The challenge:

The global scale of operations at HDS has created numerous challenges for its corporate treasury team – one of which is managing a decentralised transaction process, which includes numerous banking relationships, each with its own set of requirements. In Asia Pacific, HDS worked with seven banks and had a total of 32 bank accounts, with its shared service centre (SSC) overseeing these accounts and managing the banking relationships. It also had a manual accounts receivable (A/R) and accounts payable (A/P) process that resulted in significant reconciliation, payment and cash management challenges, including frequent delays. In addition, transactions had to be entered manually into the company’s Oracle ERP system which was time consuming and did not allow for timely and accurate visibility.

“The process did not enable real-time visibility into bank balances, making it difficult to accurately monitor and manage cash flow, as well as prepare enterprise-wide consolidated reports,” says Brian King, Senior Director, Assistant Treasurer at HDS. “Our goal was therefore to consolidate banking partners in Asia Pacific and leverage best banking practices to streamline processes and increase efficiencies.”

The solution:

To address these challenges HDS implemented a solution with J.P. Morgan that included a more effective cash management structure with host-to-host connectivity, centralised account management, simplified bank account documentation and best practices for yield enhancement on excess cash through a Liquidity Management Account.

J.P. Morgan also provided HDS with a SSC solution with a single point of contact, as well as global coverage for key locations, and a differentiated service offering designed to make operations easier and more efficient.

With host-to-host connectivity utilising the XML ISO 20022 file format from Oracle, supplemented by J.P. Morgan’s ACCESS Next Generation platform, HDS was able to use a secure, single point of access to effectively manage treasury operations online and provide a secure connection to the bank’s global processing platforms. HDS is now able to leverage the bank’s efficient and flexible high-volume payment and reporting services. ACCESS Next Generation has also provided HDS with integrated payment and reporting capabilities and unique features for user administration.

“The regional banking solution was first implemented as a pilot programme in Australia, and subsequently in the remaining countries in three staggered waves,” explains King.

Best practice and innovation:

By leveraging best practices for its banking procedures and consolidating its banking relationships, the HDS corporate treasury team was able to significantly streamline processes and improve the efficiency of its SSC in Malaysia. The host-to-host connectivity, which utilises the XML ISO 20022 file format from Oracle, provides streamlined payments and reconciliation efficiencies. HDS also relies on J.P. Morgan’s ACCESS Next Generation platform, which allows HDS to effectively manage treasury operations online.

In doing so the HDS treasury team has been able to consolidate its banking platforms and accounts and thus reduce its bank fees. Other financial benefits include increasing its annual interest income by US$700,000 and reducing its trade letter of credit costs by US$240,000 a year.

The solution has also allowed the treasury to replace cumbersome manual invoice processing with highly efficient, fully automatic host-to-host electronic processing through the SSC for all HDS Asia-Pacific locations including China, reducing the number of touch points on payments and delivering greater control. This has reduced payment processing time, turnaround time and bank account reconciliation time.

“The project was completed on time, meeting the aggressive 15-month target, on budget, and all of the objectives set by the team were successfully achieved,” says King.