The SWIFT connection offers a single connection, single data network and single security standard, so that operational risk is mitigated while providing better visibility and control.
Photo of Martin Barrios, Bank of America Merrill Lynch and Luz María Chávez Alcántar, Grupo KUO.
Grupo KUO is a leading industrial conglomerate in Mexico, with annual sales of approximately MXN$33.6bn during 2016, exports to around 70 countries across every continent and approximately 20,000 employees. Its current business portfolio includes six strategic business units: pork meat, herdez del fuerte (brand processed foods), synthetic rubber, polystyrene, aftermarket and transmissions.
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SWIFT connectivity transforms treasury at this Mexican company
As part of the company’s expansion strategy, a global treasury platform was needed that leveraged an optimal account/banking structure and was able to connect with multiple banks worldwide via a single communication channel — SWIFT. Before the implementation of SWIFT, KUO had multiple host-to-host bank connections, making it difficult to implement new layouts for payment instructions and incorporate new business units.
The SWIFT connection offers a single connection, single data network, single security standard, single format and also operational risk is mitigated while providing better visibility and control. The new global treasury structure is multi-lingual, multicurrency and provides KUO with the power and ability to easily change banks as needed.
Bank of America Merrill Lynch (BofAML) articulated the benefits of implementing this new SWIFT solution. Luis Eduardo Diaz Loera, Financing and Treasury Manager at KUO explains, “the bank was a key partner in this project and from the beginning they attended our conversations with the SWIFT team. BofAML’s experience with SWIFT was helpful for the success of this solution, which allows us to connect to any bank in the world, furthermore the flexibility and efficiency of this global solution resulted in substantial cost savings for us.”
Best practice and innovation
Over the last two and a half years, KUO has transformed its treasury process by implementing a strategic project plan ending with SWIFT connectivity.
Treasury has made a major breakthrough by obtaining process enhancement, innovation and standardisation of its companies inside and outside of Mexico. This came with enhanced control and visibility of its global cash as well as management of its companies’ treasuries around the globe. SWIFT connectivity provides better information for the decision-making process and improve security controls through its secure and robust technology framework. Furthermore, there is process automation with the flexibility to add and remove companies and banks as needed.
KUO developed a tailor-made solution to replace its existing treasury system with the SWIFT network as the primary enabler. This is a major innovation that has enhanced processes and standardisation of KUO’s companies in and out of Mexico. SWIFT connectivity has changed the cash management process and this best in class solution offers scalability so that KUO can continue growing at the pace that the industry demands and can expand globally and remain fully aligned.
KUO is provided with the flexibility to add/remove companies and banks as needed, increasing its negotiating power with banks. High-tech operations have been introduced, improving security controls and providing better information for decision making. With a single connection and a single data network, operational risk is mitigated.
Diaz Loera concludes, “This SWIFT solution differentiates KUO in the market, as its successful execution has enabled our treasury area to share best practices with our peers, paving the way for other corporates to achieve transformation of their treasury functions.”
The SWIFT solution offers many tangible benefits to KUO.
Visibility of cash is enhanced via a single platform, allowing for improved cash forecasting. High levels of standardisation are achieved and the payment process is automated.
This global solution offers better pricing due to transactional cost savings with ROI of 229% over a five-year period. Operating costs are reduced, with 35% of bank accounts closed.
There is cash management independence with increased bargaining power with banks due to SWIFT’s flexible banking connection.
Enhanced data security through SWIFT’s secure and robust technology network.
Luis Eduardo Díaz Loera
Financing and Treasury Manager
Luis Eduardo Díaz Loera is responsible for the corporate treasury of Grupo KUO, with over eight years of experience implementing global solutions for the company. A leader in the process to modernise the treasury model for KUO including; a deep change in the TWS achieving a highly-automatised cash management process.