The challenge:

Dimension Data held funds in a multitude of accounts in each of the countries it operates in, which made it difficult to obtain timely information about the company’s cash balances. The company also suffered from processing inefficiencies as a result of keeping its excess cash scattered across the region in multiple accounts, which was not to the benefit of the company on a global basis.

The company wanted to establish an optimal cash and liquidity management structure so that any excess cash could quickly be made available to its headquarters, while still leaving its local entities with full control over their own funds. It also wanted to enhance and automate its processes to increase efficiency of both its treasury staff and its working capital.

The solution:

Dimension Data achieved an optimal cash and liquidity management structure across 13 Asia Pacific markets by consolidating its bank accounts and centralising all its surplus cash across the region into a notional pool.

It used a centralised approach to coordinate documentation during the transition to the centralised structure and to manage liquidity on an ongoing basis. Each of its local entities opened both US dollar and local currency accounts with J.P. Morgan branches in their respective home countries, and local currency accounts are used for all payments, including payroll and tax.

“We also opened mirror accounts in Singapore in the names of the local entities and automated daily sweeps from these accounts, which resulted in a concentration of balances in Singapore,” says Brian Howard, Group Treasurer at Dimension Data Holdings. “These balances are being offset against each other, across multiple entities and multiple currencies, and any net excess cash is swept into a global pool in London.”

The solution has significantly simplified management of funding from the liquidity pool, streamlined bank account management by reducing the number of payables accounts, and reduced risk as a result of the central management of bank accounts and payments.

Best practice and innovation:

The successful implementation of a highly ambitious account structure that was designed to reduce the number of bank accounts and establish a new pooling structure, resulted in Dimension Data vastly increasing efficiency and financial performance through better cash visibility, improved forecasting and elimination of idle cash.

The implementation of the multi-entity, multi-currency notional pool in a global pooling master account brought Dimension Data’s treasury fully in line with best-in-class operations, simplified and streamlined cash management operations, and centralised all of its surplus cash from across Asia so that funds could be deployed optimally for the benefit of the entire company on a global basis.

“The solution has enabled us to manage our people far more effectively, deploy our cash much more efficiently, and increase our profitability by reducing our borrowings as well as increasing yield on our cash,” concludes Howard.