Adam Smith Awards
Best Practice and Innovation
2013
treasurytoday
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Congratulations to our clients for your achievements
in the 2013 Treasury Today Adam Smith Awards
© 2013 Citibank, N.A. All rights reserved. Citi and Arc Design is a registered service mark of Citigroup Inc.
Foreword
I WOULD LIKE TO CONGRATULATE ALL OUR CLIENTS that were recognised in the
Treasury Today Adam Smith Awards 2013. Each one is a worthy winner and has
demonstrated best practice, ingenuity and hard work to implement treasury solutions that
are helping their company to achieve success.
Winning a Treasury Today Adam Smith Award is a wonderful way for our clients to gain the
recognition they deserve for their accomplishments and Citi takes huge pride in having
played a part.
Michael Guralnick
Global Sales Head, Corporate
and Public Sector, Treasury and
Trade Solutions, Citi
Ultimately, it is the client that takes the initiative to optimise treasury practices. Our role as
banking partner is to work closely with our clients to listen and provide the advice and
solutions that help them achieve their goals.
What is evident from these awards is that companies from all sectors are taking steps to
improve operational processes and ensure business sustainability. For many, this starts
with ensuring all treasury practices are as efficient and cost-effective as possible. The
variety of the solutions recognised by the Adam Smith Awards – through cards, FX,
technology and helping clients manage their bank relationships – show that there are many
different approaches to optimising treasury practices. Implementing the right one, at the
right time, therefore requires expertise on both sides of the client-bank relationship.
Furthermore the geographical breadth of the companies commended by the Adam Smith
Awards – across Asia Pacific, the Americas and EMEA – clearly shows that the drive to
improve treasury is equally relevant to companies looking to make the most of opportunities
in both emerging markets and more developed markets that are currently more challenged.
Well done to Coca-Cola Enterprises, Danone Asia, Home Development Mutual Fund,
PepsiCo India Holdings, Procter & Gamble, Xerox and Thomson Reuters.
We are honoured to work with all our clients to help them achieve the success they deserve.
Please don’t hesitate to contact your Citi representative to find out how we can help you with
your treasury management.
treasurytoday Adam Smith Awards © August 2013 | 3
Highly Commended
First Class Bank Relationship Management
Coca-Cola Enterprises
Ben Haislip, Associate Director, Treasury, US
In 2010, Coca-Cola Enterprises, Inc. (CCE) completed a significant
transaction with The Coca-Cola Company, which acquired all of
CCE’s North American territory. CCE now serves customers and
consumers in Belgium, the UK, France, Luxembourg, the
Netherlands, Norway and Sweden. This Highly Commended case
study showcases CCE’s success in deploying a new Western
European bank structure coupled with new payment software
equipped to the latest industry standard.
As Ben Haislip, Associate Director, Treasury explains, “this
deployment allowed us to create company efficiencies and simplify
our account structure, reduce payment and bank costs and
provide business contingency options. In the past, we had several
different banking relationships across Western Europe, each using
different clearing instruments and rules specific to local geography,
providing little visibility into transaction reconciliation and detail
billing. We consolidated from ten banks down to five, with Citi and
HSBC selected as our two primary banks.”
Citi and HSBC were required to create host-to-host connectivity
using ISO 20022 XML version 2 file formats, receiving all bankbilling data electronically. At the same time, CCE replaced its thirdparty payment factory software, which used a number of
applications and interfaces to process payment and collection
instruments. The new solution integrated a functionality of CCE’s
ERP system (SAP), optimising the financial information flows
between CCE and its bank partners by leveraging the SAP Bank
Communication Management (BCM) module for straight through
processing (STP) and ISO 20022 XML version 2 file format.
As Haislip recalls, “we encountered a few challenges in technology,
Single Euro Payments Area (SEPA) regulation adoption and industry
standards implementation.”
Rob Harrington, HSBC, Ben Haislip, Coca-Cola Enterprises and Steven Elms, Citi
formats until further clarification from the EU in 2013. The results of
the project are impressive:
•
CCE consolidated its bank relationships.
•
Reduced the number of bank accounts.
•
Decreased the number of cash pools by 50% and bank fees by
25%.
•
Standardised its European bank instruments in order to take
advantage of SEPA.
