P&G Global Business Services (GBS) and Citi worked together on a breakthrough working capital management project called ‘Regional Interest Optimisation’ that was able to look beyond country relationships and recognise the broader scope of the partnership across the region. The team started by looking at overall regional balances being maintained by P&G with Citi and comparing market pricing that P&G was getting for investments via manual placement.

This investigation highlighted that yields being provided to P&G balances in Citi accounts varied across markets depending on elements such as the individual amounts maintained per market and the restricted nature of the market.

With this P&G had to devote manual efforts across the region to competitively bid and place funds for investment. This manual work effort was inefficient when compared to the gain of the bidding and manual placements. Citi also faced the loss of balances during the competitive bidding process.

The solution was for both parties to work together to look at overall regional balances and agree on rates (based on market reference benchmark rates) considering P&G’s overall group balance (in a notionally selected currency) vs individual local currency amounts per market.

“This unique approach to a regional mutually beneficial partnership has enabled P&G to reduce manual treasury process inefficiencies, while maximising yield enhancement across the Asia Pacific region.”

The rates agreed were sufficiently competitive to ensure P&G could simply leave a portion of its excess working capital in its accounts with Citi in the local market, rather than the competitive bid and placement process. The solution is completely automated.

The solution provides:

• An interest enhancement solution for overall yields on credit balances, where allowed by local regulation, without any disruption to the existing account structures maintained by P&G with Citi in the Asia Pacific region.

• An end-to-end treasury solution for P&G, that maintains visibility and mobility, while enhancing regional yield optimisation.

• Improved process efficiency at P&G by reducing manual effort on performing competitive bidding for money market placements.

• Competitive pricing for Citi to increase their portion of P&G’s excess working capital funds.

As Remulla remarks, “Our regional group notional balance position is computed automatically and interest is credited monthly/quarterly in the local markets where applicable. Overall, the effort has positive results for both parties, with incremental interest income and reduced manual effort for P&G and additional funds on deposit for Citi.

Asia was the first P&G region globally to utilise the interest optimisation solution. The solution is now being rolled out globally through P&G’s Global Banking team working in conjunction with the Global Citi team for the remaining regions.

The solution is a testament to the partnership. Through this project P&G was able to generate incremental interest income, and minimise the manual work effort involved in investing working capital excesses in each market across multiple currencies in the region.

This unique approach to a regional mutually beneficial partnership has enabled P&G to reduce manual treasury process inefficiencies, while maximising yield enhancement across the Asia Pacific region,” says Remulla.