Over the past few years, Firmenich’s treasury had undertaken a great deal of work to centralise its euro flows via a cash concentration and pooling structure. A multi-currency inter-company invoice netting system had also been deployed realising considerable benefits.

However, as Hervé Corré, European Regional Treasurer points out “Firmenich’s international dollar flows were even more significant than our euro flows and we wanted to get the same benefits for our global dollar liquidity as we had achieved for our euro flows in Europe.”

In 2009, Firmenich SA implemented a global US dollar cash concentration/pooling structure across eight countries in four regions. The solution was developed in conjunction with RBS, with the prime objectives of:

• Centralising the bulk of the company’s global dollar cash positions on a daily basis, with consequent control, transparency and efficiency benefits.

• Minimising idle balances and pockets of cash held on local accounts.

• Increasing the company’s ability to manageits funding internally, reducing credit requirements.

• Bringing the bulk of the company’s global cash flows into London, to take advantage of the most beneficial cut-off times in Europe.

• Positioning the treasury for further efficiency gains and incremental projects in the future.

The structure automatically centralises US dollars from the different locations into a master account in London. This is done on a daily basis, leaving the local balances at zero at close of business, re-funding the accounts automatically next day as required.

US dollars are concentrated from Firmenich’s operations in the US, UK, France, Belgium, Switzerland, Indonesia, Singapore and Australia. Surplus funds from local accounts are moved into an in-country concentration account. If the local account is with Firmenich’s international cash management bank (RBS) an automated cross-border sweep is made, transferring the concentrated balance to London. RBS applies same day value to sweeps into the UK master account, even though cross-border payments from multiple regions are involved.

Where local accounts are with a different banking provider, a multi-bank cash concentration service is used, which involves an MT101 SWIFT message.

Because the sweeps are being made between different Firmenich entities, inter-company loans are created which are subject to reporting requirements.

As with the physical sweeps themselves, tracking for reporting purposes is fully automatic and all necessary reports and transaction details are available to Firmenich through RBS’s Shadow Administration Tool service.

This cutting edge project demonstrates that a medium-sized, relatively decentralised company which has a small and lean treasury operation can still achieve global treasury best practice on a par with the largest multinationals and without high project risks and costs.

As Corré concludes, “With this strong foundation and structure now in place, we see opportunities for further efficiencies – for example, establishing domestic cash pools in swiss francs and sterling and ultimately, putting in place a multi-currency notional pooling structure.”