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RCM is, in theory, a straightforward process that brings together the business and clinical sides of healthcare. It includes a range of tasks, including charge capture, claim submission, coding diagnoses and procedures, and collecting payments. However, in practice, the almost infinite number of variations available in the US health sector in terms of payers and processes means that RCM at many healthcare providers is sub-optimal. Historically, medical services – and dental services in particular – have been extremely fragmented and small scale. That means that investment in technology has often been seen as prohibitively expensive and largely unnecessary. It has been easy to overlook inefficient RCM practices given the local, low-volume nature of activity. As a result, processes associated with billing and reimbursement have, in many cases, remained largely unchanged for decades. What’s driving change? The accelerating pace of consolidation of offices into Medical Service Organizations (MSOs) and Dental Service Organizations (DSOs) is prompting a reconsideration of inefficient legacy processes. For instance, one dental group that works with Citi recently acquired multiple practices that deal primarily with cash, submit paper reimbursements to insurers or the Centers for Medicare & Medicaid Services (CMS) via mail, and receive consolidated paper checks on a 45 to 60-day timeline. Processes involving paper-based documents and cash or check-based collections increase the amount of time between providing a service and receiving payment, which increases working capital requirements and potentially acts as a drag on profitability. Perhaps most importantly, manual-based processes are time consuming and prone to errors: for small practices in particular, billing, chasing up and reconciling receivables can take up large amounts of employees’ time. Consolidation of individual practices into larger, scalable platforms inevitably results in growing pains relating to such processes. One group that Citi works with had just five practices in 2019 but will have 35 by the end of 2020: billing and reconciliation business-as-usual is simply not sustainable at that pace of growth. Often the rolling up of small practices into larger groups coincides with the appointment of executive management (such as a CFO), who may come from business sectors where treasury practices are more sophisticated. This can elevate the importance of receivables management. Equally, the involvement of private equity investors in MSOs and DSOs can increase the focus on transparency of costs. Both factors can lead to higher levels of investment and a newfound emphasis on automation of processes to improve efficiency. An additional recent driver that has emerged in the COVID-19 environment is the pressure on healthcare providers’ revenues. The industry currently has an enormous backlog, following a two-and-a-half-month shutdown, during which only emergency patients were seen. Consequently, revenue has fallen to almost nothing. Now that businesses are reopening, billing of payers has begun to resume. But there will be a gap of 45 to 60 days before collections are due. Initiatives to accelerate those receivables are therefore a priority. Equally, many companies have sought to take advantage of market conditions created by the COVID-19 pandemic to raise debt and equity capital in order to make acquisitions. As part of a plan to enhance their liquidity base and better position themselves for M&A activity, some companies are giving a higher priority to receivables in order to accelerate cash flow. Recognizing the challenge Treasury products have a large part to play in expediting receivables for healthcare companies. But before MSOs and DSOs start to consider the various solutions available, it is important to get the basics right. Most obviously, healthcare companies need to recognize that they face a challenge in managing their receivables. This can be trickier than it sounds. Often people managing receivables just assume that the problems they face are intractable because it is not their core day-to-day function. In other situations, employees responsible for managing receivables may be reluctant to make changes to ingrained work practices for fear of losing status (or even their job). So how do companies know if there is a problem? The biggest sign is that the business faces cash constraints on a periodic basis. Many healthcare firms run a boom-and-bust revenue roller coaster without realizing that RCM can smooth it out. Often the arrival of an outsider (usually with finance expertise) acts as a wake-up call. A CFO at one Citi client recalls the challenge that greeted his arrival: he had to reconcile 25 office locations that paid into a single account, with no idea of where the money had come from. Recognizing there is a problem does not mean that healthcare companies have to transform their operations overnight. Indeed, treasury products and structures can go a long way to increasing treasury sophistication without requiring large-scale investment in training or technology. MSOs and DSOs should also make use of the expertise and thought leadership of their banks, which are familiar with common RCM strategies and best practice in the healthcare sector. Finding the right solution There is a wide range of options available to healthcare companies seeking to improve their RCM. One possibility may be to outsource billing and remittance processing to a specialist provider with experience of high-volume CMS billing. However, this option can be costly and many providers prefer to centralize their billing in-house. For those that do, efficiencies can come from myriad different technological solutions. On the operational side, electronic bill presentment and payment software, such as Citi Present & Pay, can do much to streamline processes and reduce paperwork. Some companies may find they have a large number of re-billings (whether to commercial or government payers) due to payment declines resulting from incorrect case codes, for example. Re-billing effectively doubles administrative costs. The introduction of relatively inexpensive medical billing software can not only reduce such costs, but also lay the foundations for further automation. Automation of collections is often the next step undertaken by MSOs and DSOs to improve their RCM. Companies that currently collect reimbursement checks should quantify the costs associated with this process as well as the implications in terms of days receivables and average cash in hand. Most Medicare and Medicaid payments can now be received electronically – these payment methods are typically seven days faster than a mailed check and are straightforward to implement. There are still some Medicare and Medicaid payments at the state level that are reimbursed via check. Technology can improve efficiency even in these situations, with Remote Check Deposit capabilities that allow for seamless check depositing from multiple locations. Reconciliation is a common pain point for healthcare companies. Many find it challenging to post Electronic Data Interchange information, especially when it relates to multiple payers. In some cases, a payer might send a single ACH payment for 500 patients, which takes time and effort to break out and reconcile. Citi® Smart Match uses artificial intelligence (AI) and machine learning (ML) to read remittance notices received by a company (either in paper form or electronically), extract various useful pieces of data and implement a single process for all receivables. The use of AI and ML means that the system learns where a payment is coming from and how to handle it. Receivables are automatically matched to received payments, making cash application significantly more efficient and focusing the attention of account receivables employees on exceptions management. Automating manually intensive processes reduces costs and saves time. At the same time, faster reconciliation lowers days sales outstanding and optimizes working capital. Building a sound structure As well as technological solutions, banking structures can play an important role in RCM. Companies first need to ensure that their bank account arrangements are fit for purpose. Some groups that have grown by acquisition may have dozens of legacy accounts, incurring unnecessary fees and increasing complexity; where possible, these should be consolidated. All companies should also check to ensure that CMS and private funds are properly segregated within their account structures. Once this groundwork has been done, MSOs and DSOs should work with their banks to investigate options such as zero balance accounts (ZBAs) and sweeps that move funds between the management company and clinical enterprises on an automated basis. Such structures ensure that liquidity gets to where it can be used most effectively, as quickly as possible. In a typical structure, individual accounts are set up for each practice. These then feed into a parent account that serves as a source of funding for business spending and payroll. As well as increasing the availability of liquidity, ZBA and sweep structures facilitate easy segregation of funds for individual offices. This can be important in groups where offices are independently licensed and credentialed with payers. In such situations, billing must remain at sub-entity level (with funds received in the same account). However, funds can be automatically rolled up to the parent account. Segmented account structures can go a long way toward making reconciliation easier, in addition to the technological solutions available to automate reconciliation. Conclusion The healthcare sector is changing rapidly and the pace of change could accelerate further in the wake of COVID-19, which could prompt opportunistic M&A activity. Many MSOs and DSOs are seeking ways to improve how they manage their revenue cycle and, hence, add value to their company. Those that are not might benefit from taking a good look at their practices and the costs associated with processes such as billing and reconciliation. In many cases, there may be room for improvement. Many companies in the sector are sensitive to costs. However, investments in RCM can yield dramatic benefits in terms of operational costs, while putting an end to the boom-and-bust cycle of revenue that makes working capital management extremely complex (and potentially costly in terms of borrowing). It is important to remember that there is no one-sizefits-all answer for RCM: every MSO and DSO has a different starting point and potentially different objectives. Healthcare companies should therefore seek the advice and support of their banks and other partners.

<p>RCM is, in theory, a straightforward process that brings together the business and clinical sides of healthcare. It includes a range of tasks, including charge capture, claim submission, coding diagnoses and procedures, and collecting payments. However, in practice, the almost infinite number of variations available in the US health sector in terms of payers and processes means that RCM at many healthcare providers is sub-optimal.</p>
<p>Historically, medical services &ndash; and dental services in particular &ndash; have been extremely fragmented and small scale. That means that investment in technology has often been seen as prohibitively expensive and largely unnecessary. It has been easy to overlook inefficient RCM practices given the local, low-volume nature of activity. As a result, processes associated with billing and reimbursement have, in many cases, remained largely unchanged for decades.</p>
<p><strong>What&rsquo;s driving change? </strong></p>
<p>The accelerating pace of consolidation of offices into Medical Service Organizations (MSOs) and Dental Service Organizations (DSOs) is prompting a reconsideration of inefficient legacy processes. For instance, one dental group that works with Citi recently acquired multiple practices that deal primarily with cash, submit paper reimbursements to insurers or the Centers for Medicare &amp; Medicaid Services (CMS) via mail, and receive consolidated paper checks on a 45 to 60-day timeline.</p>
<p>Processes involving paper-based documents and cash or check-based collections increase the amount of time between providing a service and receiving payment, which increases working capital requirements and potentially acts as a drag on profitability. Perhaps most importantly, manual-based processes are time consuming and prone to errors: for small practices in particular, billing, chasing up and reconciling receivables can take up large amounts of employees&rsquo; time.</p>
<p>Consolidation of individual practices into larger, scalable platforms inevitably results in growing pains relating to such processes. One group that Citi works with had just five practices in 2019 but will have 35 by the end of 2020: billing and reconciliation business-as-usual is simply not sustainable at that pace of growth.</p>
<p>Often the rolling up of small practices into larger groups coincides with the appointment of executive management (such as a CFO), who may come from business sectors where treasury practices are more sophisticated. This can elevate the importance of receivables management. Equally, the involvement of private equity investors in MSOs and DSOs can increase the focus on transparency of costs. Both factors can lead to higher levels of investment and a newfound emphasis on automation of processes to improve efficiency.</p>
<p>An additional recent driver that has emerged in the COVID-19 environment is the pressure on healthcare providers&rsquo; revenues. The industry currently has an enormous backlog, following a two-and-a-half-month shutdown, during which only emergency patients were seen. Consequently, revenue has fallen to almost nothing. Now that businesses are reopening, billing of payers has begun to resume. But there will be a gap of 45 to 60 days before collections are due. Initiatives to accelerate those receivables are therefore a priority.</p>
<p>Equally, many companies have sought to take advantage of market conditions created by the COVID-19 pandemic to raise debt and equity capital in order to make acquisitions. As part of a plan to enhance their liquidity base and better position themselves for M&amp;A activity, some companies are giving a higher priority to receivables in order to accelerate cash flow.</p>
<p><strong>Recognizing the challenge </strong></p>
<p>Treasury products have a large part to play in expediting receivables for healthcare companies. But before MSOs and DSOs start to consider the various solutions available, it is important to get the basics right.</p>
<p>Most obviously, healthcare companies need to recognize that they face a challenge in managing their receivables. This can be trickier than it sounds. Often people managing receivables just assume that the problems they face are intractable because it is not their core day-to-day function. In other situations, employees responsible for managing receivables may be reluctant to make changes to ingrained work practices for fear of losing status (or even their job).</p>
<p>So how do companies know if there is a problem? The biggest sign is that the business faces cash constraints on a periodic basis. Many healthcare firms run a boom-and-bust revenue roller coaster without realizing that RCM can smooth it out. Often the arrival of an outsider (usually with finance expertise) acts as a wake-up call. A CFO at one Citi client recalls the challenge that greeted his arrival: he had to reconcile 25 office locations that paid into a single account, with no idea of where the money had come from.</p>
<p><img style="display: block; margin-left: auto; margin-right: auto;" src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/618eb3d82639e9726b325583.png" /></p>
<p>Recognizing there is a problem does not mean that healthcare companies have to transform their operations overnight. Indeed, treasury products and structures can go a long way to increasing treasury sophistication without requiring large-scale investment in training or technology. MSOs and DSOs should also make use of the expertise and thought leadership of their banks, which are familiar with common RCM strategies and best practice in the healthcare sector.</p>
<p>Finding the right solution</p>
<p>There is a wide range of options available to healthcare companies seeking to improve their RCM. One possibility may be to outsource billing and remittance processing to a specialist provider with experience of high-volume CMS billing. However, this option can be costly and many providers prefer to centralize their billing in-house. For those that do, efficiencies can come from myriad different technological solutions.</p>
<p>On the operational side, electronic bill presentment and payment software, such as Citi Present &amp; Pay, can do much to streamline processes and reduce paperwork. Some companies may find they have a large number of re-billings (whether to commercial or government payers) due to payment declines resulting from incorrect case codes, for example. Re-billing effectively doubles administrative costs. The introduction of relatively inexpensive medical billing software can not only reduce such costs, but also lay the foundations for further automation.</p>
<p>Automation of collections is often the next step undertaken by MSOs and DSOs to improve their RCM. Companies that currently collect reimbursement checks should quantify the costs associated with this process as well as the implications in terms of days receivables and average cash in hand. Most Medicare and Medicaid payments can now be received electronically &ndash; these payment methods are typically seven days faster than a mailed check and are straightforward to implement.</p>
<p>There are still some Medicare and Medicaid payments at the state level that are reimbursed via check. Technology can improve efficiency even in these situations, with Remote Check Deposit capabilities that allow for seamless check depositing from multiple locations.</p>
<p>Reconciliation is a common pain point for healthcare companies. Many find it challenging to post Electronic Data Interchange information, especially when it relates to multiple payers. In some cases, a payer might send a single ACH payment for 500 patients, which takes time and effort to break out and reconcile.</p>
<p>Citi<sup>&reg; </sup>Smart Match uses artificial intelligence (AI) and machine learning (ML) to read remittance notices received by a company (either in paper form or electronically), extract various useful pieces of data and implement a single process for all receivables. The use of AI and ML means that the system learns where a payment is coming from and how to handle it. Receivables are automatically matched to received payments, making cash application significantly more efficient and focusing the attention of account receivables employees on exceptions management. Automating manually intensive processes reduces costs and saves time. At the same time, faster reconciliation lowers days sales outstanding and optimizes working capital.</p>
<p><strong>Building a sound structure </strong></p>
<p>As well as technological solutions, banking structures can play an important role in RCM. Companies first need to ensure that their bank account arrangements are fit for purpose. Some groups that have grown by acquisition may have dozens of legacy accounts, incurring unnecessary fees and increasing complexity; where possible, these should be consolidated. All companies should also check to ensure that CMS and private funds are properly segregated within their account structures.</p>
<p>Once this groundwork has been done, MSOs and DSOs should work with their banks to investigate options such as zero balance accounts (ZBAs) and sweeps that move funds between the management company and clinical enterprises on an automated basis. Such structures ensure that liquidity gets to where it can be used most effectively, as quickly as possible.</p>
<p>In a typical structure, individual accounts are set up for each practice. These then feed into a parent account that serves as a source of funding for business spending and payroll. As well as increasing the availability of liquidity, ZBA and sweep structures facilitate easy segregation of funds for individual offices. This can be important in groups where offices are independently licensed and credentialed with payers. In such situations, billing must remain at sub-entity level (with funds received in the same account). However, funds can be automatically rolled up to the parent account.</p>
<p>Segmented account structures can go a long way toward making reconciliation easier, in addition to the technological solutions available to automate reconciliation.</p>
<p><strong>Conclusion </strong></p>
<p>The healthcare sector is changing rapidly and the pace of change could accelerate further in the wake of COVID-19, which could prompt opportunistic M&amp;A activity. Many MSOs and DSOs are seeking ways to improve how they manage their revenue cycle and, hence, add value to their company. Those that are not might benefit from taking a good look at their practices and the costs associated with processes such as billing and reconciliation. In many cases, there may be room for improvement.</p>
<p>Many companies in the sector are sensitive to costs. However, investments in RCM can yield dramatic benefits in terms of operational costs, while putting an end to the boom-and-bust cycle of revenue that makes working capital management extremely complex (and potentially costly in terms of borrowing). It is important to remember that there is no one-sizefits-all answer for RCM: every MSO and DSO has a different starting point and potentially different objectives. Healthcare companies should therefore seek the advice and support of their banks and other partners.</p>
<p>&nbsp;</p>
<p><a title="VIEW ALL INSIGHTS" href="https://www.citigroup.com/global/insights/commercial-bank?pk_campaign=view_all_insights"><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/618ed7a99236c83314de0211.png" alt="image_5231382051636751273307.png/" /></a></p>

The healthcare sector is undergoing a profound transformation, as small practices consolidate into larger multi-location businesses, and external investors, such as private equity, increase their involvement. For healthcare businesses, growth can improve professionalism, efficiency and patient care. However, consolidation and growth also shine a spotlight on inefficiencies in the sector. Most notably, there are significant gains to be made in relation to revenue cycle management (RCM).

