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Best Cash Management Solution Highly Commended: Luxottica Group

Published: Jul 2014

Chris Jameson, Bank of America Merrill Lynch collecting the Award on behalf of Marco Bigatti and Eleanor Hill

Photo of Chris Jameson, Bank of America Merrill Lynch collecting the Award on behalf of Marco Bigatti and Eleanor Hill.


The existence of over 150 legal entities and more than 7,000 stores, including more than 4,000 in the US, created challenges for Luxottica in terms of managing cash flows and collections. The treasury team led the project to reduce the company’s number of counterparty banks and developed an international cash concentration system including three zero-balance account (ZBA) structures at a continental level: Europe, North America and Australia, as well as one at the local level for RMB in China.

Marco Bigatti

VP Finance and Group Treasurer

Luxottica

With net sales of more than €7.3 billion in 2013, over 73,000 employees and a strong global presence, including businesses in China, Luxottica is a leader in the design, manufacture, distribution and sales of premium, luxury and sports eyewear.

in partnership with

Bank of America Merrill Lynch

The challenge

The existence of over 150 legal entities and more than 7,000 stores, including more than 4,000 in the US, created challenges for Luxottica in terms of managing cash flows and collections.

Additionally, in light of China’s complex regulatory and banking environment, large companies can often end up with a significant number of different entities within the country. While one of Luxottica’s businesses in China is cash-rich, the other tends to be cash-poor, so a key objective was to offset balances against each other, thereby reducing the company’s borrowing costs. A further objective was to manage retail collections in a more streamlined way by implementing a collections solution.

The solution

The treasury team led the project to reduce the company’s number of counterparty banks and developed an international cash concentration system including three zero-balance account (ZBA) structures at a continental level: Europe, North America (with BofAML), Australia, as well as one at the local level for RMB in China (also with BofAML). Managing more than 30 currencies, the team implemented a financial risk management policy and processes in order to manage flows, including intercompany flows.

The China UnionPay collection solution is helping us to gradually centralise our retail collections to a single account, and the bank is leveraging its partner bank CCB to provide efficient cash deposit services for our retail stores.

Marianna Mitolo, China and Asia Treasury Manager

Luxottica appointed Bank of America Merrill Lynch (BofAML) to provide a cash management solution (including ZBA implementation) in the US, deposit services, ZBA in China through UnionPay, a point-of-sale (POS) collection solution, and online collections. Also on the cash management side, Luxottica’s implementation of a treasury management system (TMS) has allowed its treasury team to manage cash flow forecasting and better support the business in its development projects.

The implementation of the cash management solution in the US was a significant challenge in particular, owing to the company’s complex network of several cash pooling structures in the country.

Luxottica simultaneously rolled out a new global distribution channel, called ‘Online’, to collect payments from website sales, in order to support collections using all available local and international payment methods.

And the latest development is Luxottica’s e-commerce solution. Collections for RB.Com in the US, China and Europe have been implemented, supporting the business and enabling it to offer simple and fast customer services.

Best practice and innovation

The solution is notable in the way it simplifies and centralises retail collections. “The China UnionPay collection solution is helping us to gradually centralise our retail collections to a single account, and the bank is leveraging its partner bank CCB to provide efficient cash deposit services for our retail stores,” comments Marianna Mitolo, China and Asia Treasury Manager. “The bank’s electronic banking platform has streamlined our daily operations and allows us to manage our cash flows and accounts payables and accounts receivables more effectively.”

With integrated business support across continents, the solution has been made possible by an international team of 20 from across four continents, based in five different locations (the US, Ireland, Italy, China and Brazil). The Luxottica treasury team has been proactive and collaborative, following a simple and fast approach.

“As a result of the solution, the company has been able to centralise flows and collections processes while improving information reporting capabilities. The USD and RMB cash pooling solution has helped the company significantly reduce its financing and administrative costs,” concludes Marco Bigatti, VP Finance and Group Treasurer.

The Luxottica treasury team demonstrated great flexibility in its implementation of a cash management solution, supporting the company in following best practices while increasing efficiencies and return for the company.

Key benefits

Luxottica’s solution has provided the company with a number of benefits, including:

  • Process efficiencies.

  • Improvements in its cash conversion cycle.

  • Reduction and mitigation of risk.

  • Reduction in borrowing costs.

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