Even if Starwood Capital had previously done business with an entity, opening a new bank account which included that entity would require a new KYC check. "Legally, they had to do it again," Dorvil says. "That is why the banks' due diligence process sometimes took more than a month." In one case, Dorvil recalls, an extensive delay in opening bank accounts could have prevented the deal from closing, per the lender's agreement.

The Starwood Capital treasury team needed to be able to open accounts faster. They decided to revamp their bank account management and identified four key requirements: nimble opening of accounts, streamlined and self-service operational processes, treasury system integration, and ease of replication from one deal to another. They also wanted to find an approach through which they could achieve market-leading interest yields and a globally seamless platform. That's when the firm learned from Goldman Sachs about a new option for much faster bank account onboarding.

Starwood Capital had been working with Goldman on investment banking, and its investment advisers suggested to the treasury team that Virtual Integrated Accounts from Goldman Sachs Transaction Banking might solve their account onboarding challenges.

"They explained how the virtual accounts work, and we saw the possibility to streamline and cut down on time to open accounts," Dorvil says. "The fees would be calculated the same way as with our existing bank accounts, but we would be able to dramatically accelerate account openings."

Rollout of the virtual account system involved integration with Starwood Capital's treasury workstation. "The virtual accounts in our treasury workstation must match our account structure at Goldman," Dorvil explains. "We wanted the workstation to automatically pull in information on current balances, previous-day balances, month-to-date activities, and similar information, across all our virtual accounts. We also needed to enable users to run reports or send wires from the virtual accounts within the treasury workstation."

One challenge in integrating bank data flows with the treasury workstation was posed by Starwood Capital's complex web of accounts and signers. For example, "if a virtual account needs to fall under Fund 12, but the entity falls under Fund 11, then we need to keep them under separate umbrellas," Dorvil says. "We have to be very diligent with our accounting."

Another challenge was that Goldman provided different bank statements for virtual accounts than for its standard bank accounts. Dorvil and her team worked with the bank to come up with a new type of statement for the virtual accounts that included all the information they needed. "We wanted to run reports that included both transactions and balances, but that was something Goldman didn't offer at first," she says. "They built out that functionality based in part on our feedback."

Despite the challenges, integration was successful, and Starwood Capital now uses Goldman's Virtual Integrated Accounts to meet the banking needs of all its properties. This makes opening accounts far easier today than it was before this initiative.

With the virtual accounts, Goldman has automated some of the repetitive tasks in a traditional account opening. Instead of repeatedly completing large packets of paper documents, the firm can often leverage information it already has. "Let's say we have an entity 'Starwood Capital Group Management' and we already had an account for them previously," Dorvil says. "The KYC is already done on that specific entity. We will leverage the existing KYC, which means my team can fill out a single two-page document and have it executed by the authorized signer. Once the bank approves our request, we can then go into the platform and use self-service tools to create a virtual account ourselves."

Don't miss the webcast celebrating our 2023 Small Company Excellence award winners on April 25, 2023, at 11amET, and receive CTP/FP&A recertification credits from the AFP! Register for the free webcast today.

See also:

• Silver Award—Exelon Corp. and Constellation Energy: "How an Exelon Divestiture Resulted in Two Excellent Treasuries"
• The on-demand webcast celebrating all this year's Alexander Hamilton Award winners in the Treasury Transformation category.

The virtual account numbers are system-generated and available almost immediately. That means, "within minutes after we get the green light to set up virtual accounts for a property, the accounts can be available for transactions," Dorvil says. "We can also see right away where the funds are. So, when it comes to cash positioning, we have live, current, real-time numbers to give the market team, the attorneys involved in the transaction, and even investors."

Reducing the overhead and lead time on opening accounts for the company's routine real estate transactions gives the treasury group more time to focus on the complexities of onboarding the new property. Among other benefits, this lowers the potential security risk of not having adequate oversight and controls as the accounts become active. Another advantage of the new account structure revolves around treasury's management of capital calls and deal-closing wire reconciliations.

"Suppose we are sending out a distribution to 300 investors," Dorvil says. "Once the wires go out from our workstation, we can run a report on that specific virtual account showing everything that went out against everything that was released from our system. So we can go back and share with each investor: 'Here is the confirmation of your distribution,' and we can send a report to each internal accounting team confirming that the wires went out."

The bottom line, Dorvil says, is that "the faster we can open accounts through a more seamless process, the more time we have to take the necessary steps on our end to get BAI connectivity operating with no issue. Utilizing a virtual account structure makes us more of a real-time treasury and makes Starwood Capital Group a more agile business."