Revenue Cycle Management: An Important Opportunity for Healthcare

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The Challenge As Celltrion continued to grow and expand across Europe, the regional treasury hub in Hungary became the primary purchasing entity. This Hungarian center would sell the purchased products to Celltrion subsidiaries around the world, receiving payment from the subsidiaries in each of their local currencies. Celltrion Healthcare did not wish to open accounts in all the currencies of the subsidiaries, as it knew that this would be complicated and costly from an efficiency perspective. Instead, it sought an automated solution which would provide FX centralization, full control, and instant visibility so that it could mitigate currency risks and more effectively manage cash. The currencies initially in scope were Danish Krone, Swedish Krona, Norwegian Krone, Swiss Franc, Pound Sterling and Romania Leu. The Solution Citi has been providing Celltrion with global cash management since 2018, and we have formed a strong relationship with the company that allowed us to understand the challenges and suggest an integrated FX solution that could simplify operations. Citi proposed a process for Celltrion Hungary whereby FX spreads could be pre-agreed and locked in when the subsidiaries were sending local currency payments. The Hungarian entity would receive the payments in a single currency, at the expected exchange rates, without having to open multiple accounts. The speed of implementation was also important for Celltrion. Citi was able to set up the solution in under 24 hours, and the day after implementation the company was up and running, immediately benefiting from the solution. After the success of the initial currencies in scope, Celltrion has already started adding more, such as Canadian Dollar, and continues to look for further opportunities. The Benefits Speed: No technological implementation needed Automation: Automated FX conversion without manual interruption Cost efficiency: Negotiated pricing in advance, no foreign exchange markups from suppliers, and reduced 3rd party bank charges on local currency payments Simplicity: Simple, straight through wire payments that allowed the company to redeploy resources to other important tasks

<h3><span class="icg-blue-title">The Challenge</span></h3>
<p>As Celltrion continued to grow and expand across Europe, the regional treasury hub in Hungary became the primary purchasing entity. This Hungarian center would sell the purchased products to Celltrion subsidiaries around the world, receiving payment from the subsidiaries in each of their local currencies. Celltrion Healthcare did not wish to open accounts in all the currencies of the subsidiaries, as it knew that this would be complicated and costly from an efficiency perspective. Instead, it sought an automated solution which would provide FX centralization, full control, and instant visibility so that it could mitigate currency risks and more effectively manage cash. The currencies initially in scope were Danish Krone, Swedish Krona, Norwegian Krone, Swiss Franc, Pound Sterling and Romania Leu.</p>
<p>&nbsp;</p>
<h3><span class="icg-blue-title">The Solution</span></h3>
<p>Citi has been providing Celltrion with global cash management since 2018, and we have formed a strong relationship with the company that allowed us to understand the challenges and suggest an integrated FX solution that could simplify operations. Citi proposed a process for Celltrion Hungary whereby FX spreads could be pre-agreed and locked in when the subsidiaries were sending local currency payments. The Hungarian entity would receive the payments in a single currency, at the expected exchange rates, without having to open multiple accounts. The speed of implementation was also important for Celltrion. Citi was able to set up the solution in under 24 hours, and the day after implementation the company was up and running, immediately benefiting from the solution. After the success of the initial currencies in scope, Celltrion has already started adding more, such as Canadian Dollar, and continues to look for further opportunities.</p>
<p>&nbsp;</p>
<h3><span class="icg-blue-title">The Benefits</span></h3>
<p><strong>Speed:</strong> No technological implementation needed</p>
<p><strong>Automation:</strong> Automated FX conversion without manual interruption</p>
<p><strong>Cost efficiency:</strong> Negotiated pricing in advance, no foreign exchange markups from suppliers, and reduced 3rd party bank charges on local currency payments</p>
<p><strong>Simplicity:</strong> Simple, straight through wire payments that allowed the company to redeploy resources to other important tasks</p>
<p>&nbsp;</p>
<p><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/61e84ea411cd8d6897b71e72.png" /></p>
<p>&nbsp;</p>

Celltrion Healthcare is a fast-growing biopharmaceutical company headquartered in Incheon, South Korea. It conducts worldwide marketing, sales and distribution of biological medicines, including the breakthrough  antibody biosimilar Remsima, which provides treatment for autoimmune diseases. The company has grown considerably over the last several years, and now has subsidiaries in 30 countries  and sales in over 110 countries. Its supply chain model has also grown accordingly, with Korea sourcing  active drug ingredients, Germany handling the packaging, the U.S. managing production and quality  inspection, and Hungary operating as the logistic and treasury hub.

Case Study: Multi-Currency Payment Solution for Healthcare Company

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INDUSTRY REPORT

The same is true of your banking. If it isn’t set up to be scalable, or is hindered by a series of providers or correspondent banking arrangements, you could run into challenges at every turn, with your banking serving as an obstacle rather than an enabler. Citi understands this pressure to constantly adapt, as we’ve supported the growth cycle of many preeminent healthcare companies for decades. We can help you find efficiencies with your treasury through automation, or enable you to integrate seamlessly with us, so that you can spend less time on your payments and receivables, and more time developing the next life-saving or life-changing healthcare product. Common objectives of Healthcare companies that we can help you achieve:

<p><span style="font-size: 16px;">The same is true of your banking. If it isn&rsquo;t set up to be scalable, or is hindered by a series of providers or correspondent banking arrangements, you could run into challenges at every turn, with your banking serving as an obstacle rather than an enabler. Citi understands this pressure to constantly adapt, as we&rsquo;ve supported the growth cycle of many preeminent healthcare companies for decades. We can help you find efficiencies with your treasury through automation, or enable you to integrate seamlessly with us, so that you can spend less time on your payments and receivables, and more time developing the next life-saving or life-changing healthcare product.</span></p>
<p><span style="font-size: 16px;"><strong>Common objectives of Healthcare companies that we can help you achieve:</strong></span></p>
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Debt or equity? From a bank or the capital markets? When it comes to finding the right formula that enables your business to grow optimally, no two companies are the same – there is no onesize- fits-all capital structure. That said, our high growth clients often follow a natural sequence of lending solutions as they evolve; understanding common strategies may be helpful as you embark on your own growth journey.

Funding that fits: options for every stage of your company’s growth

The rapidly evolving healthcare industry is forcing many companies into a difficult situation: disrupt or be disrupted. Regardless of your exact product or service, with advancements in wearable technology and telehealth, the consumerization of healthcare, and revolutions in surgery and pharmaceuticals, your competitive environment is almost certainly changing around you every day, and you no longer have the luxury of maintaining the status quo.

Our Solutions for Healthcare Companies

Rory Clark, Senior Vice President, Technology Venture Banking

Citi Commercial Bank works with a wide variety of disruptors, from FoodTech, Ag Tech, and biotech to software companies, online marketplaces and the electric vehicle ecosystem. These companies spend a significant amount of time sourcing funding and planning their next major lifecycle event such as an IPO or capital raise – and rightly so. Sustained rapid growth is only possible if funds are available; financial planning is therefore critical to future success. However, we have found that only a small percentage of these companies give investment planning much thought or know what to do with cash once it is in hand. As a result, many firms are missing out on potential returns from their surplus balances. Asking the Right Questions The extended period of low interest rates may have conditioned some companies to think of investment strategies as a waste of valuable time, especially when the focus is on business growth. But funding rounds for disruptor companies can be enormous: even small differences in the return this cash generates can be significant. Moreover, technology, life sciences, and disruptive consumer and industrial firms operate in intensely competitive environments, where the smallest advantage can be make or break. It is therefore even more important to think about the options for squeezing the most out of any cash on hand, especially now that the low interest rate environment is starting to show signs of change. Not every company finds itself with large amounts of surplus cash. But all firms should, as best practice, ask themselves some basic questions to determine how much, if any, of their cash can be put to better use: Am I still burning cash? If a business has a high cash burn, usually in the earlier stages of growth, it is prudent to keep 6-12 months’ worth of anticipated cash burn in operating balances to cover expenses. If a company has a buffer of more than 6-12 months, the surplus can potentially be invested. Firms that already have positive cash flow are likely to have established the minimum cash level they need to maintain on account; any excess can be invested. Am I funding an M&A event and, if so, when? If an M&A event is imminent, it may make sense to keep the required amount liquid. If the timeline is further out, companies could consider investing the earmarked funds for 6-9 months (to match with the timeline of the transaction). Do I have a lot of excess cash? In one of the more obvious scenarios where an investment strategy might make sense, if a funding round is successful enough to generate four years’ worth of cash burn for example, any balance in excess of 12 months’ cash burn that isn’t earmarked for M&A or debt repayment can be considered excess liquidity and ripe for investment. Reviewing the Options If a company’s answers to the questions above point to an opportunity, it’s time to start thinking about the available investment options. There is no one-size-fits-all approach for investment, and every Citi client is reviewed individually before we present possible options. Our guidance is aligned with a company’s overarching investment policy; if no policy exists, we can help create one. The instruments that a company can utilize will differ based on one of two main objectives – it’s also possible the company will think about both. Maximizing returns: If, after review, a company decides that making a return on idle balances is desired, there are several investment opportunities, both short- and medium-term, that can deliver modest but meaningful returns. In fact, recent steepening at the short end of the yield curve has resulted in yields between 1.3% and 1.7% per annum depending on a company’s investment policy, and when balances are large following a major lifecycle event, this can translate into an impactful return. Minimizing the impact of negative rates: For companies that operate in multiple locations around the world, chances are that they have accounts in a foreign currency that offers minimal, or even negative, interest rates. Although these rates may turn neutral or positive in the future, we have solutions that can help minimize the impacts in the interim by pooling money in locations and currencies that have a higher or at least neutral yield, if the goal is to avoid the loss of the principal. In Conclusion While some companies develop an investment policy early on, it’s more common for fast-growing, disruptive firms to prioritize other aspects of fundraising and procrastinate the development of a strategy for how they will invest excess cash following a funding round. With disruptors looking for every possible advantage, a clearly-defined investment strategy can be extremely valuable. Citi Commercial Bank can work with you to understand your goals and support the creation of a strategy (or review an existing one) to ensure that it complements your growth plan. Contact us today to start a conversation.

<p>Citi Commercial Bank works with a wide variety of disruptors, from FoodTech, Ag Tech, and biotech to software companies, online marketplaces and the electric vehicle ecosystem. These companies spend a significant amount of time sourcing funding and planning their next major lifecycle event such as an IPO or capital raise &ndash; and rightly so. Sustained rapid growth is only possible if funds are available; financial planning is therefore critical to future success. However, we have found that only a small percentage of these companies give investment planning much thought or know what to do with cash once it is in hand. As a result, many firms are missing out on potential returns from their surplus balances.</p>
<p>&nbsp;</p>
<h3>Asking the Right Questions</h3>
<p>The extended period of low interest rates may have conditioned some companies to think of investment strategies as a waste of valuable time, especially when the focus is on business growth. But funding rounds for disruptor companies can be enormous: even small differences in the return this cash generates can be significant. Moreover, technology, life sciences, and disruptive consumer and industrial firms operate in intensely competitive environments, where the smallest advantage can be make or break. It is therefore even more important to think about the options for squeezing the most out of any cash on hand, especially now that the low interest rate environment is starting to show signs of change.</p>
<p>Not every company finds itself with large amounts of surplus cash. But all firms should, as best practice, ask themselves some basic questions to determine how much, if any, of their cash can be put to better use:</p>
<ol>
<li><strong>Am I still burning cash? </strong>If a business has a high cash burn, usually in the earlier stages of growth, it is prudent to keep 6-12 months&rsquo; worth of anticipated cash burn in operating balances to cover expenses. If a company has a buffer of more than 6-12 months, the surplus can potentially be invested. Firms that already have positive cash flow are likely to have established the minimum cash level they need to maintain on account; any excess can be invested.</li>
<li><strong>Am I funding an M&amp;A event and, if so, when?</strong> If an M&amp;A event is imminent, it may make sense to keep the required amount liquid. If the timeline is further out, companies could consider investing the earmarked funds for 6-9 months (to match with the timeline of the transaction).</li>
<li><strong>Do I have a lot of excess cash?</strong> In one of the more obvious scenarios where an investment strategy might make sense, if a funding round is successful enough to generate four years&rsquo; worth of cash burn for example, any balance in excess of 12 months&rsquo; cash burn that isn&rsquo;t earmarked for M&amp;A or debt repayment can be considered excess liquidity and ripe for investment.</li>
</ol>
<p>&nbsp;</p>
<h3>Reviewing the Options</h3>
<p>If a company&rsquo;s answers to the questions above point to an opportunity, it&rsquo;s time to start thinking about the available investment options. There is no one-size-fits-all approach for investment, and every Citi client is reviewed individually before we present possible options. Our guidance is aligned with a company&rsquo;s overarching investment policy; if no policy exists, we can help create one. The instruments that a company can utilize will differ based on one of two main objectives &ndash; it&rsquo;s also possible the company will think about both.</p>
<ul>
<li><strong>Maximizing returns:</strong> If, after review, a company decides that making a return on idle balances is desired, there are several investment opportunities, both short- and medium-term, that can deliver modest but meaningful returns. In fact, recent steepening at the short end of the yield curve has resulted in yields between 1.3% and 1.7% per annum depending on a company&rsquo;s investment policy, and when balances are large following a major lifecycle event, this can translate into an impactful return.</li>
<li><strong>Minimizing the impact of negative rates: </strong>For<strong> </strong>companies that operate in multiple locations around the world, chances are that they have accounts in a foreign currency that offers minimal, or even negative, interest rates. Although these rates may turn neutral or positive in the future, we have solutions that can help minimize the impacts in the interim by pooling money in locations and currencies that have a higher or at least neutral yield, if the goal is to avoid the loss of the principal.</li>
</ul>
<p>&nbsp;</p>
<h3>In Conclusion</h3>
<p>While some companies develop an investment policy early on, it&rsquo;s more common for fast-growing, disruptive firms to prioritize other aspects of fundraising and procrastinate the development of a strategy for how they will invest excess cash following a funding round. With disruptors looking for every possible advantage, a clearly-defined investment strategy can be extremely valuable. Citi Commercial Bank can work with you to understand your goals and support the creation of a strategy (or review an existing one) to ensure that it complements your growth plan. <a href="https://www.citigroup.com/global/insights/commercial-bank/youve-raised-the-funds-now-what#CCB_CONTACT_BLOCK">Contact us</a> today to start a conversation.</p>
<p>&nbsp;</p>
<p><a title="VIEW ALL INSIGHTS" href="https://www.citigroup.com/global/insights/commercial-bank?pk_campaign=view_all_insights"><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/618ed7a99236c83314de0211.png" alt="View" /></a></p>

Fast-growing, VC-backed companies in sectors such as technology, e-commerce, life sciences, and emerging mobility focus heavily on raising capital to support their rapid expansion, but often put an investment strategy for this new influx of cash on the backburner. When funding comes in big rounds – as it usually does for these industries – even the smallest return can make a big difference.

You've Raised the Funds, Now What?