The first challenge was to fully understand recent changes in
technology around SWIFT. CCE performed a cost-benefit analysis
and decided a bank host-to-host connection using ISO 20022 XML
version 2 file formats was the best standard. Another challenge was
the changing EU regulatory dates for SEPA. CCE partnered with its
banks to implement local payment types in the XML format as it
transitioned certain instruments to SEPA. While implementing
SEPA instruments, CCE continued to move its business away from
local payment/collection types towards more standardised SEPA
XML Credit Transfers (SCTs) and SEPA Direct Debits (SDDs).
This allowed CCE to organise, control and secure its payments
using ISO 20022 XML version 2 file format standards and directly
connecting to its two banks. With the deployment of BCM and ISO
20022 XML version two file format, CCE created process efficiency
in the procure-to-pay (P2P), order-to-cash (O2C) and record-toreport (R2R) areas of the company by increasing automated
reconciliation while also decreasing its overall payment cost and
implementing business continuity to connect with Citi and HSBC
across Europe.
CCE’s bank data required updating, including ERP vendor and
customer information with the International Bank Account Numbers
(IBANs) and Bank Identifier Codes (BICs) needed for SEPA compliant
instruments. CCE reviewed sending employee payroll via SEPA and
opted to include local payment types in ISO 20022 XML version 2 file
As Haislip concludes, “CCE was able to perform a project
management role by documenting all processes, interfacing
procedures for standardisation and ultimately aligning with its
finance strategy to achieve world-class performance driven by a
functionalised finance organisation aligned to the business.”
Coca-Cola Enterprises, Inc. is one of the world’s largest marketers, producers and distributors of products of The Coca-Cola Company.
Our product portfolio includes the world’s greatest brands and beverages. We now serve customers and consumers in Belgium, the UK,
France, Luxembourg, the Netherlands, Norway and Sweden.
4 | treasurytoday Adam Smith Awards © August 2013
Winner
Best Card Solution
Procter & Gamble
Steve Ader, GBS-Banking Service Manager, Cincinnati,
Ohio, US
Operating in approximately 75 countries worldwide, Procter and
Gamble (P&G) is the world’s largest consumer products company
serving approximately 4.6 billion people around the globe with its
renowned brands.
The company has long relied on consumer incentive campaigns for
rewarding customer loyalty, but traditional paper cheques have proven
costly and inefficient in rebate and money-back guarantee
programmes. P&G decided that issuing prepaid debit cards in place
of cheques would drive greater productivity, while also reinforcing their
brands in the minds of consumers.
P&G turned to long-time banking partner, Citi, to implement a prepaid
card solution to replace paper-based rebate and money back
guarantee payments. P&G worked closely with Citi Prepaid Services
to develop a programme customised to meet the company’s unique
requirements. Once in place, the prepaid card programme was
universally accepted both internally and externally by consumers as a
superior payment method.
As Steve Ader, GBS-Banking Service Manager explains, “now, when
P&G sends a rebate or money-back guarantee payment, we do so
at a lower cost while benefiting from the opportunity to promote and
reinforce our brands with our customers.”
Plus, the streamlined payment method allows for faster processing,
and payment delivery to the incentive recipient is much quicker.
Because paper processes have been migrated to electronic
means, the prepaid card programme enables P&G to more easily
reconcile incentive payments.
Reports generated by the
programme allow P&G to track payments more easily. The
company’s internal processes for payment issuance and problem
resolution are now far easier to manage. As a result of the
overwhelming success of the programme, P&G has expanded the
use of prepaid cards to market research payments, sales
incentives, product testing and consumer reimbursements, as well
as payments associated with special events.
Since implementing the programme, P&G has significantly reduced
the number of paper cheques it issues by almost half. This forwardthinking initiative has led to dramatic cost savings measured at
approximately 65% for the company; in the two years since P&G
started issuing cards they have realised savings between $2.5$5m. The card programme is one-third the cost of issuing paper
cheques and has proven to be a cost-effective alternative that has
helped streamline P&G’s payment operations. Now there is less
time spent time on production, reconcilement, and cheque
issuance, allowing P&G to reallocate valuable resources to more
strategic initiatives that further benefit the company’s bottom line.
