Global Cash Management Trends and Solutions
December 2007
Itzik Coriat
Global Transaction Services Head
Citi Israel
Agenda
 Market Forces & Trends
Liquidity & Investments
Electronic Banking & Information Services
Questions
3
Market Forces & Trends
Forces Driving Treasury Changes
Forces
Trends
■ Migration of treasury / financial functions into global treasury centres, in-house
banks, shared service centres, and payment factories
■ Focus on integrating transaction management, optimising cash / credit utilisation
globally
■ Centralised audit, regulatory, reporting and internal benchmarking through
transactional visibility (SOX, IAS39, FAS133, IFRS)
■ Focus on gaining visibility and control
Technology
■ Leveraging a single ERP platform to apply best practices for automation of
payables and receivables management in SSC or Payment Factory structure with
a single bank integration point
■ Format standardisation to increase STP and reduce errors / fraud
■ Trading partner integration for better working capital management
■ Real-time actionable information delivery for better decisions
Strategic Treasury
Risk &
Control
Focus
■ Centralisation of head office control, standardised processes / procedures
Holistic approaches across enterprise
Globalization
■ Rationalisation of bank relationships and account structures
■ Process / workflow automation to free resource time
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Outcome
Liquidity & Investments
Target Balancing
Solution whereby credit & debit balances in a single currency are
physically moved from a source account to a header account.
Available Domestically, Cross-Border and Cross-Regionally.
Funds move. The source account’s specified target balance is achieved by
taking or moving funds from/to the nominated header account.
End of day value dated balances are always swept with good value. Target
balancing can take place on a periodic basis.
Interest may be re-allocated if requested.
Pre-TBA
Post TBA
Bank London
Header Account
Bank London
Header Account
EUR 100
EUR 150
USD 75
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Paris
Madrid
Source
Source
EUR 75
EUR(25)
USD 25
Paris
Madrid
Source
Source
EUR 0
EUR 0
Multi-bank Target Balancing
Automated Target Balancing tools will enable efficient concentration of
cash and funding of deficits

 Same day value via cross border/cross regional Target Balancing
 Intra day or next day via Multi Bank Target Balancing
 Statement Files/Message Based Information downloaded to SAP for daily
accounting of funds movement
Customer
Communication Methods
-Web-based reports
-Files
-XML Messages
Domestic Bank(s)
Intraday TBA
Processor
Define TBA Rules
– Source A/C &
Target A/C
relationship
MT940 / MT950 End of Day Reporting
MT920 Request for Statement (MT942)
MT942 Ad hoc Intraday Report
MT101 Request for Transfer
Target Account
MT103 – Funds Transfer (Concentrating to Target Account)
MT101 Request for Transfer
MT103 – Funds Transfer (Funding Source Account)
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Follow / Against The Sun Sweep
Notional Pooling
Single Currency Notional Pooling – Example.
With notional pooling, the autonomy of the accounts is maintained, while
debit and credit balances are offset for interest purposes.
Without Notional Pooling
Bank Rates
Credit Interest = 4%, Debit Interest = 6%
Bank
Account 1
Bank
Account 2
Bank
Account 3
Bank
Account 4
Bank
Account 5
+USD 1000
-USD 2100
+USD 1500
-USD 500
+USD 400
Interest =
+ 40
- 126
+ 60
- 30
+ 16
= - USD 40
With Notional Pooling
Bank Rates
Credit Interest = 4%, Debit Interest = 6%
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Bank
Account 1
Bank
Account 2
Bank
Account 3
Bank
Account 4
Bank
Account 5
Bank
Net Position
+USD 1000
-USD 2100
+USD 1500
-USD 500
+USD 400
+USD 300
Interest earned by pooling accounts = USD 300 x 4%
= USD 12
Advantage to customer
= USD 52
= USD 12 - (- USD 40)
Optimisation – Multi Currency Notional Pooling
 Optimises short term (overnight) cash positions, by notionally pooling
balances with London bank , across eligible currencies
 Fully automated process applies to full closing balances, so treasury can
focus on managing strategic hedging and structural positions
 Flexibility to transact in any pooled currency, without FX conversion
 Integrate with target balancing to maximise cash upstreamed into pool
Net Customer
Position
Available Balance = EUR 40mn equivalent, in any pool CCY
(EUR Equiv)
Cross Currency Balance Sheet Set-Off
+ EUR 20mn eqv.
