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Best in Class Regional/Global Treasury Solution Highly Commended: The Body Shop International Ltd

Published: Jul 2022

 

Photo of Paolo Sala, Philip Connell, Marlyne Chauvin and Zeeshan Arif, The Body Shop International Ltd.

Philip Connell

Treasury Manager

Founded in 1976 by Anita Roddick, the company currently has a range of 1,000 products sold in about 3,000 stores, divided between those owned by the company and franchised outlets in more than 65 countries.

in partnership with

Bespoke mailboxes are key component in The Body Shop solution

The challenge

The Body Shop Treasury Team wanted to have greater visibility over global liquidity and cash. As the company grew, it established more than 40 banking relationships and multiple accounts in some markets where each store had its own account. These accounts were managed across 12 different banking platforms.

This was combined with a treasury function that was seeking to address further opportunities including implementing more consistent and centralised automated processes and creating more effective secure file transmission methods for payments and statements.

With central treasury located in London, the company was looking to manage cash in the most optimal way and support its follow-the-sun strategy. The company was also keen to rationalise accounts to improve efficiency, lower overall borrowing costs and improve FX currency management across the organisation. To resolve these issues, they decided to establish a cash concentration pooling structure and an in-house bank (IHB) to help concentrate cash, which was implemented over several years and completed in 2021. The IHB is recorded in The Body Shop treasury management system (TMS).

While the company found this helped to achieve some of its goals, it still faced a challenge managing data for its various bank accounts around the world. Primarily, it was noted data could be managed with greater consistency from its banking partners. Given the company’s long commitment to the environment, it was also interested in further digitising processes to eliminate as much paper as possible.

The solution

The company’s international banking partner, HSBC, recommended a bespoke global information reporting (GIR) mailbox solution to create a single point-of-entry for incoming information.

The Body Shop has implemented a global cash concentration structure that consolidates funds in London. Under this structure, The Body Shop created accounts for each purpose. There is a header account for each entity and two-way zero balance sweep from purpose accounts such as payroll, accounts payable, accounts receivable, point-of-sale/cash from stores, etc. Furthermore, as a retailer, The Body Shop still needed to maintain some local banking relationships.

To help improve straight through processing of payments, the bank created two bespoke mailboxes, one for payments and one for incoming bank statements as well as all their third-party banks across 20 countries. Payments are sent from the respective source (TMS or enterprise resource planning (ERP)), and transferred via host to host to HSBC for processing. The Body Shop operates a payment factory out of their ERP covering multiple geographical regions. MT940 statements from the banks (HSBC and third party) are uploaded into The Body Shop ERP across the world with reconciliation automated. The Body Shop has also implemented ‘Request for Transfer’ MT101 messages.

The solution is global, spanning UK, Ireland, France, Denmark, Germany, Austria, Netherlands, Belgium, Sweden, Luxembourg, Spain, Portugal, Singapore, Hong Kong, New Zealand, Australia, USA, Canada, Mexico, Chile and Japan.

Best practice and innovation

Based on the success of the ERP mailbox, The Body Shop and its bank decided to create a second GIR statement bespoke mailbox for their TMS. This allows statements to be fed into The Body Shop’s ERP and TMS separately.

Without the bespoke mailbox structure, each brand in the group would have had to create its own profile and secure file transfer protocol (SFTP) into the TMS.

For the IHB to function properly, it needs to feed standardised statement information into the TMS to enable global cash visibility. In the TMS and ERP, through the mailboxes, The Body Shop has been able to link standardised workflows for added efficiency.

Key benefits

  • Cost savings.
  • Number of banking partners/bank accounts reduced.
  • Process efficiencies.
  • Increased automation.
  • Improved visibility.
The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2022 awards attracted 230 nominations spanning 34 countries. To find out more please visit:
https://treasurytoday.com/adam-smith-awards.

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