Kimberly Young

Kimberly Young, Global Head for Life Sciences, Citi Commercial Bank

Thor Perplies

Thor Perplies, Team Leader Treasury Sales, Healthcare and Nonprofit, Citi Commercial Bank

Anju Puri

Anju Puri, Treasury Sales Officer, Healthcare and Nonprofit, Citi Commercial Bank

Once the bell rings, expectations from investors, regulators and other key stakeholders become significantly higher, essentially overnight. However, the internal transformation needed to meet these heightened expectations cannot always happen as quickly. Ideally, a life sciences company should begin preparations up to a year before the IPO is anticipated. Key to these preparations is a review of treasury operations and the creation of a system that facilitates the strong governance, transparency, and accountability that stakeholders expect. Governance: Laying the Foundations All companies, public or private, have a policy that sets out the rules (or governance) for each team across the organization and how that organization functions. It is acceptable and understood that the governance structure of a private company is more fluid than that of a public one, especially for healthcare or life sciences companies that are often growing rapidly, and in a decentralized way. Once that company takes on public funding, however, it is held to a higher standard in order to protect investors, and the same fluidity is no longer tolerated. New infrastructure and processes may be required to fulfill key tasks. Understanding the scope of the changes that need to be made before an IPO can be daunting. Many of the requirements associated with becoming a public company are prosaic but absolutely critical in order to ensure best practices. If the firm has a bank that understands the journey, they can jointly conduct a detailed survey of their treasury practices across multiple areas; answering questions early on – even the seemingly mundane ones – will have a beneficial impact at later stages. For example: Encryption: At a basic level, companies must establish security encryption protocols for payments, setting out whether they intend to encrypt connectivity to their bank or both connectivity and payment files. The bank can help the company decide what makes the most sense in its specific circumstances. Authorized Signers: Especially when a healthcare company has multiple overseas subsidiaries, it may have a variety of practices related to authorized signers. To ensure proper controls, healthcare companies should keep their signer list updated, and consider a centralized structure that leaves room for local signatories where relevant. The bank will be able to provide detailed guidance on issues such as authorized signatory requirements in various jurisdictions. Investment Policy: Raising cash is the primary objective of an IPO, but many firms fail to build a plan for how to manage that cash once it arrives, with some maintaining balances in a demand deposit account. The asset management arm at the bank can work with the company to understand its priorities and develop an investor policy statement and strategy that balances risk and return with any strategic projects such as investment in new facilities and research and development. Explore this topic further here. Cash Deployment: Proceeds from Healthcare IPOs may be used to fund subsidiaries to expand operations, conduct clinical trials, and repay debt. Separate from the investment policy for any excess balances, a healthcare company should think about how it will deploy cash for these various purposes in the most efficient way. A centralized banking operation streamlines funding at the headquarters rather than individually at each subsidiary, enabling greater visibility and control. Some banks might be able to help their clients automatically implement their governance policies, such as the authorization process for electronic payments. Authorization at the ERP level when releasing file payments is the most common, but banks can support additional authorizations as well. FX transactions, for example, may be more sensitive than regular payments, and so Healthcare companies can have defined processes and employees to input and authorize those particular transactions. Such procedures and processes make it easier to ensure robust governance. Transparency: The Key to Building Trust In addition to necessitating stronger governance, accessing the capital markets requires increased financial reporting capabilities to ensure greater transparency for stakeholders. Treasury has an obligation to consolidate and report ongoing financial data relating to key trial developments. If the company cannot easily synthesize information across the organization and provide granular reporting, it should consider building the infrastructure upfront to avoid wasting time later on. The international nature of the life sciences and healthcare sector complicates this further; companies often expand rapidly to conduct clinical trials in Asia and Europe in order to commercialize products to these key markets. Similarly, companies may launch operations in a new market to benefit from R&D credits or tax incentives in places such as Australia. If companies work with multiple providers or correspondent banks in different countries, they will need to negotiate a variety of processes, formats and reports, increasing complexity and making it harder to consolidate the necessary information. Working with a global bank that can easily scale with the company can solve some of these problems. Consolidation provides much greater control over the data that companies receive into their ERP system, making reporting fast and accurate even as they add incremental countries. Relevant data can then be efficiently mapped for each project or drug. Accountability: Oversight is Critical The importance of accountability cannot be overstated: accurate reporting to Wall Street is essential. The treasury policies and procedures put in place as part of the governance structure described earlier can help with accountability and regulatory compliance, but much more is required. For instance, companies must adhere to the target capital structure that they communicate to stakeholders. Company management will define the ideal debt/equity ratio, but it is the treasury team that takes responsibility for the actual execution of the plan and management of the day-to-day flow of cash, by repaying debt and partnering with capital markets bankers to ensure an appropriate funding structure is in place. In terms of compliance, being publicly listed transforms the regulatory burdens placed on companies. Following an IPO, a company must be in compliance with a number of regulations, which can have significant treasury and operational implications. For example, some regulations require companies to perform audits on their bank account balances or to report their tax compliance status, FX exposure, and interest rate exposure. A company’s bank should have the infrastructure to enable this. The collation of such information, which is documented in MT940 and other message types as well as cash management statements, is significantly easier if a company works with a single bank. Similarly, a bank can provide simplified reporting of FX and interest rate exposure that can be fed into the company’s ERP system, automatically populating accounting statements. Conclusion: Preparation is Essential An IPO is a marquee event in a healthcare company’s growth trajectory, and many factors need to go right in order for it to succeed. With an IPO on the horizon, treasury preparation should not be overlooked: it is an enabler of the company’s efficiency and controls after the bell rings. Because this kind of financial transformation can take time, refining a company’s treasury setup should start well before the bell. Choosing the right banking partner will make it easier to establish an appropriate treasury foundation that can support an organization as it scales, from a private start-up to public company, and from the clinic to commercialization.

<p>Once the bell rings, expectations from investors, regulators and other key stakeholders become significantly higher, essentially overnight. However, the internal transformation needed to meet these heightened expectations cannot always happen as quickly. Ideally, a life sciences company should begin preparations up to a year before the IPO is anticipated. Key to these preparations is a review of treasury operations and the creation of a system that facilitates the strong <strong>governance</strong>, <strong>transparency</strong>, and <strong>accountability </strong>that<strong> </strong>stakeholders expect.</p>
<p>&nbsp;</p>
<h3>Governance: Laying the Foundations</h3>
<p>All companies, public or private, have a policy that sets out the rules (or governance) for each team across the organization and how that organization functions. It is acceptable and understood that the governance structure of a private company is more fluid than that of a public one, especially for healthcare or life sciences companies that are often growing rapidly, and in a decentralized way. Once that company takes on public funding, however, it is held to a higher standard in order to protect investors, and the same fluidity is no longer tolerated. New infrastructure and processes may be required to fulfill key tasks.</p>
<p>Understanding the scope of the changes that need to be made before an IPO can be daunting. Many of the requirements associated with becoming a public company are prosaic but absolutely critical in order to ensure best practices. If the firm has a bank that understands the journey, they can jointly conduct a detailed survey of their treasury practices across multiple areas; answering questions early on &ndash; even the seemingly mundane ones &ndash; will have a beneficial impact at later stages. For example:</p>
<ul>
<li><strong>Encryption:</strong> At a basic level,<strong> </strong>companies must establish security encryption protocols for payments, setting out whether they intend to encrypt connectivity to their bank or both connectivity and payment files. The bank can help the company decide what makes the most sense in its specific circumstances.</li>
<li><strong>Authorized Signers:</strong> Especially when a healthcare company has multiple overseas subsidiaries, it may have a variety of practices related to authorized signers. To ensure proper controls, healthcare companies should keep their signer list updated, and consider a centralized structure that leaves room for local signatories where relevant. The bank will be able to provide detailed guidance on issues such as authorized signatory requirements in various jurisdictions.</li>
<li><strong>Investment Policy:</strong> Raising cash is the primary objective of an IPO, but many firms fail to build a plan for how to manage that cash once it arrives, with some maintaining balances in a demand deposit account. The asset management arm at the bank can work with the company to understand its priorities and develop an investor policy statement and strategy that balances risk and return with any strategic projects such as investment in new facilities and research and development. <a href="https://www.citigroup.com/global/insights/commercial-bank/youve-raised-the-funds-now-what" target="_blank" rel="noopener">Explore this topic further here</a>.</li>
<li><strong>Cash Deployment:</strong> Proceeds from Healthcare IPOs may be used to fund subsidiaries to expand operations, conduct clinical trials, and repay debt. Separate from the investment policy for any excess balances, a healthcare company should think about how it will deploy cash for these various purposes in the most efficient way. A centralized banking operation streamlines funding at the headquarters rather than individually at each subsidiary, enabling greater visibility and control.</li>
</ul>
<p>Some banks might be able to help their clients automatically implement their governance policies, such as the authorization process for electronic payments. Authorization at the ERP level when releasing file payments is the most common, but banks can support additional authorizations as well. FX transactions, for example, may be more sensitive than regular payments, and so Healthcare companies can have defined processes and employees to input and authorize those particular transactions. Such procedures and processes make it easier to ensure robust governance.</p>
<p>&nbsp;</p>
<h3>Transparency: The Key to Building Trust</h3>
<p>In addition to necessitating stronger governance, accessing the capital markets requires increased financial reporting capabilities to ensure greater transparency for stakeholders. Treasury has an obligation to consolidate and report ongoing financial data relating to key trial developments. If the company cannot easily synthesize information across the organization and provide granular reporting, it should consider building the infrastructure upfront to avoid wasting time later on.</p>
<p>The international nature of the life sciences and healthcare sector complicates this further; companies often expand rapidly to conduct clinical trials in Asia and Europe in order to commercialize products to these key markets. Similarly, companies may launch operations in a new market to benefit from R&amp;D credits or tax incentives in places such as Australia. If companies work with multiple providers or correspondent banks in different countries, they will need to negotiate a variety of processes, formats and reports, increasing complexity and making it harder to consolidate the necessary information.</p>
<p>Working with a global bank that can easily scale with the company can solve some of these problems. Consolidation provides much greater control over the data that companies receive into their ERP system, making reporting fast and accurate even as they add incremental countries. Relevant data can then be efficiently mapped for each project or drug.</p>
<p>&nbsp;</p>
<h3>Accountability: Oversight is Critical</h3>
<p>The importance of accountability cannot be overstated: accurate reporting to Wall Street is essential. The treasury policies and procedures put in place as part of the governance structure described earlier can help with accountability and regulatory compliance, but much more is required.</p>
<p>For instance, companies must adhere to the target capital structure that they communicate to stakeholders. Company management will define the ideal debt/equity ratio, but it is the treasury team that takes responsibility for the actual execution of the plan and management of the day-to-day flow of cash, by repaying debt and partnering with capital markets bankers to ensure an appropriate funding structure is in place.</p>
<p>In terms of compliance, being publicly listed transforms the regulatory burdens placed on companies. Following an IPO, a company must be in compliance with a number of regulations, which can have significant treasury and operational implications. For example, some regulations require companies to perform audits on their bank account balances or to report their tax compliance status, FX exposure, and interest rate exposure. A company&rsquo;s bank should have the infrastructure to enable this.</p>
<p>The collation of such information, which is documented in MT940 and other message types as well as cash management statements, is significantly easier if a company works with a single bank. Similarly, a bank can provide simplified reporting of FX and interest rate exposure that can be fed into the company&rsquo;s ERP system, automatically populating accounting statements.</p>
<p>&nbsp;</p>
<h3>Conclusion: Preparation is Essential</h3>
<p>An IPO is a marquee event in a healthcare company&rsquo;s growth trajectory, and many factors need to go right in order for it to succeed. With an IPO on the horizon, treasury preparation should not be overlooked: it is an enabler of the company&rsquo;s efficiency and controls after the bell rings. Because this kind of financial transformation can take time, refining a company&rsquo;s treasury setup should start well <em>before </em>the bell. Choosing the right banking partner will make it easier to establish an appropriate treasury foundation that can support an organization as it scales, from a private start-up to public company, and from the clinic to commercialization.</p>
<p>&nbsp;</p>
<p><a title="VIEW ALL INSIGHTS" href="https://www.citigroup.com/global/insights/commercial-bank?pk_campaign=view_all_insights"><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6262d6f3fa483e262fbebe51.png" alt="VIEW" /></a></p>

Life Sciences companies are unique not only in how quickly they scale, but also how early they go public in their life cycle. Listing on a stock exchange is usually a momentous milestone for a business, and for months leading up to it, attention understandably turns almost exclusively to the IPO process, investor roadshows, and ringing the opening bell. What often gets overlooked is the importance of an automated, efficient treasury setup. Getting this right not only delivers a major boost for a healthcare company’s operations in general, but in many cases is necessary to meet the increased expectations and scrutiny that comes with being a public entity.

Healthcare IPOs: Treasury's Role Before the Bell

Jackson Diaz-Cobo

Jackson Diaz-Cobo,  Relationship Manager | Healthcare Specialty Group, US Citi Commercial Bank

Jamie Mantle

Jamie Mantle, Relationship Manager | Healthcare Specialty Group, US Citi Commercial Bank

Gareth Petsch

Gareth Petsch, Industry Head | Healthcare Specialty Group, US Citi Commercial Bank

A dire situation One of the hallmarks of the past year has been staffing shortages in many sectors. Dubbed ‘The Great Resignation’, millions of Americans quit their jobs during the pandemic, with the trend gathering pace as the economy rebounded when lockdowns were lifted. These shortages have been particularly acute in the healthcare sector, as the industry was already suffering from shortages even before COVID-19, and it only got worse when non-medical treatment was put on hold in 2020. Staff shortages mean that some healthcare providers are unable to provide the services that patients want, which will cut revenue and profit (and put pressure on valuations). In the longer term, if healthcare providers cannot deliver timely and high-quality services, patient satisfaction and quality of care could suffer. Ultimately, providers could suffer reputational damage. A vicious circle could also emerge, with employees working overtime to fill gaps, undermining employee satisfaction and prompting staff to leave. Healthcare’s response: one step forward, two steps back In response to the challenges with attracting and retaining staff, many providers have resorted to deploying both financial and nonfinancial incentives to fill the gap. But in many cases these measures have driven costs up even further, both directly and indirectly. For instance, some organizations have started raising wages to attract new hires. In addition to the predictable impact on incremental expenses, this also creates a new problem – the potential for further dissatisfaction with existing staff, which may lead to even higher rates of turnover. Ultimately, wages may need to rise across the board to maintain a content workforce. Other practices have been experimenting with bonuses. If these are performance-related, a practice might for example award administrative staff bonuses based on their scheduling efficiency, or at companies making an acquisition, bonuses might be dependent upon the successful integration of a new practice. Some are also awarding sporadic bonuses, or signing-on bonuses for new hires. The latter approach creates similar challenges with existing staff, who were not awarded the same benefit, and no matter what kind of bonus is awarded, costs increase accordingly. Recognizing the cost implications of the above strategies, still others are trying to plug the gap via non-financial incentives. These usually focus on improving employee satisfaction. For example, some healthcare providers are offering non-clinical or support staff flexibility about where they work or expanded benefits. Others are enhancing their organizational culture to make employees feel more appreciated, by closing on the weekends or paying for employees to stay at a country club. While these options save on expense, they may not have the same impact as a bonus or wage increase. How can banks help? It is clear that healthcare providers’ staffing shortages are not going to be resolved in the short term. While providers have begun to raise prices (especially where companies operate a fee-for-service model), they are unlikely to be able to keep pace with higher staffing costs. Where services are reimbursed by an insurance company or Medicare and Medicaid, the gap between fees and costs will be greater still. Some impact on profitability is therefore inevitable. In response, healthcare providers are having a tough time improving efficiency, especially in relation to administration and accounting services. There are often solutions available from banks (or third-party providers) that can help. For instance, solutions are available to automate revenue cycle management. Some of these leverage artificial intelligence and machine learning technology to streamline billing, collections and reconciliation. Others are integrated into banking portals or enterprise resource planning solutions that healthcare companies already use, improving efficiency further. Some solutions automatically pull Explanation of Benefits data and align it with a payment received from an insurance provider. Automation releases staff from mundane, repetitive (and often paper-based) tasks so that they can concentrate on more valuable and meaningful activities. It therefore not only reduces costs – unleashing funds for growth or service improvements – but by giving staff greater responsibility improves employee satisfaction, potentially making staff retention easier. In addition, automation reduces human error: overworked administrators may miss claim denials from insurance providers, slowing down cashflow; automation can flag denials and other problems in real time. There may also be opportunities for efficiency gains on the payables side. For example, moving from checks to electronic payments can reduce costs (and improve security) while the use of commercial cards can improve working capital by taking advantage of the card billing cycle. On a practical level, higher staff turnover has the potential to increase disruption. Companies need to consider a number of practical measures to lessen the impact. For example, it is important to have a clear record of authorized signers and individuals with administration rights for online banking as well as processes such as dual approvals for payments, for instance. That way changes can be made quickly should an individual leave the company. In Conclusion The pandemic has made an already difficult situation for the healthcare sector even more challenging. No matter how employers choose to tackle it, it appears that risings costs are inevitable. Citi Commercial Bank clients in this sector that have recently conducted compensation reviews – and had success in retaining staff – have found that the market rate for many positions has gone up substantially. With inflation at a 40-year record high, remuneration expectations among employees and potential hires are likely to increase further. To offset increased staffing and other costs, healthcare providers should seek opportunities to improve efficiency and cut costs across the organization. Many providers still have cumbersome, paper-based processes for billing and reconciliation. Technology, whether provided by banks or third-party providers, can play a major role in automating revenue cycle management. These opportunities can be explored immediately so that companies can begin to reap the benefits and mitigate the risks of the healthcare staffing crisis. For more information about how Citi Commercial Bank can partner with you and your team please Contact Us Below.

