The challenge
To better support Omni Logistics’ robust global operations, the organisation’s treasury team recognised the need to improve its manual processes and automate how it applies investment policy criteria with the mission-critical goal of reducing risk and preserving capital.
The challenge the team faced was that the company’s existing investment practices involved manual execution. Lack of automation meant a team member was tasked with reviewing cash forecasts, then investing cash into bank deposits or money market mutual funds, redeeming those funds when needed to manage the company’s day-to-day working capital needs.
Omni Logistics’ treasury director wanted to eliminate the manual decision-making and execution process, bringing much needed automation to treasury. The objective of this change was to ensure competitive yield, based on the company’s risk appetite and market conditions, while ensuring compliance with investment policies and achieving capital preservation goals.
A second issue treasury faced was managing bank account fees around the world. In addition to automating the process of investments in money market funds (MMFs), the team wanted a solution that would reduce banking fees incurred transacting across the globe.
The solution
Omni Logistics’ treasury team turned to long-time cash management banking provider, Citi, to help address the company’s cash management needs. Citi implemented its optimised liquidity solution to help dramatically improve Omni Logistics’ manual investment process, delivering critical automation.
This solution allowed treasury to designate funds over a pre-set deposit balance to be automatically invested. Citi then provided an automatic sweep to money market mutual funds.
This solution incurs no sweep transaction costs while at the same time, greatly simplifying the team’s investment process.
The team provided the bank with the intended set-up and its investment policy, which detailed the company’s acceptable criteria and counterparty limits. Citi then automated the investment transactions, helping ensure compliance with the policy.
This advanced solution enabled Omni Logistics to invest across multiple MMFs, which allow counterparty exposure risk to be diversified across institutions and providers.
In conjunction with the liquidity solution, Citi also implemented its Global Earnings Credit Rate (ECR) solution. This ECR solution uses a Citi demand deposit account (DDA) to generate earnings credits that were then used to offset fees in the US, Canada and Western Europe.
“The Adam Smith Awards are the ultimate industry benchmark of corporate treasury achievement.
We are honoured to be recognised by the amazing group of treasury professionals. It is a reminder that our treasury team provides best practice and outstanding investment solutions for the future of Omni.”
Ailing Lin, Treasury Director, CTP, Corporate Finance
Best practice and innovation
In an increasingly volatile interest rate environment and with growing pressure on treasury to reduce costs, the combined Citi liquidity and Global ECR solutions have proven invaluable for Omni Logistics. These solutions deliver critical benefits – helping to maximise short-term yield, lower costs, reduce operational risk and improve treasury efficiency.
“By automating the company’s short-term investment function, we have eliminated the time consuming, manual process of monitoring market conditions and cash positions through cash forecasts, then executing investment transactions,” explains Ailing Lin, Treasury Director, CTP, Corporate Finance.
The automation of this process has improved treasury’s ability to reduce timing risk, taking advantage of investment opportunities, while lowering operational risks associated with a manual process and ensuring compliance with investment policies. In addition, automation frees-up treasury personnel to focus on more strategic objectives.
As a result of implementing the Citi liquidity solution, treasury personnel no longer have to monitor MMF investments on a weekly or monthly basis. Treasury has taken advantage of no-cost MMF daily sweeps, and by leveraging the unique Global ECR solution, accrued credits are used to offset monthly account fees globally.
Key benefits
This automated short-term cash management solution delivers on all Omni Logistics’ key goals of corporate outcomes, driving down costs, promoting operational efficiency and optimising yield. The solution combines cash sweeps, MMFs, and an earnings credit rate programme to create a global, automated cash management solution that automates treasury.
