Best Liquidity Management Solution Winner: Ecolab

Published: Jul 2019


Photo of Nico Ortiz, Bank of America Merrill Lynch, Kathryn O’Neill and Allison Rakitin, Ecolab.

Allison Rakitin

Global Treasury Director


Ecolab provides water, hygiene and energy services to more than three million customer locations in 170 countries around the world.

in partnership with

Multi-tiered pooling structure delivers elegant solution for Ecolab

The challenge

Ecolab was manually consolidating its cash on a monthly basis via a large system of intercompany loans and incurring foreign exchange hedging costs. “We decided we needed a large-scale solution in order to consolidate and maximise access to our global cash positions,” recalls Allison Rakitin, Global Treasury Director, Ecolab.

The solution

Ecolab turned to Bank of America Merrill Lynch (BofAML), its main regional banking partner in EMEA, to structure a solution which would allow the company to gain real-time access to cash generated by its operations in Europe, Canada, Latin America and Asia Pacific.

The result is a multi-entity, multi-currency notional pooling solution in London, which is consolidating cash from over 280 accounts and 90 sweeps in 23 different currencies, improving visibility and enhancing liquidity.

The pooling solution comprises three currencies; USD, EUR and GBP single-currency pool strategically placed in London and Amsterdam, which are then connected to larger multi-currency pools located in London.

A key part of the solution is that pooling is not limited to accounts held with BofAML but also includes one and two-way sweeps from other banks across EMEA, and automated two-way sweep with Ecolab’s non-BofAML Asia Pacific cash pool.

“We have developed a European based structure that effectively manages our entire global liquidity structure in real-time,” explains Rakitin.

Working together with Ecolab regional treasury team, law and centralised corporate treasury uncovered diversity of capabilities, creative freedom and commitment with trust.

Leveraging all of BofAML’s capabilities has allowed the Ecolab treasury team to evolve from a transaction oriented department into a mature, intelligent, value-add contributor of their global organisation.

Best practice and innovation

The scale of this notional pooling implementation stands out as a great example of best practice. With 280 accounts and 90 sweeps in 23 different currencies, Ecolab’s pooling structure was developed to meet a very specific business need – to make the best possible utilisation of the company’s substantial cash balances, not just in Europe, but also in Asia Pacific.

The multi-tiered pooling solution developed with its partner bank is elegantly simple, despite dealing with so many accounts and currencies. It has, in effect, introduced a global liquidity structure for Ecolab in one single step.

Key benefits

The primary benefits are cost savings and improved visibility:

  • By maximising pool membership and allowing pool members to participate in their own functional currency, Ecolab has eliminated a large number of intercompany loans and also eliminated the costly FX hedging of those loans. Since inception the new liquidity structure has led to the removal of nearly 100 intercompany loans.
  • The pooling structure has allowed Ecolab to establish a EUR commercial paper programme and use that programme as a low-cost means of funding global liquidity. EUR commercial paper proceeds are easily shared via notional pooling and have replaced costly individual credit lines.
  • The automated sweeping of the liquidity solution has removed the need for repetitive manual cash consolidation transfers. Instead of executing repetitive transfers, Ecolab treasury now focuses on high level initiatives such as currency optimisation and tax minimisation.
  • The cash pooling structure allows the sweeping mechanism to concentrate cash from Asia via a separate Asia cash pool. (The cash pool model truly follows the sun and starts in Asia, where at the end of the day, cash is swept into London pools and becomes available immediately, thereby facilitating global liquidity management.) The cash pooling in London also serves as a conduit for when cash is needed in the Asia Pacific region, sweeping against the sun and making funds available back in Asia as required.

“Despite the scale and complexity of the pooling structure, the bulk of the project was completed in under a year, a testament to the close working partnership which developed between our treasury team in the US and BofAML in Europe. The structure already covers more than 280 bank accounts and 170 legal entities and will continue to grow,” concludes Rakitin.

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