<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 24px;"><strong>A dire situation</strong></span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">One of the hallmarks of the past year has been staffing shortages in many sectors. Dubbed &lsquo;The Great Resignation&rsquo;, millions of Americans quit their jobs during the pandemic, with the trend gathering pace as the economy rebounded when lockdowns were lifted. These shortages have been particularly acute in the healthcare sector, as the industry was already suffering from shortages even before COVID-19, and it only got worse when non-medical treatment was put on hold in 2020.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">Staff shortages mean that some healthcare providers are unable to provide the services that patients want, which will cut revenue and profit (and put pressure on valuations). In the longer term, if healthcare providers cannot deliver timely and high-quality services, patient satisfaction and quality of care could suffer. Ultimately, providers could suffer reputational damage. A vicious circle could also emerge, with employees working overtime to fill gaps, undermining employee satisfaction and prompting staff to leave.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 24px;"><strong>Healthcare&rsquo;s response: one step forward, two steps back</strong></span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">In response to the challenges with attracting and retaining staff, many providers have resorted to deploying both financial and nonfinancial incentives to fill the gap. But in many cases these measures have driven costs up even further, both directly and indirectly.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">For instance, some organizations have started raising wages to attract new hires. In addition to the predictable impact on incremental expenses, this also creates a new problem &ndash; the potential for further dissatisfaction with existing staff, which may lead to even higher rates of turnover. Ultimately, wages may need to rise across the board to maintain a content workforce.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">Other practices have been experimenting with bonuses. If these are performance-related, a practice might for example award administrative staff bonuses based on their scheduling efficiency, or at companies making an acquisition, bonuses might be dependent upon the successful integration of a new practice. Some are also awarding sporadic bonuses, or signing-on bonuses for new hires. The latter approach creates similar challenges with existing staff, who were not awarded the same benefit, and no matter what kind of bonus is awarded, costs increase accordingly.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;"><em>&nbsp;</em></span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">Recognizing the cost implications of the above strategies, still others are trying to plug the gap via non-financial incentives. These usually focus on improving employee satisfaction. For example, some healthcare providers are offering non-clinical or support staff flexibility about where they work or expanded benefits. Others are enhancing their organizational culture to make employees feel more appreciated, by closing on the weekends or paying for employees to stay at a country club. While these options save on expense, they may not have the same impact as a bonus or wage increase.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 24px;"><strong>How can banks help?</strong></span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">It is clear that healthcare providers&rsquo; staffing shortages are not going to be resolved in the short term. While providers have begun to raise prices (especially where companies operate a fee-for-service model), they are unlikely to be able to keep pace with higher staffing costs. Where services are reimbursed by an insurance company or Medicare and Medicaid, the gap between fees and costs will be greater still. Some impact on profitability is therefore inevitable. In response, healthcare providers are having a tough time improving efficiency, especially in relation to administration and accounting services. There are often solutions available from banks (or third-party providers) that can help.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">For instance, solutions are available to automate revenue cycle management. Some of these leverage artificial intelligence and machine learning technology to streamline billing, collections and reconciliation. Others are integrated into banking portals or enterprise resource planning solutions that healthcare companies already use, improving efficiency further. Some solutions automatically pull Explanation of Benefits data and align it with a payment received from an insurance provider.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">Automation releases staff from mundane, repetitive (and often paper-based) tasks so that they can concentrate on more valuable and meaningful activities. It therefore not only reduces costs &ndash; unleashing funds for growth or service improvements &ndash; but by giving staff greater responsibility improves employee satisfaction, potentially making staff retention easier. In addition, automation reduces human error: overworked administrators may miss claim denials from insurance providers, slowing down cashflow; automation can flag denials and other problems in real time.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;">&nbsp;</p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">There may also be opportunities for efficiency gains on the payables side. For example, moving from checks to electronic payments can reduce costs (and improve security) while the use of commercial cards can improve working capital by taking advantage of the card billing cycle. </span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">On a practical level, higher staff turnover has the potential to increase disruption. Companies need to consider a number of practical measures to lessen the impact. For example, it is important to have a clear record of authorized signers and individuals with administration rights for online banking as well as processes such as dual approvals for payments, for instance. That way changes can be made quickly should an individual leave the company.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 24px;"><strong>In Conclusion</strong></span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">The pandemic has made an already difficult situation for the healthcare sector even more challenging. No matter how employers choose to tackle it, it appears that risings costs are inevitable. Citi Commercial Bank clients in this sector that have recently conducted compensation reviews &ndash; and had success in retaining staff &ndash; have found that the market rate for many positions has gone up substantially. With inflation at a 40-year record high, remuneration expectations among employees and potential hires are likely to increase further.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">&nbsp;</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">To offset increased staffing and other costs, healthcare providers should seek opportunities to improve efficiency and cut costs across the organization. Many providers still have cumbersome, paper-based processes for billing and reconciliation. Technology, whether provided by banks or third-party providers, can play a major role in automating revenue cycle management. These opportunities can be explored immediately so that companies can begin to reap the benefits and mitigate the risks of the healthcare staffing crisis.</span></p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;">&nbsp;</p>
<p style="margin: 0in; line-height: normal; font-size: 11pt;"><span style="font-size: 16px;">For more information about how Citi Commercial Bank can partner with you and your team please <strong>Contact Us Below</strong>.</span></p>
<p>&nbsp;</p>
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The pandemic has intensified many of the challenges facing the healthcare sector, chief among them the shortage of both clinical and non-clinical staff. This shortage of workers is having a number of direct and indirect impacts on costs, causing healthcare providers to look for help. Fortunately, there are several key efficiencies that banks can enable, which we explore in this article.

The healthcare staffing challenge: finding new ways to be efficient

Richard Rambo

Richard Rambo Vice President, Life Sciences Group, US Citi Commercial Bank

The Challenge Traditionally, biotech companies focus on a limited number of technologies. In contrast, atai operates a decentralized platform approach to enable scalable drug or technological development at its atai companies (commonly known as a hub and spoke model). By leveraging its funding, technology, scientific, operational and regulatory expertise, atai helps accelerate treatments for targeted patient groups across a broad portfolio of companies globally, each dedicated to different drug programs. As atai grew and moved towards an IPO, it needed to establish a banking relationship with a partner that could accommodate its global footprint and complex structure. Specifically, atai wanted to rationalize the fragmented banking relationships of 20 legal entities and concentrate activity with a single global bank. The company had relationships with several banks in the US and multiple local banks around the world, which increased costs and unnecessarily put a burden on resources. Given a demanding timeline for the IPO, there was a need to rapidly open accounts and onboard atai’s entities in several key markets around the globe. The Solution Citi Commercial Bank was one of the few banks able to meet atai’s needs in the US and Western Europe, and provide a network to support future expansion as the company grows its presence in additional regions, most recently in the Asia Pacific. Ahead of atai’s IPO, Citi Commercial Bank onboarded 20 legal entities, both domestically and internationally. Citi’s subsidiaries coverage team in each geography facilitated onboarding, taking into account local regulations and standards. All accounts are visible to atai via the CitiDirect® online banking platform. The Result atai implemented a streamlined banking structure in advance of its IPO, improving its cash and liquidity management and treasury oversight by centralizing banking activities. In doing so, the company created opportunities to enhance working capital efficiency, improve liquidity management, and simplify payments and collections. In addition, the new banking structure significantly reduces the administrative burden on its treasury team, who no longer has to manage multiple local bank portals. As a newly public and rapidly growing platform company, atai has laid the foundations for strong governance, transparency and accountability. By working closely with Citi Commercial Bank, atai has a financial institution that will continue to support their growth.

<div><strong>The Challenge</strong></div>
<div>Traditionally, biotech companies focus on a limited number of technologies. In contrast, atai operates a decentralized platform approach to enable scalable drug or technological development at its atai companies (commonly known as a hub and spoke model). By leveraging its funding, technology, scientific, operational and regulatory expertise, atai helps accelerate treatments for targeted patient groups across a broad portfolio of companies globally, each dedicated to different drug programs.</div>
<div>&nbsp;</div>
<div>As atai grew and moved towards an IPO, it needed to establish a banking relationship with a partner that could accommodate its global footprint and complex structure. Specifically, atai wanted to rationalize the fragmented banking relationships of 20 legal entities and concentrate activity with a single global bank. The company had relationships with several banks in the US and multiple local banks around the world, which increased costs and unnecessarily put a burden on resources.</div>
<div>&nbsp;</div>
<div>
<div>Given a demanding timeline for the IPO, there was a need to rapidly open accounts and onboard atai&rsquo;s entities in several key markets around the globe.</div>
<div>&nbsp;</div>
<div>
<div><strong>The Solution</strong></div>
<div>Citi Commercial Bank was one of the few banks able to meet atai&rsquo;s needs in the US and Western Europe, and provide a network to support future expansion as the company grows its presence in additional regions, most recently in the Asia Pacific. Ahead of atai&rsquo;s IPO, Citi Commercial Bank onboarded 20 legal entities, both domestically and internationally. Citi&rsquo;s subsidiaries coverage team in each geography facilitated onboarding, taking into account local regulations and standards. All accounts are visible to atai via the CitiDirect&reg; online banking platform.</div>
<div>&nbsp;</div>
<div><img style="display: block; margin-left: auto; margin-right: auto;" src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6320b358ae7ec0031e5bb81f.png" alt="image_83476252831663087448717.png/" /></div>
<div>&nbsp;</div>
<div>
<div><strong>The Result</strong></div>
<div>atai implemented a streamlined banking structure in advance of its IPO, improving its cash and liquidity management and treasury oversight by centralizing banking activities. In doing so, the company created opportunities to enhance working capital efficiency, improve liquidity management, and simplify payments and collections. In addition, the new banking structure significantly reduces the administrative burden on its treasury team, who no longer has to manage multiple local bank portals.</div>
<div>&nbsp;</div>
<div>As a newly public and rapidly growing platform company, atai has laid the foundations for strong governance, transparency and accountability. By working closely with Citi Commercial Bank, atai has a financial institution that will continue to support their growth.</div>
<div>&nbsp;</div>
<div><a title="Contact US" href="https://www.citigroup.com/global/businesses/banking/commercial-bank/contact-us?pk_campaign=insights_cta&amp;pk_cid=atai-case-study" target="_blank" rel="noopener"><img style="display: block; margin-left: auto; margin-right: auto;" src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/63bdc28c1466c7382969b9b9.png" alt="Insight" /></a></div>
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Founded in 2018, atai is a clinical-stage biopharmaceutical company that uses a decentralized business model to accelerate the development of mental health treatments.

Optimizing atai Life Sciences’ Banking Structure to Drive Growth

Debt or equity? From a bank or the capital markets? When it comes to finding the right formula that enables your business to grow optimally, no two companies are the same – there is no onesize- fits-all capital structure. That said, our high growth clients often follow a natural sequence of lending solutions as they evolve; understanding common strategies may be helpful as you embark on your own growth journey. Assessing the implications of each financing option is more important than ever given macroeconomic headwinds that are impacting the cost of debt: inflation and interest rates have reached levels not seen in a decade, and investor scrutiny is intensifying. The funding choices described below are not prescriptive – companies can leapfrog to a strategy that suits them or forge their own path entirely. By understanding the options, you can plan and make the right choice for your company’s unique situation.

<div><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/64994e93fbdd7d5369572636.png" alt="" width="404" height="115" /></div>
<div>&nbsp;</div>
<p><span style="font-size: 24px; background- float: none; display: inline;">Debt or equity? From a bank or the capital markets? When it comes to finding the right formula that enables your business to grow optimally, no two companies are the same &ndash; there is no onesize- fits-all capital structure. That said, our high growth clients often follow a natural sequence of lending solutions as they evolve; understanding common strategies may be helpful as you embark on your own growth journey.</span></p>
<p>Assessing the implications of each financing option is more important than ever given macroeconomic headwinds that are impacting the cost of debt: inflation and interest rates have reached levels not seen in a decade, and investor scrutiny is intensifying. The funding choices described below are not prescriptive &ndash; companies can leapfrog to a strategy that suits them or forge their own path entirely. By understanding the options, you can plan and make the right choice for your company&rsquo;s unique situation.</p>

Getting started <p>The archetype of a start-up is an entrepreneur in their garage, growing their business with funds from family and friends. Even if the first part of this picture isn&rsquo;t always the case, the second part is often close to the truth. Unless you are a tech start-up that takes on venture capital funding, it is common for new businesses to rely on small scale debt &ndash; whether that&rsquo;s from family and friends, government programs, or an overdraft line with their account at a local bank.</p>

<p>The archetype of a start-up is an entrepreneur in their garage, growing their business with funds from family and friends. Even if the first part of this picture isn&rsquo;t always the case, the second part is often close to the truth. Unless you are a tech start-up that takes on venture capital funding, it is common for new businesses to rely on small scale debt &ndash; whether that&rsquo;s from family and friends, government programs, or an overdraft line with their account at a local bank.</p>

Getting started

Working your capital <p>Many organizations move on to fund their growth through short-term working capital. Sales rise, and hopefully margins with them, freeing up cash to fund growth internally. Quite often, though, companies will have to pay suppliers sooner than they collect from customers. To accelerate growth, a short-term working capital loan can help address this timing mismatch and give you a flexible tool to continue your expansion.</p>

<p>Many organizations move on to fund their growth through short-term working capital. Sales rise, and hopefully margins with them, freeing up cash to fund growth internally. Quite often, though, companies will have to pay suppliers sooner than they collect from customers. To accelerate growth, a short-term working capital loan can help address this timing mismatch and give you a flexible tool to continue your expansion.</p>

Working your capital

Investing in capacity <p>After a while, many organizations decide to invest in capacity &ndash; such as a new factory, warehouse, office, or production facility &ndash; to supercharge growth. These kinds of expenditures can be sizeable and take time, so longer-term financing may be necessary. Bilateral term loans, with maturities that align more to the longer duration of the investment, are commonly used at this point of a company&rsquo;s journey.</p>

<p>After a while, many organizations decide to invest in capacity &ndash; such as a new factory, warehouse, office, or production facility &ndash; to supercharge growth. These kinds of expenditures can be sizeable and take time, so longer-term financing may be necessary. Bilateral term loans, with maturities that align more to the longer duration of the investment, are commonly used at this point of a company&rsquo;s journey.</p>

Investing in capacity

Diversifying your funds <p>Once companies reach a certain size, their funding requirements will exceed a level beyond what a single bank can provide. Organizations at this stage may also be interested in diversifying their sources of financing. In such situations, a club or syndicate of banks may come together to offer a more significant funding boost compared to what would be available from bilateral arrangements.</p>

<p>Once companies reach a certain size, their funding requirements will exceed a level beyond what a single bank can provide. Organizations at this stage may also be interested in diversifying their sources of financing. In such situations, a club or syndicate of banks may come together to offer a more significant funding boost compared to what would be available from bilateral arrangements.</p>

Diversifying your funds

Ringing the bell? <p>At the upper end of the market, companies may conclude that their needs exceed what a bank &ndash; or even a group of them &ndash; can provide. When this happens, it&rsquo;s time to think about options in the capital markets. Organizations may stick with debt and choose to issue bonds or could adopt the newer approach of seeking private institutional debt investors. However, many companies aspire to &ldquo;ring the bell&rdquo; and go public. An IPO is an important milestone event in a company&rsquo;s growth journey, at which point it will typically have a sophisticated capital structure that enables it to tap into both private and public capital markets through a diversity of financial instruments.</p>

<p>At the upper end of the market, companies may conclude that their needs exceed what a bank &ndash; or even a group of them &ndash; can provide. When this happens, it&rsquo;s time to think about options in the capital markets. Organizations may stick with debt and choose to issue bonds or could adopt the newer approach of seeking private institutional debt investors. However, many companies aspire to &ldquo;ring the bell&rdquo; and go public. An IPO is an important milestone event in a company&rsquo;s growth journey, at which point it will typically have a sophisticated capital structure that enables it to tap into both private and public capital markets through a diversity of financial instruments.</p>

Ringing the bell?