Steven Elms, Citi and David Swainston, Procter & Gamble
And, by eliminating the issuance of a large number of incentive
cheques and replacing them with cards, P&G has substantially
reduced the risk of fraud.
The majority of cards issued by P&G to consumers are produced on
25% recycled composite card stock. P&G celebrated its 175th
anniversary in 2012, a milestone that very few companies have
achieved. Another equally impressive milestone was also achieved
that year, as P&G passed the million card issuance mark. As a result
of the overwhelming success of this programme, P&G is currently
exploring how prepaid cards can be further utilised across more
brands and additional payment opportunities, domestically as well
as globally.
While not all countries, regions and cultures are comfortable with
cards in general, acceptance continues to grow offering greater
opportunities to expand their use. P&G continues to explore new uses
for prepaid cards, such as with payments associated with special
events. An example of this can be found in P&G’ s recent, highly
successful global ‘Thank You Mom’ campaign, the largest such
campaign in the company’s history.
Ader concludes, “as an Olympic sponsor, P&G demonstrated
support for athletes, their mothers and families through brand
specific promotions geared toward raising awareness of the
commitment and sacrifice athletes and their families make when
undertaking the arduous pursuit of Olympic perfection. With this
prepaid card programme in place, P&G now has the ability to deploy
cards whenever and wherever this powerful application warrants.”
P&G serves approximately 4.6 billion people around the world with its brands. The company has one of the strongest
portfolios of trusted, quality, leadership brands, including Pampers®, Tide®, Ariel®, Always®, Whisper®, Pantene®,
Mach3®, Bounty®, Dawn®, Fairy®, Gain®, Charmin®, Downy®, Lenor®, Iams®, Crest®, Oral-B®, Duracell®, Olay®, Head
& Shoulders®, Wella®, Gillette®, Braun®, Fusion®, Ace®, Febreze®, Ambi Pur®, SK-II®, and Vicks®. The P&G community
includes operations in approximately 75 countries worldwide.
treasurytoday Adam Smith Awards © August 2013 | 5
Highly commended
Best Card Solution
Home Development Mutual Fund
Rey Malaya, Vice President, Fund Management Group, Makati City, Philippines
The Home Development Mutual Fund or more popularly known as the
Pag-IBIG Fund, is a 33-year-old government institution in the
Philippines and was established to develop a sound and viable mutual
provident savings system suitable to the needs of the employed and
to motivate them to better plan and provide for their housing needs. It
was created through a series of Presidential Decrees, Executive
Orders and Republic Acts, the latest of which is Republic Act 9679.
At present membership to Pag-IBIG is mandatory for all Filipino
employees including Overseas Worker and the informal income
sector. All active members have access to the Fund’s different benefit
programmes, which include short-term loan programmes, where
financial assistance is provided to members to address their immediate
needs and its provident savings programme where members’ savings
earn annual dividends; and its housing loans which are offered at very
affordable interest rates.
Pag-IBIG has over 12 million members worldwide, and disburses
billions of pesos in short-term loans yearly. In 2012 alone Pag-IBIG
released P51.4 billion under its Multi-Purpose and Calamity Loan
Programmes. A percentage of the loan proceeds are released through
paper cheques. These paper cheques are prepared manually, often
requiring the members to go back to the Pag-IBIG Fund office to pick
them up. Moreover, cheques are subject to a minimum of three days
clearing, further delaying members’ access to much needed funds.
Considering the Fund’s objective of moving towards a paper-free
environment, and after a thorough evaluation process, Citi was
mandated by the Pag-IBIG Fund to provide them with fully
customised Pag-IBIG prepaid cards for disbursement of short-term
loan proceeds and provident benefits, as an alternative to the
traditional cheque payments.
Citi’s prepaid card system was the only one that could provide the
Pag-IBIG Fund with instant issuance capability, allowing Pag-IBIG to
issue the cards to members immediately on site during the loan
application process. Upon loading of the cards, the cardholders are
notified instantly through SMS, giving them access to funds through
any Visa/MasterCard point of sale terminal or through various ATMs
nationwide. Online access and a 24/7 Interactive Active Response
System is available to cardholders for verification or clarification. The
solution has improved efficiency and lowered costs as various manual
processes are now automated. Pag-IBIG can also have access to
data on how and where members spend the funds, potentially giving
Pag-IBIG greater insights as to what type of loans or benefits would be
preferred by its members.