+ EUR 60mn eqv.
(EUR Equiv)
- EUR 40mn eqv.
x
Group
LCY
London
Sub A
LCY
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Sub B
LCY
Sub C
EUR
x
Group
EUR
x
Group
GBP
London
London
Sub D
EUR
Net Multi Currency
Pool Balances
Sub E
GBP
Sub F
GBP
Individual
Currency
Pools or TBAs
in London
Multi-Currency Pooling: Participation
Approved Jurisdictions
Asia:
Australia, Hong Kong, Japan, New Zealand,
Singapore, Indonesia*, Philippines***, Taiwan*
EMEA:
Austria, Belgium, Czech Republic, Denmark, Finland,
France, Germany (gmbh), Greece, Hungary, Ireland,
Israel*, Italy, Netherlands, Poland, Portugal, Slovakia
Spain, Switzerland, Turkey, UK
Americas:
Bahamas, Bermuda, Canada (Ontario/Quebec), USA
Currencies (19):
USD, EUR, GBP, CHF, NOK, SEK, DKK, CAD, AUD,
NZD, JPY, PLN**, CZK**, HUF**, HKD**, SKK** RON**
Positive balances only:
ZAR, TRY, SGD**
Additionally, on-going legal reviews Slovakia, for which external counsel have advised they expect a favorable outcome.
* FCY only **pilot phase ***FCY not sourced from local currency FX
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Integrating Investments with Liquidity Solutions
Tight integration of investments with global liquidity structures optimizes both
cash balances and cash investments
Money Market Funds
Time Deposits
2
1
3
Bank
High Interest Yield Account (HIYA) or Overnight Sweep
Sub 1
Sub 2
Sub 3
Liquidity structure (TBA
or Notional Pool) to
optimise investments
Sub 4
Liquidity structures facilitate concentration into a single position, which can be invested in a choice of
investments on an automated or active basis:
1.
High Interest Yield Account or end-of-day sweep, as per market environment
2.
Money market mutual funds via daily automated sweep
3.
Time deposits
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Automated Investment
Solutions
Active Investment
Solutions
Electronic Banking & Information Services
Data Aggregation Solutions
Gaining Visibility into Group Cash Positions
 Gaining
visibility and control of group cash with actionable data is a critical first
step
To enables companies to realize these benefits now without need to build system
interfaces with each banking provider
 To provides integrated information – the first building block to controlling and
optimizing cash
 To enables companies to manage risk through improved cash control, forecasting
and event notification
 To enables more effective working capital management across various entities
through provision of real-time actionable information
 To enables improved reporting to meet regulatory requirements (e.g. SarbanesOxley)
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Integrated Payments & Collections
Global solution integrating domestic and cross-border payment &
collection capabilities into a single, standardized and efficient
product offering
 Account based payment options, e.g. funds transfers, local cheques, ACH/Giro,
direct debit
 Non-account based options that provide multi-currency payment capabilities
without the need to open multiple accounts in each country
State-Of-The-Art Portal Solution
Liquidity
Liquidity
Management
ManagementViews
Views
Risk
Risk Management
ManagementViews
Views
Integrate
Integrate
with
withMS
MS
Office
Office
Alerts
Alerts
Robust,
Robust, flexible,
flexible,
user-tested
user-tested
platform
platform
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Custom
Custom
Reporting
Reporting
Scaleable,
Scaleable, Secure
Secure Web
Webportal
portal
Fully
FullyFlexible
Flexible
Administration
Administration
Questions ?
17
Thank you for your time !
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