The capital structure question <p>Once a company brings equity into the funding equation, the question of capital structure comes into play. What combination of debt and equity is optimal? How much debt capacity does the company have? We work with clients to help them tackle these questions and can benchmark a company&rsquo;s working capital and debt structures against its peer group, discuss bank group strategies, explore the possibility of mergers and acquisitions, and review the firm&rsquo;s target cost of capital. Although this stage represents mature commercial growth, the journey is far from over.</p>

<p>Once a company brings equity into the funding equation, the question of capital structure comes into play. What combination of debt and equity is optimal? How much debt capacity does the company have? We work with clients to help them tackle these questions and can benchmark a company&rsquo;s working capital and debt structures against its peer group, discuss bank group strategies, explore the possibility of mergers and acquisitions, and review the firm&rsquo;s target cost of capital. Although this stage represents mature commercial growth, the journey is far from over.</p>

The capital structure question

<h3><span style="font-size: 24px;">Thinking ahead is key</span></h3>
<p>It&rsquo;s common for Citi to work with entrepreneurs who can think two steps ahead for their business, but who are more uncertain about what their funding will look like at that point. The most successful organizations anticipate future inflection points and position themselves accordingly. For instance, if your business model requires 30-day payment terms for your suppliers, but you&rsquo;re collecting from buyers in 90 days, it&rsquo;s time to start thinking beyond what you can fund with internal working capital. And if syndicated lending might be valuable to fund future growth, it&rsquo;s a good idea to start building relationships with banks early on.</p>
<p>&nbsp;</p>
<h3>In conclusion</h3>
<p>Companies are all different: some will never go through the funding stages described above. You may be leading an organization that took on equity funding from the beginning, or maybe even bootstrapped your way to unicorn status. But more often than not, the companies that we work with will generally follow this sequence, even if they leapfrog certain stages. Regardless, Citi is here to help you think through your funding journey and plan ahead so you can access the funding you need to achieve your strategic goals in today&rsquo;s ultra-competitive market.</p>
<p>&nbsp;</p>
<p><a title="VIEW ALL INSIGHTS" href="https://www.citigroup.com/global/insights/commercial-bank?pk_campaign=view_all_insights" target="_blank" rel="noopener" data-link-source="tiny"><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/64834692ef207e3f74ae09e1.png" alt="VIEW" /></a></p>

Debt or equity? From a bank or the capital markets? When it comes to finding the right formula that enables your business to grow optimally, no two companies are the same – there is no onesize- fits-all capital structure. That said, our high growth clients often follow a natural sequence of lending solutions as they evolve; understanding common strategies may be helpful as you embark on your own growth journey. Assessing the implications of each financing option is more important than ever given macroeconomic headwinds that are impacting the cost of debt: inflation and interest rates have reached levels not seen in a decade, and investor scrutiny is intensifying. The funding choices described below are not prescriptive – companies can leapfrog to a strategy that suits them or forge their own path entirely. By understanding the options, you can plan and make the right choice for your company’s unique situation. Getting started <p>The archetype of a start-up is an entrepreneur in their garage, growing their business with funds from family and friends. Even if the first part of this picture isn&rsquo;t always the case, the second part is often close to the truth. Unless you are a tech start-up that takes on venture capital funding, it is common for new businesses to rely on small scale debt &ndash; whether that&rsquo;s from family and friends, government programs, or an overdraft line with their account at a local bank.</p> Working your capital <p>Many organizations move on to fund their growth through short-term working capital. Sales rise, and hopefully margins with them, freeing up cash to fund growth internally. Quite often, though, companies will have to pay suppliers sooner than they collect from customers. To accelerate growth, a short-term working capital loan can help address this timing mismatch and give you a flexible tool to continue your expansion.</p> Investing in capacity <p>After a while, many organizations decide to invest in capacity &ndash; such as a new factory, warehouse, office, or production facility &ndash; to supercharge growth. These kinds of expenditures can be sizeable and take time, so longer-term financing may be necessary. Bilateral term loans, with maturities that align more to the longer duration of the investment, are commonly used at this point of a company&rsquo;s journey.</p> Diversifying your funds <p>Once companies reach a certain size, their funding requirements will exceed a level beyond what a single bank can provide. Organizations at this stage may also be interested in diversifying their sources of financing. In such situations, a club or syndicate of banks may come together to offer a more significant funding boost compared to what would be available from bilateral arrangements.</p> Ringing the bell? <p>At the upper end of the market, companies may conclude that their needs exceed what a bank &ndash; or even a group of them &ndash; can provide. When this happens, it&rsquo;s time to think about options in the capital markets. Organizations may stick with debt and choose to issue bonds or could adopt the newer approach of seeking private institutional debt investors. However, many companies aspire to &ldquo;ring the bell&rdquo; and go public. An IPO is an important milestone event in a company&rsquo;s growth journey, at which point it will typically have a sophisticated capital structure that enables it to tap into both private and public capital markets through a diversity of financial instruments.</p> The capital structure question <p>Once a company brings equity into the funding equation, the question of capital structure comes into play. What combination of debt and equity is optimal? How much debt capacity does the company have? We work with clients to help them tackle these questions and can benchmark a company&rsquo;s working capital and debt structures against its peer group, discuss bank group strategies, explore the possibility of mergers and acquisitions, and review the firm&rsquo;s target cost of capital. Although this stage represents mature commercial growth, the journey is far from over.</p> <h3><span style="font-size: 24px;">Thinking ahead is key</span></h3>
<p>It&rsquo;s common for Citi to work with entrepreneurs who can think two steps ahead for their business, but who are more uncertain about what their funding will look like at that point. The most successful organizations anticipate future inflection points and position themselves accordingly. For instance, if your business model requires 30-day payment terms for your suppliers, but you&rsquo;re collecting from buyers in 90 days, it&rsquo;s time to start thinking beyond what you can fund with internal working capital. And if syndicated lending might be valuable to fund future growth, it&rsquo;s a good idea to start building relationships with banks early on.</p>
<p>&nbsp;</p>
<h3>In conclusion</h3>
<p>Companies are all different: some will never go through the funding stages described above. You may be leading an organization that took on equity funding from the beginning, or maybe even bootstrapped your way to unicorn status. But more often than not, the companies that we work with will generally follow this sequence, even if they leapfrog certain stages. Regardless, Citi is here to help you think through your funding journey and plan ahead so you can access the funding you need to achieve your strategic goals in today&rsquo;s ultra-competitive market.</p>
<p>&nbsp;</p>
<p><a title="VIEW ALL INSIGHTS" href="https://www.citigroup.com/global/insights/commercial-bank?pk_campaign=view_all_insights" target="_blank" rel="noopener" data-link-source="tiny"><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/64834692ef207e3f74ae09e1.png" alt="VIEW" /></a></p>

PORTUGUESE

As the world pushes past the pandemic, healthcare companies are working to firm up their long term growth strategies. Though management often seek growth through acquisitions, sometimes the opposite is needed to reinvigorate the company and unlock long-term value. Among the largest healthcare players, there has already been a number of high-profile announcements where larger companies are splitting and creating separate healthcare units. Others are spinning off specific units and assets to allow greater focus and flexibility to pursue divergent growth paths. Planning for change Post separation, the independent entity likely have to set up its policies, processes, and systems. For treasuries, planning for the separation starts before day-one as teams from both side review capabilities and coordinate handoff. Sometimes, to ease transition, a Transition Service Agreement is agreed to for the parent to continue to perform certain treasury functions for the new company. The best way forward, however, is in-house so treasury can have control and visibility over its data. This involves setting up company specific plans that tie back to the organization’s strategic vision (do you want global visibility? real-time data? and automation?) Don’t go at it alone Building up a new treasury may involve leaner organizations and potentially fewer resources than what is available at a larger, legacy company. Often, technology must pave the way. One avenue for the new independent company is to leverage platforms that banking partners offer and explore technological solutions that may suit its workflows and strategic plans. An example of such partnership is in the workflow related to FX risk management and dealing. FX is a key area for the new treasury if company has a global footprint. Movements in the exchange rates – some can be upwards of 10-15% YOY change – can have material impact on operational results and financial metrics, thus affecting investors’ assessment of the company. Transition toward operational excellence For the new company, efficiency and operational excellence can be achieved with technology. Companies can decide on the degree of integration and connectivity that fits with their overall goals. Post-trade straight-through-processing (STP), for example, while not new, is a versatile starting point. Many banking partners can offer proprietary STP solutions that aggregate executed FX trades and automate delivery of transaction details to a company’s treasury management system (TMS). The ability to automate post-trade processes can produce many benefits by reducing error rates and speeding up processing and reconciliation. However, STP does not have to apply only to post-trade. Citi’s CitiFX Pulse can help companies create greater efficiency in pre-trade workflow with connectivity and auto execution of hedging trades. In the pre-trade, CitiFX Pulse can be connected to a company’s TMS to receive data related to FX exposures. The transmit frequency can be set to a desired interval: if payables and receivables are booked daily, data can be sent daily to capture new positions. The transmitted data can be converted and reconciled to a Citi format (with embedded ETL technology), creating FX exposures within the Exposure Management module. Critically, the module will allow companies the ability to implement their hedge policy and be in control of defining the auto-execution rule. Incoming exposures are hedged according to the pre-specified rules and executed trades are subsequently fed back to the TMS to calculate net position for next day. Benefits of automating the hedging process In CitiFX Pulse’s automated FX risk management solution, a company can run an efficient risk management process by leveraging technology to run end-to-end processes. Doing so would allow the new treasury to reduce time and resources expended on non strategic activities (reconciling formats, inputting trades, manually calculating net exposures to hedge). Moreover, when exposures and trade data are connected, risk monitoring can be better supported and updated on a timely basis. With volatile currency market conditions expected to continue, accurate FX data will be critical to allow companies better insight and make more informed decisions. For more information about how Citi Commercial Bank can assist you and your team, please contact us below

<p><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/649aced33a54ba018d0b2a90.png" /></p>
<div>As the world pushes past the pandemic, healthcare companies are working to firm up their long term growth strategies. Though management often seek growth through acquisitions, sometimes the opposite is needed to reinvigorate the company and unlock long-term value. Among the largest healthcare players, there has already been a number of high-profile announcements where larger companies are splitting and creating separate healthcare units. Others are spinning off specific units and assets to allow greater focus and flexibility to pursue divergent growth paths.</div>
<div>&nbsp;</div>
<div>
<h3>Planning for change</h3>
<div>Post separation, the independent entity likely have to set up its policies, processes, and systems. For treasuries, planning for the separation starts before day-one as teams from both side&nbsp; review capabilities and coordinate handoff. Sometimes, to ease transition, a Transition Service Agreement is agreed to for the parent to continue to perform certain treasury functions for the new company. The best way forward, however, is in-house so treasury can have control and visibility over its data. This involves setting up company specific plans that tie back to the organization&rsquo;s strategic vision (do you want global visibility? real-time data? and automation?)</div>
<div>
<h3>&nbsp;</h3>
<h3>Don&rsquo;t go at it alone</h3>
<div>Building up a new treasury may involve leaner organizations and potentially fewer resources than what is available at a larger, legacy company. Often, technology must pave the way. One avenue for the new independent company is to leverage platforms that banking partners offer and explore technological solutions that may suit its workflows and strategic plans. An example of such partnership is in the workflow related to FX risk management and dealing.</div>
<div>&nbsp;</div>
<div>FX is a key area for the new treasury if company has a global footprint. Movements in the exchange rates &ndash; some can be upwards of 10-15% YOY change &ndash; can have material impact on operational results and financial metrics, thus affecting investors&rsquo; assessment of the company.</div>
<div>&nbsp;</div>
<div><img style="display: block; margin-left: auto; margin-right: auto;" src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/649acfdbbd521c59b48d0808.png" /></div>
<div>&nbsp;</div>
<div>
<h3>Transition toward operational excellence</h3>
<div>For the new company, efficiency and operational excellence can be achieved with technology. Companies can decide on the degree of integration and connectivity that fits with their overall goals. Post-trade straight-through-processing (STP), for example, while not new, is a versatile starting point. Many banking partners can offer proprietary STP solutions that aggregate executed FX trades and automate delivery of transaction details to a company&rsquo;s treasury management system (TMS). The ability to automate post-trade processes can produce many benefits by reducing error rates and speeding up processing and reconciliation. However, STP does not have to apply only to post-trade. Citi&rsquo;s CitiFX Pulse can help companies create greater efficiency in pre-trade workflow with connectivity and auto execution of hedging trades.</div>
<div>&nbsp;</div>
<div>In the pre-trade, CitiFX Pulse can be connected to a company&rsquo;s TMS to receive data related to FX exposures. The transmit frequency can be set to a desired interval: if payables and receivables are booked daily, data can be sent daily to capture new positions. The transmitted data can be converted and reconciled to a Citi format (with embedded ETL technology), creating FX exposures within the Exposure Management module. Critically, the module will allow companies the ability to implement their hedge policy and be in control of defining the auto-execution rule. Incoming exposures are hedged according to the pre-specified rules and executed trades are subsequently fed back to the TMS to calculate net position for next day.</div>
<div>
<h3>&nbsp;</h3>
<h3>Benefits of automating the hedging process</h3>
<div>In CitiFX Pulse&rsquo;s automated FX risk management solution, a company can run an efficient risk management process by leveraging technology to run end-to-end processes. Doing so would allow the new treasury to reduce time and resources expended on non strategic activities (reconciling formats, inputting trades, manually calculating net exposures to hedge). Moreover, when exposures and trade data are connected, risk monitoring can be better supported and updated on a timely basis. With volatile currency market conditions expected to continue, accurate FX data will be critical to allow companies better insight and make more informed decisions.</div>
<div>&nbsp;</div>
<div>
<div>For more information about how Citi Commercial Bank can assist you and your team, please contact us below</div>
</div>
<div>&nbsp;</div>
<div>&nbsp;</div>
</div>
</div>
</div>
</div>