As Rey Malaya, Vice President, Fund Management Group points
out, “Pag-IBIG’s brand image has been greatly enhanced by the
customised Pag-IBIG Prepaid Card, as well as by the discounts
members can enjoy in various establishments.”
PagIB IG
FUND
Rey Malaya, Home Development Mutual Fund and Barbara Harrison, Citi
Citi’s prepaid card solution has also met the objectives of the Fund in
moving towards a less-paper operating environment. In addition to
instant issuance capability, Citi also integrated with Pag-IBIG Funds’
in-house system, so that cardholder information as well as the
amounts to be loaded into each card could be automatically interfaced
into Citi’s back-end systems, thereby increasing security and reducing
manual processes. Pag-IBIG members can inquire about their card
balances and transaction history by calling Citi’s Interactive Voice
Response System or by accessing the information online.
Malaya concludes, “as a value added benefit, Citi partnered with
Visa to provide discount coupons included in the card envelopes,
giving members discounts or complimentary offers at selected
partner merchants.”
The Pag-IBIG Citi prepaid card provides for a faster and more
convenient and safer way for Pag-IBIG short-term loan borrowers to
receive and use their loan proceeds – adhering to the Fund’s
commitment of bigger, better and faster service. This is exactly the
kind of beneficial consequence that results when government and the
private sector work towards a goal.
Home Development Mutual Fund, popularly known as Pag-IBIG (Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya
at Gobyerno) Fund created under R.A. 9679, is a government financial institution that operates a national savings system
for private and government employees and other earning groups. It provides short-term benefits and affordable shelter
financing for Filipino workers.
6 | treasurytoday Adam Smith Awards © August 2013
Highly commended
Best Process Re-engineering Solution
Thomson Reuters
Dominic Little, Senior Business Analyst and Banking Implementation Manager, and Gouse Basha Shaik, Senior
Manager, Enterprise Solutions Design Team, London, UK
The Consolidated Receivables Project has delivered end-to-end
automation for Thomson Reuters and has optimised its cash
management. A global team from Thomson Reuters, Citi and Deloitte
(which supported the pilot) implemented a global integrated solution
that has automated Thomson Reuters’ banking processes; enabling
automatic allocation of customer payments to customer open
accounts receivables (AR) accounts based on remit information and
also auto reconciling of bank statements to general ledger accounts.
Major benefits are:
•
Auto payment lots are generated from host-to-host
Consolidated Receivable Report (CRR) file transfers from Citi to
Thomson Reuters’ server. This has reduced the amount of
manual work required to create payment lots in SAP. As a
result, efficiency, accuracy and the turnaround time of recording
the cash in AR have improved.
•
Implementation of auto application parsing rules for remittances
(where customer/invoice details are available) has also reduced
the manual effort required for cash allocation to the
respective invoices.
•
For EMEA and Latin America the total volume of transactions
processed on the consolidated receivables file rose from 2,146 in
January 2012 to 9,299 in March 2013.
•
Thomson Reuters experienced an auto upload percentage of
93-95% for EMEA and 40-50% auto application of the auto
upload based purely on direct invoice application.
•
Centralisation of cheque accounting through lockboxes has
resulted in fast fund clearing. Before this project the lockbox
process was cumbersome, as allocation details were on the
scanned copy of a cheque.
•
Auto reconciliation of payment lots using electronic bank
statements has reduced the time spent on bank reconciliation.
It has enabled it to concentrate on open item management and
resulted in fewer open items compared to the legacy process.
•
Introduction of electronic bank statements and a bank clearing
account concept means Thomson Reuters’ bank reconciliation
has been streamlined into a common process across the UK
and Europe.
•
Executing the direct debit (DD) solution has improved the
turnaround time on DD processing and also enhanced
mandate management.
As Dominic Little, Senior Business Analysis and Banking
Implementation Manager, explains, “overall, the solution has given
us greater visibility of our receivables and provided a clear audit trail
for a wide range of payment types. As a result, the company’s
financial control has been considerably improved.”
