The challenge

noon aimed to streamline its financial operations and support its growth. In particular, the company needed to address the following key challenges in the UAE:

• Streamlining reconciliation processes for over 30% of collections made through cash on delivery.

• Managing the complexities of rapidly opening new bank accounts due to its fast-growing nature and presence in multiple countries.

• Optimising returns on the company’s total cash position, which was dispersed across various legal entities and bank accounts.

• Introducing new products under working capital facilities to optimise finance costs.

The solution

1. Transitioning cash on delivery to card payments: initially, around 80% of noon’s sales were made through costlier cash on delivery channels. Mashreq provided payment processing services to noon in the UAE, including online payment gateways, co-branded cashback credit and debit cards, and mobile payment solutions. This enabled noon to provide customers with a smooth payment experience and facilitated the transition of the part of its sales in the UAE to card-based payments.

2. Resolving cash on delivery reconciliation challenges: to expedite and ensure accurate reconciliation of customer receipts, noon implemented a combination of cash deposit machines and virtual accounts. This reduced the reconciliation timeframe from three to four days to same or next day. Additionally, noon payments, a secure and convenient payment solution, was introduced to facilitate customer purchases on noon’s platform and Mashreq was one of the partner banks to support on the acquiring side.

3. Yield enhancement: noon implemented an interest optimisation structure, which yielded higher returns on the company’s total cash balance. This was achieved without the need to co-mingle funds across various accounts and legal entities, thanks to Mashreq’s introduction of notional pooling of balances across operating accounts, irrespective of legal entities, and interest-bearing call accounts.

4. Conversion of interest expense into revenue: in collaboration with the bank, noon introduced a product called Buyer Led Supplier Financing (BLSF). This offering streamlined payment processes for suppliers by providing invoice discounting and favourable interest rates on noon’s credit. By sharing a portion of the factoring charges imposed on suppliers by the bank, noon generated revenue. This mutually beneficial arrangement allowed suppliers to receive prompt pay-outs by paying the factoring charges, while noon avoided interest costs associated with paying invoices at their due dates using its working capital limits. Additionally, the bank benefitted from increased supplier participation on its platform, expanding its reach within the SMEs sector.

“We are very proud to be in such esteemed company, and we are thrilled to have received this award. The entire noon team has worked extremely hard to achieve this honour, and we hope to continue driving excellence with financial solutions and services.”

Vishnu Katara, Group Finance Controller

Best practice and innovation

Mashreq is one of the partners in noon’s journey to transform treasury operations. The implemented cash management solutions have allowed noon to optimise its working capital, enhance liquidity management, and improve cash flow forecasting and utilisation. The company’s treasury has automated manual processes, reducing the time and effort required for various treasury operations.

Products co-created: notional pooling of balances which allows the company to optimise the yield on balances available, BLSF which allows noon to generate additional income in place of interest expenses, and virtual accounts and CDMs solutions which allow quicker reconciliation and better control over collection via cash on delivery.

“noon is committed to a continuous journey of transforming treasury operations, and our valued banking partners play a crucial role in enabling us to overcome business challenges. Mashreq, as one of these partners, has been instrumental in helping us achieve our objectives. Through our collaboration, we have co-created a range of innovative products tailored to the region, placing us at the forefront of industry trends,” explains Vishnu Katara, Group Finance Controller.

Key benefits

The collaboration with Mashreq during noon’s wider treasury transformation initiatives has resulted in numerous benefits, including:

1. Cost savings.

2. Process efficiencies.

3. Return on investment (ROI).

4. Increased automation.

5. Mitigation of risks.

6. Improved visibility.

7. Reduction in errors.

8. Minimisation of manual intervention.

9. Improvement in key performance indicators (KPI) metrics.