Portuguese <p><span style="font-family: sans-serif; font-size: 16px;">Automatizando o hedge cambial em empresas de sa&uacute;de &mdash; melhor n&atilde;o fazer isso sozinho</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">&Agrave; medida que o mundo supera a pandemia, empresas de sa&uacute;de trabalham para firmar estrat&eacute;gias de crescimento de longo prazo. Embora muitas vezes os administradores busquem crescimento por meio de aquisi&ccedil;&otilde;es, &agrave;s vezes o oposto &eacute; necess&aacute;rio para revigorar a empresa e gerar valor de longo prazo. Entre os maiores players, j&aacute; houve v&aacute;rios an&uacute;ncios de alto n&iacute;vel em que empresas maiores est&atilde;o se dividindo e criando unidades de sa&uacute;de separadas. Outras est&atilde;o separando unidades e ativos espec&iacute;ficos para permitir maior foco e flexibilidade para buscar caminhos de crescimento divergentes.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Planejando a mudan&ccedil;a</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Ap&oacute;s a separa&ccedil;&atilde;o, a entidade independente provavelmente ter&aacute; que definir suas pol&iacute;ticas, processos e sistemas. Para tesourarias, o planejamento da separa&ccedil;&atilde;o come&ccedil;a antes do primeiro dia, &agrave; medida que as equipes de ambos os lados revisam os recursos e coordenam a transfer&ecirc;ncia. &Agrave;s vezes, para facilitar a transi&ccedil;&atilde;o, um Acordo de Servi&ccedil;o de Transi&ccedil;&atilde;o &eacute; feito para que a controladora continue desempenhando determinadas fun&ccedil;&otilde;es de tesouraria para a nova empresa. O melhor caminho a seguir, no entanto, &eacute; interno, para que a tesouraria possa ter controle e visibilidade sobre seus dados. Isso envolve a cria&ccedil;&atilde;o de planos espec&iacute;ficos da empresa que se relacionam com a vis&atilde;o estrat&eacute;gica da organiza&ccedil;&atilde;o (voc&ecirc; quer visibilidade global? dados em tempo real? e automa&ccedil;&atilde;o?)</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">N&atilde;o fa&ccedil;a isso sozinho</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Construir uma nova tesouraria pode envolver organiza&ccedil;&otilde;es mais enxutas e potencialmente menos recursos do que os dispon&iacute;veis em uma empresa legada maior. Muitas vezes, a tecnologia deve abrir o caminho. Um caminho para a nova empresa independente &eacute; alavancar as plataformas que os parceiros banc&aacute;rios oferecem e explorar solu&ccedil;&otilde;es tecnol&oacute;gicas que possam se adequar aos seus fluxos de trabalho e planos estrat&eacute;gicos. Um exemplo desse tipo de parceria est&aacute; no fluxo de trabalho relacionado &agrave; gest&atilde;o e negocia&ccedil;&atilde;o de riscos cambiais.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">FX &eacute; uma &aacute;rea chave para a nova tesouraria se a empresa tiver presen&ccedil;a global. Oscila&ccedil;&otilde;es no c&acirc;mbio &ndash; &agrave;s vezes superior a 10-15% de varia&ccedil;&atilde;o anual &ndash; podem ter um impacto material nos resultados operacionais e nas m&eacute;tricas financeiras, afetando assim a avalia&ccedil;&atilde;o dos investidores sobre a empresa.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Transi&ccedil;&atilde;o para a excel&ecirc;ncia operacional</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Para a nova empresa, efici&ecirc;ncia e excel&ecirc;ncia operacional podem ser alcan&ccedil;adas com tecnologia. As empresas podem decidir sobre o grau de integra&ccedil;&atilde;o e conectividade que se adequa aos seus objetivos gerais. O processamento direto p&oacute;s-negocia&ccedil;&atilde;o (STP), por exemplo, embora n&atilde;o seja novo, &eacute; um ponto de partida vers&aacute;til. Muitos parceiros banc&aacute;rios podem oferecer solu&ccedil;&otilde;es STP propriet&aacute;rias que agregam transa&ccedil;&otilde;es FX executadas e automatizam a entrega de detalhes de transa&ccedil;&otilde;es para o sistema de gerenciamento de tesouraria (TMS) de uma empresa. A capacidade de automatizar os processos de p&oacute;s negocia&ccedil;&atilde;o pode produzir muitos benef&iacute;cios, reduzindo as taxas de erro e acelerando o processamento e a reconcilia&ccedil;&atilde;o. No entanto, o STP n&atilde;o precisa se aplicar apenas ao p&oacute;s-negocia&ccedil;&atilde;o. O CitiFX Pulse do Citi pode ajudar as empresas a criar maior efici&ecirc;ncia no fluxo de trabalho pr&eacute;-negocia&ccedil;&atilde;o com conectividade e execu&ccedil;&atilde;o autom&aacute;tica de negocia&ccedil;&otilde;es de hedge.</span></p>
<div>
<p><span style="font-family: sans-serif; font-size: 16px;">Na pr&eacute;-negocia&ccedil;&atilde;o, o CitiFX Pulse pode ser conectado ao TMS de uma empresa para receber dados relacionados &agrave;s exposi&ccedil;&otilde;es cambiais. A frequ&ecirc;ncia de transmiss&atilde;o pode ser ajustada para um intervalo desejado: se as contas a pagar e a receber forem registradas diariamente, os dados podem ser enviados diariamente para capturar novas posi&ccedil;&otilde;es. Os dados transmitidos podem ser convertidos e reconciliados para um formato Citi (com tecnologia ETL incorporada), criando exposi&ccedil;&otilde;es FX dentro do m&oacute;dulo Exposure Management. De forma cr&iacute;tica, o m&oacute;dulo permitir&aacute; &agrave;s empresas a capacidade de implementar sua pol&iacute;tica de hedge e controlar a defini&ccedil;&atilde;o da regra de execu&ccedil;&atilde;o autom&aacute;tica. As exposi&ccedil;&otilde;es recebidas s&atilde;o cobertas de acordo com as regras pr&eacute;-especificadas e as negocia&ccedil;&otilde;es executadas s&atilde;o subsequentemente realimentadas ao TMS para calcular a posi&ccedil;&atilde;o l&iacute;quida para o dia seguinte.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Benef&iacute;cios de automatizar o processo de hedge</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Na solu&ccedil;&atilde;o automatizada de gerenciamento de risco cambial do CitiFX Pulse, uma empresa pode executar um processo de gerenciamento de risco eficiente, alavancando a tecnologia para executar processos de ponta a ponta. Isso permitiria &agrave; nova tesouraria reduzir o tempo e os recursos gastos em atividades n&atilde;o estrat&eacute;gicas (conciliar formatos, inserir negocia&ccedil;&otilde;es, calcular manualmente as exposi&ccedil;&otilde;es l&iacute;quidas para hedge). Al&eacute;m disso, quando as exposi&ccedil;&otilde;es e os dados comerciais est&atilde;o conectados, o monitoramento de risco pode ser mais bem suportado e atualizado em tempo h&aacute;bil. Com a expectativa de que as condi&ccedil;&otilde;es vol&aacute;teis do mercado de c&acirc;mbio continuem, dados precisos de c&acirc;mbio ser&atilde;o essenciais para permitir que as empresas tenham uma vis&atilde;o melhor e tomem decis&otilde;es mais informadas.</span></p>
</div> 

<p><span style="font-family: sans-serif; font-size: 16px;">Automatizando o hedge cambial em empresas de sa&uacute;de &mdash; melhor n&atilde;o fazer isso sozinho</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">&Agrave; medida que o mundo supera a pandemia, empresas de sa&uacute;de trabalham para firmar estrat&eacute;gias de crescimento de longo prazo. Embora muitas vezes os administradores busquem crescimento por meio de aquisi&ccedil;&otilde;es, &agrave;s vezes o oposto &eacute; necess&aacute;rio para revigorar a empresa e gerar valor de longo prazo. Entre os maiores players, j&aacute; houve v&aacute;rios an&uacute;ncios de alto n&iacute;vel em que empresas maiores est&atilde;o se dividindo e criando unidades de sa&uacute;de separadas. Outras est&atilde;o separando unidades e ativos espec&iacute;ficos para permitir maior foco e flexibilidade para buscar caminhos de crescimento divergentes.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Planejando a mudan&ccedil;a</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Ap&oacute;s a separa&ccedil;&atilde;o, a entidade independente provavelmente ter&aacute; que definir suas pol&iacute;ticas, processos e sistemas. Para tesourarias, o planejamento da separa&ccedil;&atilde;o come&ccedil;a antes do primeiro dia, &agrave; medida que as equipes de ambos os lados revisam os recursos e coordenam a transfer&ecirc;ncia. &Agrave;s vezes, para facilitar a transi&ccedil;&atilde;o, um Acordo de Servi&ccedil;o de Transi&ccedil;&atilde;o &eacute; feito para que a controladora continue desempenhando determinadas fun&ccedil;&otilde;es de tesouraria para a nova empresa. O melhor caminho a seguir, no entanto, &eacute; interno, para que a tesouraria possa ter controle e visibilidade sobre seus dados. Isso envolve a cria&ccedil;&atilde;o de planos espec&iacute;ficos da empresa que se relacionam com a vis&atilde;o estrat&eacute;gica da organiza&ccedil;&atilde;o (voc&ecirc; quer visibilidade global? dados em tempo real? e automa&ccedil;&atilde;o?)</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">N&atilde;o fa&ccedil;a isso sozinho</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Construir uma nova tesouraria pode envolver organiza&ccedil;&otilde;es mais enxutas e potencialmente menos recursos do que os dispon&iacute;veis em uma empresa legada maior. Muitas vezes, a tecnologia deve abrir o caminho. Um caminho para a nova empresa independente &eacute; alavancar as plataformas que os parceiros banc&aacute;rios oferecem e explorar solu&ccedil;&otilde;es tecnol&oacute;gicas que possam se adequar aos seus fluxos de trabalho e planos estrat&eacute;gicos. Um exemplo desse tipo de parceria est&aacute; no fluxo de trabalho relacionado &agrave; gest&atilde;o e negocia&ccedil;&atilde;o de riscos cambiais.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">FX &eacute; uma &aacute;rea chave para a nova tesouraria se a empresa tiver presen&ccedil;a global. Oscila&ccedil;&otilde;es no c&acirc;mbio &ndash; &agrave;s vezes superior a 10-15% de varia&ccedil;&atilde;o anual &ndash; podem ter um impacto material nos resultados operacionais e nas m&eacute;tricas financeiras, afetando assim a avalia&ccedil;&atilde;o dos investidores sobre a empresa.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Transi&ccedil;&atilde;o para a excel&ecirc;ncia operacional</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Para a nova empresa, efici&ecirc;ncia e excel&ecirc;ncia operacional podem ser alcan&ccedil;adas com tecnologia. As empresas podem decidir sobre o grau de integra&ccedil;&atilde;o e conectividade que se adequa aos seus objetivos gerais. O processamento direto p&oacute;s-negocia&ccedil;&atilde;o (STP), por exemplo, embora n&atilde;o seja novo, &eacute; um ponto de partida vers&aacute;til. Muitos parceiros banc&aacute;rios podem oferecer solu&ccedil;&otilde;es STP propriet&aacute;rias que agregam transa&ccedil;&otilde;es FX executadas e automatizam a entrega de detalhes de transa&ccedil;&otilde;es para o sistema de gerenciamento de tesouraria (TMS) de uma empresa. A capacidade de automatizar os processos de p&oacute;s negocia&ccedil;&atilde;o pode produzir muitos benef&iacute;cios, reduzindo as taxas de erro e acelerando o processamento e a reconcilia&ccedil;&atilde;o. No entanto, o STP n&atilde;o precisa se aplicar apenas ao p&oacute;s-negocia&ccedil;&atilde;o. O CitiFX Pulse do Citi pode ajudar as empresas a criar maior efici&ecirc;ncia no fluxo de trabalho pr&eacute;-negocia&ccedil;&atilde;o com conectividade e execu&ccedil;&atilde;o autom&aacute;tica de negocia&ccedil;&otilde;es de hedge.</span></p>
<div>
<p><span style="font-family: sans-serif; font-size: 16px;">Na pr&eacute;-negocia&ccedil;&atilde;o, o CitiFX Pulse pode ser conectado ao TMS de uma empresa para receber dados relacionados &agrave;s exposi&ccedil;&otilde;es cambiais. A frequ&ecirc;ncia de transmiss&atilde;o pode ser ajustada para um intervalo desejado: se as contas a pagar e a receber forem registradas diariamente, os dados podem ser enviados diariamente para capturar novas posi&ccedil;&otilde;es. Os dados transmitidos podem ser convertidos e reconciliados para um formato Citi (com tecnologia ETL incorporada), criando exposi&ccedil;&otilde;es FX dentro do m&oacute;dulo Exposure Management. De forma cr&iacute;tica, o m&oacute;dulo permitir&aacute; &agrave;s empresas a capacidade de implementar sua pol&iacute;tica de hedge e controlar a defini&ccedil;&atilde;o da regra de execu&ccedil;&atilde;o autom&aacute;tica. As exposi&ccedil;&otilde;es recebidas s&atilde;o cobertas de acordo com as regras pr&eacute;-especificadas e as negocia&ccedil;&otilde;es executadas s&atilde;o subsequentemente realimentadas ao TMS para calcular a posi&ccedil;&atilde;o l&iacute;quida para o dia seguinte.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Benef&iacute;cios de automatizar o processo de hedge</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Na solu&ccedil;&atilde;o automatizada de gerenciamento de risco cambial do CitiFX Pulse, uma empresa pode executar um processo de gerenciamento de risco eficiente, alavancando a tecnologia para executar processos de ponta a ponta. Isso permitiria &agrave; nova tesouraria reduzir o tempo e os recursos gastos em atividades n&atilde;o estrat&eacute;gicas (conciliar formatos, inserir negocia&ccedil;&otilde;es, calcular manualmente as exposi&ccedil;&otilde;es l&iacute;quidas para hedge). Al&eacute;m disso, quando as exposi&ccedil;&otilde;es e os dados comerciais est&atilde;o conectados, o monitoramento de risco pode ser mais bem suportado e atualizado em tempo h&aacute;bil. Com a expectativa de que as condi&ccedil;&otilde;es vol&aacute;teis do mercado de c&acirc;mbio continuem, dados precisos de c&acirc;mbio ser&atilde;o essenciais para permitir que as empresas tenham uma vis&atilde;o melhor e tomem decis&otilde;es mais informadas.</span></p>
</div>