Citi, which is Thomson Reuters’ primary bank in EMEA and Latin
America, devised a consolidated receivables solution that gives the
Dominic Little, Thomson Reuters and Barbara Harrison, Citi
company an end-to-end automated flow for cash management.
Inbound interfaces were set up with the bank to pull electronic
bank statements and consolidated receivables files throughout the
day (file availability dependent on the region’s time-zone). These
files incorporated all payment types – including wire, ACH, cheque,
DD and Boleto (in Brazil) – and automated general ledger postings
and auto allocation to the customer account. Outbound interfaces
were also designed to send Citi information so that it could process
DDs and Boletos.
Thomson Reuters issues an invoice to its customers, which
generates an attached Boleto with a unique number (similar to a
barcode). Thomson Reuters informs Citi in advance of Boletos that
will be received that month. Citi’s interface passes the Boleto
information to Thomson Reuters in the same electronic file as all
other payment data. Another outstanding feature of the solution is
that the technical teams, which are located across the globe, were
effectively co-ordinated despite time zone differences to ensure
successful implementation across different phases. This strong
support continued after the project went live.
As Gouse Basha Shaik, Senior Manager, Enterprise Solutions
Design Team, concludes, “regular calls with Citibank helped us to
address outstanding issues while a dedicated customer service
representative for Thomson Reuters helped to identify and fix any
problems immediately, and consequently minimised any impacts.”
Thomson Reuters is the world’s leading source of intelligent information for businesses and professionals.
We combine industry expertise with innovative technology to deliver critical news, information and solutions
to decision makers in the financial and risk, legal, tax and accounting, intellectual property and science, and
media markets, powered by the world’s largest international news organisation.
treasurytoday Adam Smith Awards © August 2013 | 7
Highly commended
Best in Class Benchmarking
Danone Asia
Yannick Gehin, Regional Treasurer Asia Pacific, Singapore
With the help of Citi, Danone participated in the People’s Bank of
China’s (PBoC) newly launched pilot scheme for renminbi (RMB)
cross-border lending. By pioneering RMB cross-border lending,
Danone has been able to complete a critical step in its expansion
plans by adding RMB to its treasury management currency basket,
and thus leverage surplus RMB in China to finance the net debt of
its regional treasury centre (RTC) in Singapore. The structure
optimises Danone’s treasury activities to realise improved global
liquidity management and greater efficiency.
The transaction sets an important precedent both for Danone and
other multinational corporations (MNCs) seeking to include RMB in
their global cash pools and optimise liquidity management. It is
also a valuable first step in becoming familiar with RMB as an
operating currency offshore. By participating in the PBoC’s newly
launched pilot scheme for RMB cross-border lending, Danone has
positioned itself as a pioneer in RMB cross-border lending and has
been able to leverage surplus RMB in China to finance the net debt
of the group’s regional treasury centre in Singapore.
As Yannick Gehin, Regional Treasurer Asia Pacific, explains:
“Danone has a long-term ambition to enhance global liquidity
management and had built up a large onshore RMB surplus in
China. Under current regulations, it was not possible to leverage
this surplus for inter-company financing purposes. In terms of the
pilot scheme, there were a variety of pre-requisites for RMB crossborder lending that Danone needed to satisfy.”
“
Steven Elms, Citi collecting on behalf of Yannick Gehin
dedicated accounts in RMB. The loan was then swapped into US
dollar, the functional currency for its Singapore-based holding company.
The time taken to implement this
solution and realise the benefits has
been remarkable.
”
An eligible company must be a registered company in a pilot city,
which was Shanghai in Danone’s case, and companies could lend
directly or by using funding in its cash pool. They also need to have a
structural cash surplus in RMB with no outstanding RMB-denominated
borrowings. In order to adhere to transfer pricing regulations, the
interest rate was often set with reference to the onshore PBoC
benchmark deposit rate. Inter-company contracts were drawn up
between Danone’s group offices in China and Singapore with
Danone conducted the first transaction under the pilot scheme on
24th January 2013, having obtained approval within three months of
Citi initially approaching the company about the pilot scheme. The
rapidity with which the transaction was concluded under the pilot
scheme and the ability for Danone to achieve its global liquidity
ambitions was due largely to the effective communication between
Citi, PBoC and Danone.
