You want to build an in-house bank in your treasury? Fred Schacknies would tell you that it is far from just another installation of software. Two years after Schacknies, as senior treasury manager for middle-office and global projects for Lucent Technologies Inc., set out to establish an in-house bank for his company, he is only now entering the late stages of activation.

According to Schacknies, the wait was worth it. While $12 billion Lucent initiated the in-house bank as a treasury project to get the usual benefits of more efficient borrowing and investing and lower bank charges, the treasury of the Murray Hill, N.J.-based telecom equipment provider came up with an unexpected payoff: tighter integration with the rest of Lucent's finance operation. "We've discovered real, unexpected benefits outside treasury," explains Schacknies. "To get to the in-house bank, we needed much cleaner integration with the rest of finance–A/P, A/R, cash application and other controller and accounting functions. That integration has meant better visibility across the whole finance organization and less waste of human and financial resources. It has required a comprehensive reengineering of the treasury process."

For years the esoteric finance kingdom of the Global 50, the concept of the in-house bank is today enjoying a stunning expansion. Thanks to better and cheaper technology, tight external credit markets and post-Enron accounting and control rigors, companies not necessarily the biggest in their industries can now see real returns on their investments by organizing an in-house bank, while also moving closer to the nation's new standard for transparency in financial transactions. "The barriers are coming down," notes consultant Ron Chakravarti, a principal at Treasury Strategies Inc., "and with bank credit tight, there is certainly a premium on liquidity management and making all cash visible."

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