Portuguese

As the world pushes past the pandemic, healthcare companies are working to firm up their long term growth strategies. Though management often seek growth through acquisitions, sometimes the opposite is needed to reinvigorate the company and unlock long-term value. Among the largest healthcare players, there has already been a number of high-profile announcements where larger companies are splitting and creating separate healthcare units. Others are spinning off specific units and assets to allow greater focus and flexibility to pursue divergent growth paths. Planning for change Post separation, the independent entity likely have to set up its policies, processes, and systems. For treasuries, planning for the separation starts before day-one as teams from both side review capabilities and coordinate handoff. Sometimes, to ease transition, a Transition Service Agreement is agreed to for the parent to continue to perform certain treasury functions for the new company. The best way forward, however, is in-house so treasury can have control and visibility over its data. This involves setting up company specific plans that tie back to the organization’s strategic vision (do you want global visibility? real-time data? and automation?) Don’t go at it alone Building up a new treasury may involve leaner organizations and potentially fewer resources than what is available at a larger, legacy company. Often, technology must pave the way. One avenue for the new independent company is to leverage platforms that banking partners offer and explore technological solutions that may suit its workflows and strategic plans. An example of such partnership is in the workflow related to FX risk management and dealing. FX is a key area for the new treasury if company has a global footprint. Movements in the exchange rates – some can be upwards of 10-15% YOY change – can have material impact on operational results and financial metrics, thus affecting investors’ assessment of the company. Transition toward operational excellence For the new company, efficiency and operational excellence can be achieved with technology. Companies can decide on the degree of integration and connectivity that fits with their overall goals. Post-trade straight-through-processing (STP), for example, while not new, is a versatile starting point. Many banking partners can offer proprietary STP solutions that aggregate executed FX trades and automate delivery of transaction details to a company’s treasury management system (TMS). The ability to automate post-trade processes can produce many benefits by reducing error rates and speeding up processing and reconciliation. However, STP does not have to apply only to post-trade. Citi’s CitiFX Pulse can help companies create greater efficiency in pre-trade workflow with connectivity and auto execution of hedging trades. In the pre-trade, CitiFX Pulse can be connected to a company’s TMS to receive data related to FX exposures. The transmit frequency can be set to a desired interval: if payables and receivables are booked daily, data can be sent daily to capture new positions. The transmitted data can be converted and reconciled to a Citi format (with embedded ETL technology), creating FX exposures within the Exposure Management module. Critically, the module will allow companies the ability to implement their hedge policy and be in control of defining the auto-execution rule. Incoming exposures are hedged according to the pre-specified rules and executed trades are subsequently fed back to the TMS to calculate net position for next day. Benefits of automating the hedging process In CitiFX Pulse’s automated FX risk management solution, a company can run an efficient risk management process by leveraging technology to run end-to-end processes. Doing so would allow the new treasury to reduce time and resources expended on non strategic activities (reconciling formats, inputting trades, manually calculating net exposures to hedge). Moreover, when exposures and trade data are connected, risk monitoring can be better supported and updated on a timely basis. With volatile currency market conditions expected to continue, accurate FX data will be critical to allow companies better insight and make more informed decisions. For more information about how Citi Commercial Bank can assist you and your team, please contact us below Portuguese <p><span style="font-family: sans-serif; font-size: 16px;">Automatizando o hedge cambial em empresas de sa&uacute;de &mdash; melhor n&atilde;o fazer isso sozinho</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">&Agrave; medida que o mundo supera a pandemia, empresas de sa&uacute;de trabalham para firmar estrat&eacute;gias de crescimento de longo prazo. Embora muitas vezes os administradores busquem crescimento por meio de aquisi&ccedil;&otilde;es, &agrave;s vezes o oposto &eacute; necess&aacute;rio para revigorar a empresa e gerar valor de longo prazo. Entre os maiores players, j&aacute; houve v&aacute;rios an&uacute;ncios de alto n&iacute;vel em que empresas maiores est&atilde;o se dividindo e criando unidades de sa&uacute;de separadas. Outras est&atilde;o separando unidades e ativos espec&iacute;ficos para permitir maior foco e flexibilidade para buscar caminhos de crescimento divergentes.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Planejando a mudan&ccedil;a</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Ap&oacute;s a separa&ccedil;&atilde;o, a entidade independente provavelmente ter&aacute; que definir suas pol&iacute;ticas, processos e sistemas. Para tesourarias, o planejamento da separa&ccedil;&atilde;o come&ccedil;a antes do primeiro dia, &agrave; medida que as equipes de ambos os lados revisam os recursos e coordenam a transfer&ecirc;ncia. &Agrave;s vezes, para facilitar a transi&ccedil;&atilde;o, um Acordo de Servi&ccedil;o de Transi&ccedil;&atilde;o &eacute; feito para que a controladora continue desempenhando determinadas fun&ccedil;&otilde;es de tesouraria para a nova empresa. O melhor caminho a seguir, no entanto, &eacute; interno, para que a tesouraria possa ter controle e visibilidade sobre seus dados. Isso envolve a cria&ccedil;&atilde;o de planos espec&iacute;ficos da empresa que se relacionam com a vis&atilde;o estrat&eacute;gica da organiza&ccedil;&atilde;o (voc&ecirc; quer visibilidade global? dados em tempo real? e automa&ccedil;&atilde;o?)</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">N&atilde;o fa&ccedil;a isso sozinho</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Construir uma nova tesouraria pode envolver organiza&ccedil;&otilde;es mais enxutas e potencialmente menos recursos do que os dispon&iacute;veis em uma empresa legada maior. Muitas vezes, a tecnologia deve abrir o caminho. Um caminho para a nova empresa independente &eacute; alavancar as plataformas que os parceiros banc&aacute;rios oferecem e explorar solu&ccedil;&otilde;es tecnol&oacute;gicas que possam se adequar aos seus fluxos de trabalho e planos estrat&eacute;gicos. Um exemplo desse tipo de parceria est&aacute; no fluxo de trabalho relacionado &agrave; gest&atilde;o e negocia&ccedil;&atilde;o de riscos cambiais.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">FX &eacute; uma &aacute;rea chave para a nova tesouraria se a empresa tiver presen&ccedil;a global. Oscila&ccedil;&otilde;es no c&acirc;mbio &ndash; &agrave;s vezes superior a 10-15% de varia&ccedil;&atilde;o anual &ndash; podem ter um impacto material nos resultados operacionais e nas m&eacute;tricas financeiras, afetando assim a avalia&ccedil;&atilde;o dos investidores sobre a empresa.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Transi&ccedil;&atilde;o para a excel&ecirc;ncia operacional</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Para a nova empresa, efici&ecirc;ncia e excel&ecirc;ncia operacional podem ser alcan&ccedil;adas com tecnologia. As empresas podem decidir sobre o grau de integra&ccedil;&atilde;o e conectividade que se adequa aos seus objetivos gerais. O processamento direto p&oacute;s-negocia&ccedil;&atilde;o (STP), por exemplo, embora n&atilde;o seja novo, &eacute; um ponto de partida vers&aacute;til. Muitos parceiros banc&aacute;rios podem oferecer solu&ccedil;&otilde;es STP propriet&aacute;rias que agregam transa&ccedil;&otilde;es FX executadas e automatizam a entrega de detalhes de transa&ccedil;&otilde;es para o sistema de gerenciamento de tesouraria (TMS) de uma empresa. A capacidade de automatizar os processos de p&oacute;s negocia&ccedil;&atilde;o pode produzir muitos benef&iacute;cios, reduzindo as taxas de erro e acelerando o processamento e a reconcilia&ccedil;&atilde;o. No entanto, o STP n&atilde;o precisa se aplicar apenas ao p&oacute;s-negocia&ccedil;&atilde;o. O CitiFX Pulse do Citi pode ajudar as empresas a criar maior efici&ecirc;ncia no fluxo de trabalho pr&eacute;-negocia&ccedil;&atilde;o com conectividade e execu&ccedil;&atilde;o autom&aacute;tica de negocia&ccedil;&otilde;es de hedge.</span></p>
<div>
<p><span style="font-family: sans-serif; font-size: 16px;">Na pr&eacute;-negocia&ccedil;&atilde;o, o CitiFX Pulse pode ser conectado ao TMS de uma empresa para receber dados relacionados &agrave;s exposi&ccedil;&otilde;es cambiais. A frequ&ecirc;ncia de transmiss&atilde;o pode ser ajustada para um intervalo desejado: se as contas a pagar e a receber forem registradas diariamente, os dados podem ser enviados diariamente para capturar novas posi&ccedil;&otilde;es. Os dados transmitidos podem ser convertidos e reconciliados para um formato Citi (com tecnologia ETL incorporada), criando exposi&ccedil;&otilde;es FX dentro do m&oacute;dulo Exposure Management. De forma cr&iacute;tica, o m&oacute;dulo permitir&aacute; &agrave;s empresas a capacidade de implementar sua pol&iacute;tica de hedge e controlar a defini&ccedil;&atilde;o da regra de execu&ccedil;&atilde;o autom&aacute;tica. As exposi&ccedil;&otilde;es recebidas s&atilde;o cobertas de acordo com as regras pr&eacute;-especificadas e as negocia&ccedil;&otilde;es executadas s&atilde;o subsequentemente realimentadas ao TMS para calcular a posi&ccedil;&atilde;o l&iacute;quida para o dia seguinte.</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Benef&iacute;cios de automatizar o processo de hedge</span></p>
<p><span style="font-family: sans-serif; font-size: 16px;">Na solu&ccedil;&atilde;o automatizada de gerenciamento de risco cambial do CitiFX Pulse, uma empresa pode executar um processo de gerenciamento de risco eficiente, alavancando a tecnologia para executar processos de ponta a ponta. Isso permitiria &agrave; nova tesouraria reduzir o tempo e os recursos gastos em atividades n&atilde;o estrat&eacute;gicas (conciliar formatos, inserir negocia&ccedil;&otilde;es, calcular manualmente as exposi&ccedil;&otilde;es l&iacute;quidas para hedge). Al&eacute;m disso, quando as exposi&ccedil;&otilde;es e os dados comerciais est&atilde;o conectados, o monitoramento de risco pode ser mais bem suportado e atualizado em tempo h&aacute;bil. Com a expectativa de que as condi&ccedil;&otilde;es vol&aacute;teis do mercado de c&acirc;mbio continuem, dados precisos de c&acirc;mbio ser&atilde;o essenciais para permitir que as empresas tenham uma vis&atilde;o melhor e tomem decis&otilde;es mais informadas.</span></p>
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As the world pushes past the pandemic, healthcare companies are working to firm up their long term growth strategies. Though management often seek growth through acquisitions, sometimes the opposite is needed to reinvigorate the company and unlock long-term value. Among the largest healthcare players, there has already been a number of high-profile announcements where larger companies are splitting and creating separate healthcare units. Others are spinning off specific units and assets to allow greater focus and flexibility to pursue divergent growth paths.

Automating FX hedging for healthcare companies — don’t go at it alone

China is the world’s second largest healthcare market1 and is therefore a priority for many US healthcare and life sciences companies, whether for sales, research and development, or manufacturing. But managing cash generated in China can be challenging as regulations, especially relating to local currency, are stricter and more complex than the US or European countries, for example. Selecting the right strategy for the repatriation of cash may not seem a priority for US companies when they are setting up operations in China; after all, generating revenue in healthcare and life sciences can take several years after gaining regulatory approval to operate. Nevertheless, cash repatriation is critical and should be carefully thought through before a local entity is established and certainly well in advance of generating cash. It’s important for companies to be aware of the various options for repatriating cash – and tailor their strategies accordingly – to ensure cash repatriation is as efficient and effective as possible. As importantly, no company wants to risk being fined for breaching regulations or suffer the reputational damage – and possible restrictions on their activity in China – that might follow from such a breach. What options are available? Chinese regulators impose a variety of rules and requirements on the movement of funds from China, prohibiting the use of some methods of repatriation that may be commonplace in other jurisdictions and placing strict caps in other circumstances. Nevertheless, with careful planning, US companies can take advantage of three principal repatriation structures that can meet a variety of needs for companies at different stages of development. Dividend remittance is the most common strategy for most US healthcare and life sciences companies operating in China. Dividends are a one-way transfer of funds and are simple to execute: there are no restrictions on the use of dividends and no need to return funds to China at a later date. As execution is straightforward, and no regulatory approvals are required when remitting dividends, the strategy is valuable even for companies with limited treasury resources. Dividends can be adopted as both a near and long-term repatriation solution. Healthcare companies will need to pay withholding tax to the local tax bureau, so it is important to consider the impact of this on P&L when repatriating funds. Cross-border lending from China involves more complex structures than dividend remittance and may be more applicable to companies with greater treasury resources or more sophisticated treasury arrangements. While companies must register with China’s State Administration of Foreign Exchange (SAFE) or with banks in certain pilot areas in order to lend cross-border, specific regulatory approval is not required. Execution is both straightforward and can be completed on a timely basis. Cross-border lending is subject to a number of requirements, however. Repatriated funds can only be used for working capital and lending cannot exceed more than 50% of the China entity’s equity, limiting the ability of a US company to extract surplus renminbi from China. The tenor of lending is subject to the underlying lending contract tenor. Cross-border pooling is a more complex arrangement for repatriating funds and is typically applicable for healthcare or life sciences companies with regional or global treasury hubs that utilize sophisticated structures to optimize liquidity management. Cross-border pooling requires registration or filing with local regulators and offers flexible borrowing/lending quotas. Self-generated funds can be swept offshore and then freely converted to other currencies. Certain foreign currency pooling structures do not include a regulatory repayment period and the tenor can be stipulated in the underlying loan agreement that is filed with regulators. Pooling structures can also evolve as required: new entities can be added to the pool as companies’ China business grows. While cross-border pooling offers many benefits, it is complicated to set up and execute and there are a variety options available, including programs administered by SAFE and China’s central bank (the People’s Bank of China) and a program for companies that operate in the Shanghai Free-Trade Zone. In addition, repayment of RMB is required within 12 months under certain structures. Consequently, currencies may need to be converted twice when funds are lent and repaid, potentially increasing costs. Choosing the right banking partner For US healthcare and life sciences companies, the attractions of the world’s second largest healthcare market are clear. However, companies need to be aware of the challenges associated with repatriating cash from China and plan accordingly. While companies’ needs may evolve as their operations in the country grow, it is essential to identify appropriate strategies well in advance of generating revenue in China. Regulations in China are subject to rapid and frequent change and therefore companies also need to be aware of government and regulatory announcements. Healthcare and life sciences companies planning to establish operations in China – or with existing operations in the country – should work closely with their bank to identify appropriate strategies to ensure that they can repatriate cash in the most efficient way and in compliance with local rules and regulations. For more information about how Citi Commercial Bank can support you and your team, please contact us below. 1 https://www.trade.gov/country-commercial-guides/china-healthcare

<div><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/649d956abd521c59b48d0b87.png" /></div>
<div>&nbsp;</div>
<div>China is the world&rsquo;s second largest healthcare market<sup>1</sup> and is therefore a priority for many US healthcare and life sciences companies, whether for sales, research and development, or manufacturing. But managing cash generated in China can be challenging as regulations, especially relating to local currency, are stricter and more complex than the US or European countries, for example.</div>
<div>&nbsp;</div>
<div>Selecting the right strategy for the repatriation of cash may not seem a priority for US companies when they are setting up operations in China; after all, generating revenue in healthcare and life sciences can take several years after gaining regulatory approval to operate. Nevertheless, cash repatriation is critical and should be carefully thought through before a local entity is established and certainly well in advance of generating cash.</div>
<div>&nbsp;</div>
<div>It&rsquo;s important for companies to be aware of the various options for repatriating cash &ndash; and tailor their strategies accordingly &ndash; to ensure cash repatriation is as efficient and effective as possible. As importantly, no company wants to risk being fined for breaching regulations or suffer the reputational damage &ndash; and possible restrictions on their activity in China &ndash; that might follow from such a breach.</div>
<p>&nbsp;</p>
<p><strong>What options are available?</strong></p>
<div>Chinese regulators impose a variety of rules and requirements on the movement of funds from China, prohibiting the use of some methods of repatriation that may be commonplace in other jurisdictions and placing strict caps in other circumstances. Nevertheless, with careful planning, US companies can take advantage of three principal repatriation structures that can meet a variety of needs for companies at different stages of development.</div>
<div>&nbsp;</div>
<ol>
<li><strong>Dividend remittance</strong> is the most common strategy for most US healthcare and life sciences companies operating in China. Dividends are a one-way transfer of funds and are simple to execute: there are no restrictions on the use of dividends and no need to return funds to China at a later date. As execution is straightforward, and no regulatory approvals are required when remitting dividends, the strategy is valuable even for companies with limited treasury resources. Dividends can be adopted as both a near and long-term repatriation solution. Healthcare companies will need to pay withholding tax to the local tax bureau, so it is important to consider the impact of this on P&amp;L when repatriating funds.</li>
<li><strong>Cross-border lending</strong> from China involves more complex structures than dividend remittance and may be more applicable to companies with greater treasury resources or more sophisticated treasury arrangements. While companies must register with China&rsquo;s State Administration of Foreign Exchange (SAFE) or with banks in certain pilot areas in order to lend cross-border, specific regulatory approval is not required. Execution is both straightforward and can be completed on a timely basis. Cross-border lending is subject to a number of requirements, however. Repatriated funds can only be used for working capital and lending cannot exceed more than 50% of the China entity&rsquo;s equity, limiting the ability of a US company to extract surplus renminbi from China. The tenor of lending is subject to the underlying lending contract tenor.</li>
<li><strong>Cross-border pooling</strong> is a more complex arrangement for repatriating funds and is typically applicable for healthcare or life sciences companies with regional or global treasury hubs that utilize sophisticated structures to optimize liquidity management. Cross-border pooling requires registration or filing with local regulators and offers flexible borrowing/lending quotas. Self-generated funds can be swept offshore and then freely converted to other currencies. Certain foreign currency pooling structures do not include a regulatory repayment period and the tenor can be stipulated in the underlying loan agreement that is filed with regulators. Pooling structures can also evolve as required: new entities can be added to the pool as companies&rsquo; China business grows. While cross-border pooling offers many benefits, it is complicated to set up and execute and there are a variety options available, including programs administered by SAFE and China&rsquo;s central bank (the People&rsquo;s Bank of China) and a program for companies that operate in the Shanghai Free-Trade Zone. In addition, repayment of RMB is required within 12 months under certain structures. Consequently, currencies may need to be converted twice when funds are lent and repaid, potentially increasing costs.</li>
</ol>
<div><strong>Choosing the right banking partner</strong></div>
<div>For US healthcare and life sciences companies, the attractions of the world&rsquo;s second largest healthcare market are clear. However, companies need to be aware of the challenges associated with repatriating cash from China and plan accordingly. While companies&rsquo; needs may evolve as their operations in the country grow, it is essential to identify appropriate strategies well in advance of generating revenue in China. Regulations in China are subject to rapid and frequent change and therefore companies also need to be aware of government and regulatory announcements.</div>
<div>&nbsp;</div>
<div>Healthcare and life sciences companies planning to establish operations in China &ndash; or with existing operations in the country &ndash; should work closely with their bank to identify appropriate strategies to ensure that they can repatriate cash in the most efficient way and in compliance with local rules and regulations.</div>
<div>&nbsp;</div>
<div>For more information about how Citi Commercial Bank can support you and your team, please contact us below.</div>
<div>&nbsp;</div>
<p><sup>1 <a href="https://www.trade.gov/country-commercial-guides/china-healthcare" target="_blank" rel="noopener" data-link-source="tiny">https://www.trade.gov/country-commercial-guides/china-healthcare</a></sup></p>
<div>&nbsp;</div>
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To fully capture the opportunities available in China’s healthcare market, companies need to manage their cash repatriation effectively given strict and complex rules.