Gehin concludes: “The time taken to implement this solution and
realise the benefits has been remarkable.”
The transaction sets an important precedent both for Danone and
other multinational corporations seeking to include RMB in their
global cash pools and optimise liquidity management. It is also a
valuable first step in becoming familiar with RMB as an operating
currency offshore.
Danone is a multinational company (MNC) operating in the food industry. The company holds top positions in healthy
food through four businesses: Fresh Dairy Products, Baby Nutrition, Waters and Medical Nutrition. Danone has over 190
production plants and around 102,000 employees. In 2012, the company generated sales of over €20 billion, of which
more than 50% were in emerging countries.
8 | treasurytoday Adam Smith Awards © August 2013
Winner
Best Foreign Exchange Solution
Xerox
Stuart Kirk, Head of Global FX Risk Management, Dublin, Ireland
With over 25 years of FX experience, Stuart Kirk, Head of Global FX
Risk Management, was able to identify some of the key areas of risk to
the firm and potential shortcomings. “We needed to do three things,”
says Kirk, based at Xerox’s Treasury Centre in Dublin. “We need to
look at our exposures on a consolidated basis and quantify the total
impact of FX volatility on our earnings; to increase the transparency of
our hedging programme to ensure cost/risk optimisation; and to come
up with a more systematic approach to FX hedging, which ensures we
consistently meet the corporation’s risk management objectives. The
project was about clarity, measurability, and the ability to benchmark
performance against alternative solutions.”
Xerox engaged CitiFX Corporate Solutions to help design a rulesbased programme which was transparent, easy to implement and
which would more closely align its hedges with its exposures thus
reducing the period-on-period impact of FX volatility on its bottom line.
Treasury back-tested the solution against 20 years of data to
demonstrate it improved Xerox’s profitability by reducing risk and
minimising hedging costs. The economic and risk management
benefits of the solution were compelling and convinced Xerox’s
treasurer and CFO to adopt it. Xerox policy dictates that all long-term
hedges must qualify for hedge accounting treatment so forecast
accuracy was paramount.
“The solution has smoothed the impact of currency volatility on
our results while enhancing transparency and cost effectiveness,”
says Kirk.
The value of the solution has been particularly evident in the past
12 months as the yen, to which Xerox has significant exposure, has
experienced some sizeable changes in value. The solution has
enabled Xerox to successfully navigate through volatile market
conditions while achieving a better all-in hedge rate and large
cost savings.
The key drivers of this innovative dynamic layered hedging (DLH)
solution are relative valuation, which compares current levels of a
currency pair to its fair value, and cost of hedging, which is driven by
carry, ie the forward point adjustment, and volatility, which dictates the
option premium. Using both these inputs, the model will select the
maturity of each hedge and the optimum hedging instrument. For
example, if a currency is overvalued and carry is in the company’s
favour, the model will favour hedging more now and less later using
forwards. If the currency is undervalued and carry is negative, the
model favours hedging less now and more later via options. In
between, the model selects the appropriate mix. Hence it gives the
company the benefit of a systematic programme which guarantees a
pre-agreed level of hedging but allows the flexibility to adjust the
maturity of the hedges or the type of instrument used according to
prevailing market conditions. With regard to relative value, uniquely, the
DLH strategy incorporates Citi’s World Exchange Rate Model (WERM),
which is a new proprietary measure of fair value exchange rates.
Cormac Donohoe, Citi and Stuart Kirk, Xerox
The final piece of the jigsaw was to design a system which could
deliver the product. Again Xerox and Citi collaborated to come up
with the CitiFX Exposure Management toolset which is accessed via
Citi’s corporate FX portal, CitiFX Pulse. This allows Xerox to input
exposures, run its strategy, execute and confirm trades and monitor
changes on a single platform. The system links directly to Xerox’s
treasury management system (TMS), allowing forecasted exposures
and existing hedges to be uploaded seamlessly.
The main benefits are:
•
Systematic, rules-based hedging programme which is closely
aligned to underlying exposures and is clearly understood by
senior management.
•
More effective risk management with built-in flexibility to
provide potential for real economic benefit.
•
Robust relative-value model based on 20 years of
back-tested data.
•
Simple to implement and track performance.
