Photo of Juliana Garcia Caceres, Alessandra Segatelli, Herbalife and Mel Gargagliano, Bank of America Merrill Lynch.

This company needed a new solution to remove the need to issue cheques in Brazil. They worked with their bank to introduce a prepaid card under the VISA label and are now in the process of consolidating all their daily cash operations to their banking partner.

The challenge

Each month in Brazil, Herbalife historically issued more than 10,000 royalty cheques to its 20,000 members. These cheques where expensive for the company to issue and created a high risk of fraud. Also, the use of cheques posed significant operational risk to the company as it took more than 15 days for Herbalife’s members to receive their royalties – sometimes longer if there were issues with addresses. The delay in receiving royalty cheques, unsurprisingly, was the number one complaint received at Herbalife’s call centre.

The solution

To overcome these issues, Herbalife looked for alternatives to cheques and collaborated with Bank of America Merrill Lynch (BoAML) to introduce a new cash management solution – a prepaid card under the Visa Label produced by a local company, Brasil Pre Pagos (BPP).

Herbalife’s pilot programme offered one amalgamated solution to enhance the company’s cash management needs in Brazil. To do this its members in the country receive royalty payments through a prepaid card that functions as a debit card.

Instead of waiting for cheques that took more than 15 days, royalties are paid one day before, avoiding delays. This has reduced complaints regarding royalty payments by 66% from 2015 vs 2014. Another benefit of this innovative solution is fraud prevention, as the amount is paid directly by card, using BoAML bank transactions, along with a password for added member protection.

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Additionally, its members can use the cards to purchase finished goods and services, including Herbalife’s products for their sales. These purchases have resulted in about 20% of royalty payments returning to the company. This solution has also provided an attractive alternative, especially for those members without access to a bank account.

As well as offering numerous benefits for its members, the prepaid car solution has also afforded benefits to the treasury. “By collaborating with BoAML, Herbalife is able to upload files from our legacy systems for prepaid cards in Brazil and can automate reports through the bank’s cash management platform, CashPro, which creates numerous efficiencies over our legacy process,” explains Alessandra Segatelli, Finance Director at Herbalife. “We are now in the process of consolidating all of our daily cash operations with BoAML, making it the main bank for our Brazilian business unit in order to gain further improvements and standardisation across our operations.”

Best practice and innovation

This unique solution has brought efficiency to the treasury department by using an electronic service to automate the reconciliation and processing of royalty payments. As a result member’s costs have been reduced by 70%. Moreover, by eliminating cheques the operational risk associated with fraud has also been greatly reduced.

It is not common for multi-level marketing companies to participate on treasury projects and definitely this partnership with Bank of America Merrill Lynch puts the Brazil business unit at the top of financial organisations.

Yet the solution has also brought wider benefits and enabled other departments, such as sales and marketing, to perform better and use the cards as a way to expand its distribution network in Brazil. As a result, this solution’s success has been recognised internally at Herbalife; two years in a row Herbalife’s Senior Director in Brazil has received an award from Herbalife’s Global CEO at the company’s global meeting.

Juliana Garcia Caceres, Finance Manager at Herbalife, concludes: “This solution is under discussion to be replicated in all of Herbalife’s operations globally. Herbalife prides itself on changing people’s lives and this new prepaid card solution has had a positive impact on our members’ lives. Members who had not previously had access to a bank account now benefit from access to a prepaid card. This has the same functions as a credit card without the need for any credit analysis.”

Key benefits

• Cheques eliminated.
• Number of complaints significantly reduced.
• Risk of fraud mitigated.
• Opportunity to roll out globally.
• Efficiency gains.
• Financial inclusion.

Key takeaways

• Listen carefully to your customer´s needs – we had one issue to solve but we always took into consideration the importance of attending our customers’ requirements – this is the key to the success of the project.
• Find good partners: Bank of America Merrill Lynch offered a unique partnership, that we didn’t find with any other bank – they proposed solutions according to the project´s evolution and we always received wonderful support during all processes.
• Always believe in your ideas, even when it doesn’t seem simple in the beginning – in our case we changed a 20-year old payment method.