Healthcare and life sciences companies operating in China: finding the right cash repatriation strategy

The Challenge US-based Precision Medicine Group provides an integrated infrastructure that supports biopharmaceutical and life science companies as they develop and commercialize new products. Rapid organic growth and M&A activity meant it had different banks in 15+ markets across North America, EMEA and Asia Pacific. Managing multiple bank relationships and accounts was time consuming. Each of the company’s banks required different tokens to log in, and a variety of inconsistent formats and processes for KYC and other compliance requirements. With this fragmented banking structure, Precision Medicine’s cash visibility was limited, making it difficult to assess cash positions. Determining balances required local teams to pull data manually by logging into one of the multiple banking platforms and summarizing the data in an Excel file. Precision Medicine decided to consolidate international banking with a single global partner as part of an initiative to increase centralization. The company wanted consistent solutions and service levels, greater visibility and control of cash, and to free up local teams to focus on core activities rather than bank account management. The Solution Precision Medicine selected Citi Commercial Bank as its global banking partner based on Citi’s presence in nearly 100 countries and jurisdictions worldwide, which aligned with the company’s existing operations and strategic ambitions. Given its long healthcare industry experience and specific expertise in working with contract research organizations, Citi was well placed to help Precision Medicine navigate its centralization journey. Citi and Precision Medicine’s objective was to create a best-in-class global treasury function. To achieve this, Citi developed a scalable treasury roadmap to take the company to its desired future state in phases: Consolidate banking relationships worldwide to Citi Commercial Bank, rationalizing accounts where possible. Increase automation and improve liquidity management. A key part of Precision Medicine’s centralization strategy is the introduction of a new ERP system, which will have full host-to-host connectivity with Citi. The Result Citi opened all new accounts for Precision Medicine within their project timeline, including new entities that were added after the original project scope was set. Account openings used digital onboarding to ensure a consistent process across all jurisdictions, which significantly reduced the resources required to manage the process. Citi provided support and a single global contact to address Precision Medicine’s queries. Precision Medicine uses CitiDirect to manage its accounts, giving it visibility and control of cash globally via a single dashboard. The company enjoys the benefits of Citi Payment Insights, which provides payment status updates via a visual tracker. Precision Medicine also uses the SEPA Debtor Mandates module within CitiDirect, enabling it to self-manageits Euro Zone SEPA debtor mandates and prevent unapproved transactions. All this has freed up individuals at Precision Medicine entities worldwide to focus on their core roles, as well as improve risk management. With phase one now complete, Precision Medicine and Citi have embarked on phase two. The company has introduced its new ERP system, which is being integrated via host-to-host connectivity with Citi to improve control and reduce manual effort. As part of the ERP integration, Precision Medicine and Citi have developed an XML file to accommodate payment instructions for multiple countries, currencies, and payment types, which will be sent directly from the company’s ERP to Citi. Precision Medicine is also using CitiConnect File Manager to allow it to review batch payment files before processing. The company also intends to take advantage of its consolidated bank relationship with Citi and new functionality to move cash between entities more efficiently. For more information about how Citi Commercial Bank’s Healthcare Group can assist you and your team, please contact us below.

<h3><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/64d123de835d715b4dae2c64.png" alt="Author: Matt Marzicola &ndash; Senior Vice President, Healthcare &ndash; Citi Commercial Bank" /></h3>
<h3>The Challenge</h3>
<p>US-based Precision Medicine Group provides an integrated infrastructure that supports biopharmaceutical and life science companies as they develop and commercialize new products. Rapid organic growth and M&amp;A activity meant it had different banks in 15+ markets across North America, EMEA and Asia Pacific. Managing multiple bank relationships and accounts was time consuming. Each of the company&rsquo;s banks required different tokens to log in, and a variety of inconsistent formats and processes for KYC and other compliance requirements.</p>
<p>With this fragmented banking structure, Precision Medicine&rsquo;s cash visibility was limited, making it difficult to assess cash positions. Determining balances required local teams to pull data manually by logging into one of the multiple banking platforms and summarizing the data in an Excel file.</p>
<p>Precision Medicine decided to consolidate international banking with a single global partner as part of an initiative to increase centralization. The company wanted consistent solutions and service levels, greater visibility and control of cash, and to free up local teams to focus on core activities rather than bank account management.</p>
<h3>The Solution</h3>
<div>
<p>Precision Medicine selected Citi Commercial Bank as its global banking partner based on Citi&rsquo;s presence in nearly 100 countries and jurisdictions worldwide, which aligned with the company&rsquo;s existing operations and strategic ambitions. Given its long healthcare industry experience and specific expertise in working with contract research organizations, Citi was well placed to help Precision Medicine navigate its centralization journey.</p>
<p>Citi and Precision Medicine&rsquo;s objective was to create a best-in-class global treasury function. To achieve this, Citi developed a scalable treasury roadmap to take the company to its desired future state in phases:</p>
<ol>
<li>Consolidate banking relationships worldwide to Citi Commercial Bank, rationalizing accounts where possible.</li>
<li>Increase automation and improve liquidity management. A key part of Precision Medicine&rsquo;s centralization strategy is the introduction of a new ERP system, which will have full host-to-host connectivity with Citi.</li>
</ol>
<h3>The Result</h3>
<div>
<p>Citi opened all new accounts for Precision Medicine within their project timeline, including new entities that were added after the original project scope was set.</p>
<p>Account openings used digital onboarding to ensure a consistent process across all jurisdictions, which significantly reduced the resources required to manage the process. Citi provided support and a single global contact to address Precision Medicine&rsquo;s queries.</p>
<p>Precision Medicine uses CitiDirect to manage its accounts, giving it visibility and control of cash globally via a single dashboard. The company enjoys the benefits of Citi Payment Insights, which provides payment status updates via a visual tracker. Precision Medicine also uses the SEPA Debtor Mandates module within CitiDirect, enabling it to self-manageits Euro Zone SEPA debtor mandates and prevent unapproved transactions. All this has freed up individuals at Precision Medicine entities worldwide to focus on their core roles, as well as improve risk management.</p>
<p>With phase one now complete, Precision Medicine and Citi have embarked on phase two. The company has introduced its new ERP system, which is being integrated via host-to-host connectivity with Citi to improve control and reduce manual effort. As part of the ERP integration, Precision Medicine and Citi have developed an XML file to accommodate payment instructions for multiple countries, currencies, and payment types, which will be sent directly from the company&rsquo;s ERP to Citi. Precision Medicine is also using CitiConnect File Manager to allow it to review batch payment files before processing. The company also intends to take advantage of its consolidated bank relationship with Citi and new functionality to move cash between entities more efficiently.</p>
<p>For more information about how Citi Commercial Bank&rsquo;s Healthcare Group can assist you and your team, please contact us below.&nbsp;</p>
<p>&nbsp;</p>
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</div>
</div>

Formed in 2012, Precision Medicine Group is a life sciences services company supporting next-generation approaches to drug development and commercialization.

Precision Medicine decided to consolidate international banking with a single global partner as part of an initiative to increase centralization.

Global banking relationship delivers visibility, control and efficiency

*This partner content was produced by the Financial Times on behalf of Citi Commercial Bank Regardless of sector, when the smooth running of organizations is discussed, a quote attributed to US General Omar Bradley is often employed: “Amateurs talk strategy, professionals talk logistics.” A company could sell the best, most innovative product or solution, underpinned by a brilliant marketing strategy, but if the logistics for delivering the goods aren’t optimal then that company will underperform. Martin Christopher, Emeritus Fellow of the Chartered Institute of Logistics and Transport, and author of the bestselling book Logistics and Supply Chain Management, concurs: “The real competition in business sectors is between supply chains, not companies.” This critical battleground is particularly tricky for the pharmaceutical industry. Stringent regulatory compliance and complex approval processes can lead to product launch delays and supply chain disruption. End-to-end supply chain visibility, while desirable for mitigating risks and optimizing operations, is often difficult to ensure. As detailed in this 2022 study by EY, the global nature of pharmaceutical distribution, usually involving various external partners, makes for a complex mix of worldwide shipping solutions across ocean, air and cross-border trucking. Integrating shipping data across these solutions can be hugely challenging and costly. Add in supplier supervision, geopolitical and trade considerations – plus the pharma-specific requirement that is cold-chain management (ensuring goods are kept at the correct temperature) – and it is clear that the sector requires world-beating supply-chain organization. A specific set of challenges Fast-growing Taiwan-based biopharmaceutical company PharmaEssentia is one firm that can attest to the logistical challenges of operating a globally expanding pharmaceutical business. The Covid-19 pandemic, for example, saw PharmaEssentia potentially heading for supply problems as the worldwide demand for items such as syringe barrels skyrocketed. “Like many pharmaceutical and biotech companies, we rely on different CMOs (contract manufacturing organisations) and suppliers,” says Samuel Lin, PharmaEssentia’s VP, Head of Business Operations and Strategy. “During Covid, we were asked to share commoditised components like these with vaccine manufacturers. So we had to ensure we had sufficient stock to guarantee a stability of service to our customers and, ultimately, to patients.” For business continuity, PharmaEssentia turned to its global banking partner, Citi Commercial Bank, for an injection of working capital, helping the firm to carry on providing innovative medicines to patients in dire need. Laura Fogarty, Citi Commercial Bank’s Healthcare Industry Head in North America, agrees that this was essential in order to avoid shipping disruption. “There was a lot going on at the time,” she says. “Around November 2021, at the height of the pandemic, PharmaEssentia had received approval across much of the world for its lead drug candidate BESREMi, a biologic used to treat a rare blood disease. It was also launching in the US, and all of that required significant investment. Our working capital solution provided the company with the financial flexibility it needed to maintain its core business while ensuring the US launch of BESREMi was a success.” Local market knowledge is essential Ko-Chung Lin, PharmaEssentia’s founder and CEO, points out that Citi’s global footprint – together with a deep knowledge of local markets – helped it weather the storms of Covid-19 and ensure a robust supply chain, as well as funding further commercialisation in global markets. “Citi gave us solutions and dynamics for different markets,” he says. “They didn’t just help with capital but also in an advisory capacity. We are essentially a group of scientists – that’s our focus – and Citi brought the financial expertise we needed.” To support the market expansion of PharmaEssentia’s lead product, BESREMi, Citi helped the firm raise capital through the issuance of global depository receipts in Luxembourg. Tapping the overseas markets allowed PharmaEssentia to elevate its brand recognition, as well as obtain access to new investors. In April 2023, this was the largest overseas offering at the time by a Taiwanese healthcare issuer. Citi also introduced a “host-to-host” solution to automate payment flows and create better operational efficiencies. “Host-to-host allows full automation of files – sending and processing without the need for manual intervention,” explains Fogarty. Ko-Chung Lin describes that future forecast trajectory as “hockey stick growth”, with more investment and the hiring of many more talented scientists ultimately resulting in a greater number of successful patient treatments. “This is such an exciting and rewarding client to work with,” says Fogarty. “There’s a genuinely positive patient impact that you’re a part of – that’s why we come to work every day.” All opinions expressed by the participants in this article are their own and do not necessarily represent the opinions of Citi Commercial Bank

<p><span style="  font-size: 11.6667px; white-space: normal; background- float: none; display: inline;">*This partner content was produced by the Financial Times on behalf of Citi Commercial Bank</span></p>
<p>Regardless of sector, when the smooth running of organizations is discussed, a quote attributed to US General Omar Bradley is often employed: &ldquo;Amateurs talk strategy, professionals talk logistics.&rdquo; A company could sell the best, most innovative product or solution, underpinned by a brilliant marketing strategy, but if the logistics for delivering the goods aren&rsquo;t optimal then that company will underperform.</p>
<p>Martin Christopher, Emeritus Fellow of the Chartered Institute of Logistics and Transport, and author of the bestselling book&nbsp;<em>Logistics and Supply Chain Management</em>, concurs: &ldquo;The real competition in business sectors is between supply chains, not companies.&rdquo; This critical battleground is particularly tricky for the pharmaceutical industry. Stringent regulatory compliance and complex approval processes can lead to product launch delays and supply chain disruption. End-to-end supply chain visibility, while desirable for mitigating risks and optimizing operations, is often difficult to ensure.<br /><br />As detailed in&nbsp;this 2022 study by EY, the global nature of pharmaceutical distribution, usually involving various external partners, makes for a complex mix of worldwide shipping solutions across ocean, air and cross-border trucking. Integrating shipping data across these solutions can be hugely challenging and costly. Add in supplier supervision, geopolitical and trade considerations &ndash; plus the pharma-specific requirement that is cold-chain management (ensuring goods are kept at the correct temperature) &ndash; and it is clear that the sector requires world-beating supply-chain organization.</p>
<h4><strong>A specific set of challenges</strong></h4>
<p>Fast-growing Taiwan-based biopharmaceutical company PharmaEssentia is one firm that can attest to the logistical challenges of operating a globally expanding pharmaceutical business. The Covid-19 pandemic, for example, saw PharmaEssentia potentially heading for supply problems as the worldwide demand for items such as syringe barrels skyrocketed. &ldquo;Like many pharmaceutical and biotech companies, we rely on different CMOs (contract manufacturing organisations) and suppliers,&rdquo; says Samuel Lin, PharmaEssentia&rsquo;s VP, Head of Business Operations and Strategy. &ldquo;During Covid, we were asked to share commoditised components like these with vaccine manufacturers. So we had to ensure we had sufficient stock to guarantee a stability of service to our customers and, ultimately, to patients.&rdquo;</p>
<p>For business continuity, PharmaEssentia turned to its global banking partner, Citi Commercial Bank, for an injection of working capital, helping the firm to carry on providing innovative medicines to patients in dire need. Laura Fogarty, Citi Commercial Bank&rsquo;s Healthcare Industry Head in North America, agrees that this was essential in order to avoid shipping disruption. &ldquo;There was a lot going on at the time,&rdquo; she says. &ldquo;Around November 2021, at the height of the pandemic, PharmaEssentia had received approval across much of the world for its lead drug candidate BESREMi, a biologic used to treat a rare blood disease. It was also launching in the US, and all of that required significant investment. Our working capital solution provided the company with the financial flexibility it needed to maintain its core business while ensuring the US launch of BESREMi was a success.&rdquo;</p>
<h4><strong>Local market knowledge is essential</strong></h4>
<p>Ko-Chung Lin, PharmaEssentia&rsquo;s founder and CEO, points out that Citi&rsquo;s global footprint &ndash; together with a deep knowledge of local markets &ndash; helped it weather the storms of Covid-19 and ensure a robust supply chain, as well as funding further commercialisation in global markets. &ldquo;Citi gave us solutions and dynamics for different markets,&rdquo; he says. &ldquo;They didn&rsquo;t just help with capital but also in an advisory capacity. We are essentially a group of scientists &ndash; that&rsquo;s our focus &ndash; and Citi brought the financial expertise we needed.&rdquo;</p>
<p>To support the market expansion of PharmaEssentia&rsquo;s lead product, BESREMi, Citi helped the firm raise capital through the issuance of global depository receipts in Luxembourg. Tapping the overseas markets allowed PharmaEssentia to elevate its brand recognition, as well as obtain access to new investors. In April 2023, this was the largest overseas offering at the time by a Taiwanese healthcare issuer. Citi also introduced a &ldquo;host-to-host&rdquo; solution to automate payment flows and create better operational efficiencies. &ldquo;Host-to-host allows full automation of files &ndash; sending and processing without the need for manual intervention,&rdquo; explains Fogarty.</p>
<p>Ko-Chung Lin describes that future forecast trajectory as &ldquo;hockey stick growth&rdquo;, with more investment and the hiring of many more talented scientists ultimately resulting in a greater number of successful patient treatments. &ldquo;This is such an exciting and rewarding client to work with,&rdquo; says Fogarty. &ldquo;There&rsquo;s a genuinely positive patient impact that you&rsquo;re a part of &ndash; that&rsquo;s why we come to work every day.&rdquo;</p>
<p>&nbsp;</p>
<p><strong style="box-sizing: border-box;  font-size: 15px; white-space: normal; background-"><em style="box-sizing: border-box;">All opinions expressed by the participants in this article are their own and do not necessarily represent the opinions of Citi Commercial Bank</em></strong></p>
<p>&nbsp;</p>
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As our premier thought leadership product, Citi Global Perspectives & Solutions (Citi GPS) is designed to help our clients navigate the global economy’s most demanding challenges, identify future themes and trends, and prosper in a fast-changing and interconnected world. 

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