The challenge:

Historically GLP’s treasury worked exclusively with spreadsheets. Yet, what at first seemed user-friendly, turned out to be burdensome and error-prone for a fast-growing, global company operating in a volatile, multi-currency business environment. Bulging files slowed down data keying and analysis, and the sheer amount of consolidating financial data from the three countries in which it operates took about a month to complete. Foreign currencies made the exercise even more complex.

As the majority of the company’s debt, investments, and P&L items are managed in local currencies, there is limited currency exposure at country level. However, as GLP’s functional currency is US dollars and all cash flows are routed through Singapore before allocation, there is exposure to RMB, JPY, SGD and BRL. Trapped cash in China and the high volatility of the JPY and BRL made risk management and hedging challenging.

GLP used to manage over 1,300 bank accounts, located in China, Japan, Brazil and Singapore, due to its investment structure, and was far from operating with real-time visibility into its global cash position. In most cases, cash forecasting and exposure management were based on obsolete data. As GLP often deploys capital across countries (eg capital deployment in one country with capital generated from monetisation events in other countries), accurate cash forecasting is critical.

The solution:

To increase its operational efficiency and reduce its operational risk GLP implemented Reval’s global cash, liquidity and risk management solution. The solution provides GLP with a single platform where all financial data is stored and shared within the global team in real time. This central data repository enables GLP to improve day-to-day cash operations, cash forecasting as well as FX, credit and liquidity risk management. In addition, internal and external reporting can be handled more efficiently.

Best Practice and Innovation:

Within only six months, GLP began to see results from its new solution, including the global integration of all cash flows from its operations in Japan, China and Brazil in one single platform. This ensured that GLP had easy and secure access to financial data and fast global roll out using software-as-a-service (SaaS). Not only was more information available but the quality and accuracy of this was also greatly improved. The company now has real-time visibility of local cash balances and consolidated cash position that are automatically imported into the system from 1,300 bank accounts. This has allowed error prevention to be enhanced and has also facilitated a 70% (approximately US$250m) increase in available working capital (the sum of all cash balances excluding trapped cash).

The improved information and visibility over this has also allowed GLP to enhance the reliability and accuracy in cash forecasting. As such, the treasury is now able to add value through improved funding of business strategies, stable cash forecasting, and coherent liquidity plans at entity and company level. There is also now greater control over the mitigation of counterparty, FX, liquidity and systemic risk.

The improved speed and accuracy in reporting that the solution offers, has delivered a number of benefits, particularly for the audit committee. The committee now benefits from efficiency gains through single data basis, and time savings in management reporting. They are also able to analyse and create reports on IFRS compliance quickly andaccurately.