries, legal entities to be included
the kinds of transactions to be included
how FX is to be managed
the management of the group’s liquidity
the credit line needed
the servicing model required, e.g. local to local, local to central customer service department, only corporate treasury department to customer service, etc.
security and business continuity systems and processes
other detailed technical functionality required

N.B. avoid requesting information not required for the evaluation process and allow sufficient space on the RfP for adequate responses

Other information to be included in the RfP:

i. the key criteria to be used in selecting a service provider, e.g.:

quality
experience
innovative approach
customer service
price

ii. whether the business will be awarded to a single provider or multiple providers (if multiple describe how this would work)

iii. the name and contact details of the person to whom the Tender should be sent

iv. the name and contact details of the person to answer questions for bidders concerning issues arising from or questions regarding the RfP

v. whether on-site meeting(s) with the chosen supplier will be required

vi. key dates:

for Q&A session
submission deadline (allowing adequate time for vendors to submit their responses, typically four weeks)
for vendor selection decision (allowing adequate time for the selection team to carryout a thorough and detailed analysis of the responses)

Response guidelines:

i. in what form the completed RfP/tender should be submitted, e.g. spread sheet, Word or PDF file

ii. the date for bidders to confirm their intention to submit a proposal

iii. information required to be included by bidders in their proposals, for example:

background on the company history, turnover, coverage, etc.
company experience and history of the product and number of users
references of current users who are of similar size and have same type of requirements
customer service and support
general technical capabilities, e.g. processing systems and services
anticipated resources to be assigned to the project
full testing plan
contract terms and conditions

iv. pricing details, to include all the one off (non-recurring charges), the monthly/recurring charges, and the per transactions charges.

Co-developed with Carla Huelsmann, Head of Cash Management Structuring EMEA, Deutsche Bank.

About the author