Photo of Abdul Majid Syed, Vice President – Financial Reporting, Controls and System.

Pioneering solution in Kingdom of Saudi delivers tangible benefits for ACWA Power

Group cash management at ACWA Power is equally complex due to the proliferation of bank accounts resulting from its ever-growing corporate structure. Manually managing thousands of intercompany transactions annually for cash concentrations, equity injections, dividend disbursements, returns processing, and management fees across the group placed severe strain on a small treasury team (who operate from Riyadh, Saudi Arabia, and Dubai in the UAE).

While the company had automated some tasks through its treasury management system (TMS), there was no automation in place for multi-bank reporting, cash positioning, cash consolidation, payment processing, cash application, bank reconciliation or intercompany loan administration.

The project focused on the following:

• Simplify liquidity management with real-time centralisation of its global USD positions.
• Introduce payments on-behalf-of operating model.
• Streamline its bank relationships and account structures with virtual account management (VAM).
• Automate every aspect of group cash management with the best-in-class TMS the company had procured.
• Standardise multi-bank connectivity with SWIFT.

The solution

The solution ACWA Power implemented in this treasury transformation project was threefold:

1. Their TMS provides the in-house bank infrastructure for payment, intercompany, accounting forecasting, screening and reconciliation.
2. SWIFT for Corporates (SCORE) for bank-agnostic multi-bank connectivity for payment delivery and reporting.
3. A multi-entity VAM structure with J.P. Morgan underpinning a single USD bank account to achieve real-time cash concentration without any physical sweeping and enable on-behalf-of payment and receipt operating structure.

Best practice and innovation

This is the most innovative bank solution in Saudi Arabia in recent years involving a VAM enabling on-behalf-of and in-house banking structures, combined with best-in-class bank-agnostic connectivity and treasury management system.

Key benefits

1. Improved working capital.
2. Visibility over accounts.
3. Increased efficiencies.
4. Scalable model.
5. No business interruption during pandemic.
6. Trapped cash released.
7. Cost/FTE savings.
8. Recovered ROI.

The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2021 Awards attracted a record-breaking 309 nominations spanning 40 countries. To find out more please visit: https://treasurytoday.com/adam-smith-awards.