As Kirk concludes: “It eliminates much of the emotion and randomness
in the hedging decision by introducing a pre-agreed set of metrics
designed to optimise both the hedge ratio and the hedging instrument
based on valuation and carry.”
Since the invention of Xerography 75 years ago, the people of Xerox have helped businesses simplify the way
work gets done. Today, we are the global leader in business process and document management, helping
people be more efficient so they can focus on their real business. Headquartered in Norwalk, Conneticut, US
the company has more than 140,000 Xerox employees serving clients in 160 countries.
treasurytoday Adam Smith Awards © August 2013 | 9
Highly commended
Asia Pacific Regional Award for Best Practice
PepsiCo India Holdings
Deepak Kini, Region Reporting and Shared Services Director, Haryana, India
India is expected to continue to be on the
growth curve with most forecasts pegging
GDP growths between 7%-8% over the next
five years. PepsiCo India Holdings Private
Limited (PepsiCo) has grown into one of the
largest and fastest growing food and beverage
businesses in India.
PepsiCo worked with Citi on a re-engineering
project which facilitated end-to-end seamless
automation of receivables processing in a
scalable and sustainable manner. Over the
past 18 months, PepsiCo has realised benefits
in terms of liquidity management, cash flow
planning and transaction reporting in India, a
market of high strategic importance for the
company. PepsiCo Senior Management is
benefiting from risk mitigation and improved
compliance too. Significant administrative
cost savings have also been realised, which
has facilitated the reduction of 6,650 man
hours once the accounting of all electronic
transfers was centralised and then moved
from a manual upload process to a host-tohost structure. Treasury has improved cash
forecasting and fund planning, resulting in a
reduction of bank charges by $120k.
Deepak Kini, PepsiCo India Holdings and Steven Elms, Citi
Sales and marketing have seen the turnaround on deliveries reduce
and working relationships with over 3,000 distributors have also been
enhanced as a result of faster turnaround times and automated realtime alerts via email and SMS for payments. Migration of all non-core
activities was moved to the shared services centre (SSC) to automate
cash management processes and reduce the manual risks.
As Deepak Kini, Region Reporting and Shared Services Director
states, “this solution had to be designed to address challenges
specific to India, such as a predominantly paper-based economy,
complex regulatory environment varying across states, vast
geographical spread and cultural diversity.”
initiation of payment by the final consumer to reconciliation of the
transaction in its global records.
As Kini describes, “we first moved the accounting centrally to
PepsiCo’s SSC by requesting Citi to send the MIS only to the SSC.
These transactions used to be accounted for manually at the SSC and
the bank reconciliation was also manual. We then started getting files
from Citi which used to get uploaded. To improve the process further,
we moved the accounting of the transaction to a host-to-host
structure. Within 60 minutes of the funds hitting PepsiCo’s account
with Citi, the accounting entry in SAP is automatically passed and the
goods can be shipped directly to the distributors.”
Implemented in a timeline of only one and a half years, the solution
allowed PepsiCo to re-engineer its workflow processes, while also
dramatically cutting costs. An innovator in introducing host-to-host
functionality in India, the migration has resulted in the simplification
of operations, standardisation of processes across the country and
automation of the collection process.
Bank reconciliation is now automated and since the accounting
happens through an automatic bank feed, there are no open items in
the reconciliation for all e-Collect transactions. Citi designed the
system architecture and data workflow where data travels in a secure
environment between Citi and PepsiCo. An e-Collect system with
automatic remitter identification for the PepsiCo sales and finance
team enabled automatic reconciliation in SAP and the sending of
confirmations of credit via SMS or email to dealers and distributors
The re-engineering strategy adopted by PepsiCo was an endeavour
to improve treasury functions, working capital management and
drive efficiencies in the business. This involved continually rethinking,
automating or outsourcing numerous end-to-end steps from
Kini concludes, “the host-to-host migration has resulted in the
simplification of operations, standardisation of processes across the
country and across the beverages and foods businesses and
automation of the collection process.”
PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio
that includes 22 brands that generate more than $1 billion each in annual retail sales. Our main businesses –
Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola – make hundreds of enjoyable foods and beverages.
10 | treasurytoday Adam Smith Awards © August 2013