Procter and Gamble, Highly Commended, Global Liquidity Management

Published: Aug 2011

This multi-currency notional pooling structure allows Procter and Gamble (P&G) WE Operations to optimise its transaction processing costs throughout its Western European businesses, with local payments made locally, while concentrating excess liquidity. This enables the company to minimise, and potentially eliminate, bank overdrafts and optimise its yield on group cash, which is moved to a global level.


Photo of Peter Cunningham, Citi and Peter Cowling.

Peter Cowling

WE Front Office Treasury Manager

Four billion times a day, P&G brands touch the lives of people around the world. The company has one of the strongest portfolios of trusted, quality, leadership brands, including Pampers®, Ariel®, Always®, Pantene®, Mach3®, Fairy®, Pringles®, Lenor®, Iams®, Crest®, Oral-B®, Duracell®, Olay®, Head & Shoulders®, Wella®, Gillette®, Braun® and Fusion®. The P&G community includes approximately 127,000 employees working in about 80 countries worldwide.

in partnership with

Whilst intra-day clearing lines are required to ensure smooth and timely processing of commercial flows, P&G WE Operations has been able to reduce or eliminate overnight borrowing as operating cash balances are up-streamed and all payments activity centrally funded through the multi-currency notional pool in London.

Procter and Gamble WE Operations has significantly increased its flexibility to recycle cash in Western Europe, even when cash is not in its notional currency pool. The pooling solution enables the company to use cash where it is most needed irrespective of internal cut-off times between the regional operations and group treasury. Moreover, the structure has introduced greater flexibility into P&G’s WE Operations ability to send US dollars to its global cash pool as part of its ‘go with the sun’ liquidity structure; the window to manage this liquidity has increased from 11am to 3pm each day.

“Around $150,000 a year in yield pick-up has been generated as a result of liquidity optimisation – a noteworthy achievement in the current interest rate environment.”

Peter Cowling explains “from day one, P&G has realised benefits from its multi-currency pooling structure. Around $150,000 a year in yield pick-up has been generated as a result of liquidity optimisation – a noteworthy achievement in the current interest rate environment. The company has also increased by around $5m per day its contribution to the global treasury cash pool. As a direct result of the project, it has proved possible to reduce Front Office Treasury staffing in Western Europe by 25% within six months”.

Procter and Gamble’s WE Operations multi-currency pool has significantly simplified its management of exotic currencies. The solution allows balances to be offset across a basket of 15 currencies, giving it the flexibility to exit individual currencies in a structured way – a crucial consideration for relatively thin markets.

The project has required no increase in overnight credit lines. Indeed, it provides a platform that gives the company the visibility to reduce its overall credit lines. From day one, the company has enhanced yield, lowered costs and created a better relationship with its global treasury cash pool.

Procter and Gamble WE Operations operates multiple currency accounts across 15 currencies, moving around an average of $150m equivalent a day. Historically these accounts were managed individually with draw-down and investment on an individual currency basis. As a result, there were positive and negative balances across the 15 currencies with Citi London, leading to operational inefficiencies in centralising excess cash to the global company. There was also a need for increased FTE in order to manage the accounts on an individual basis. In order to implement the multi-currency notional pool, new accounts were opened for Czech koruna, Polish zloty and Hungarian forint. Local currency accounts in London are linked to local Citi branch accounts with an automatic funding mechanism in place to meet their needs.

The company’s goal was to optimise group liquidity, enhance visibility and control over cash, and drive operational efficiency in daily company funding and cash repatriation. Procter and Gamble WE Operations determined that the pricing and structure of Citi’s multi-currency notional pooling offering was superior to other banks and selected Citi for the project.

Peter Cowling concludes “Our multi-currency notional pooling structure has demonstrated best practice and, as a result, the company is looking to extend the concept across its wider bank group through multi-bank target balancing in Western Europe. The company is also seeking to apply the structure to other regions including Central and Eastern Europe, the Middle East, Africa and Asia”.

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