The challenge:

The rapid expansion of Amway India Enterprises over recent years has resulted in the growth of dealer and supplier networks and treasury flows. The expansion presented some challenges for the Amway India Enterprises treasury team. One particular challenge was dealing with cash management, risk management and banking operations across India. As a result of these challenges the company incurred unnecessary overdraft charges in some accounts while others would have idle funds. It was therefore pinpointed that in order to support increasing business volumes in the country, Amway India Enterprises’ liquidity management processes needed upgrading.

Amway had developed a liquidity model wherein treasury employees would manually transfer funds between accounts on a daily basis to optimise interest rates.

The solution:

Amway India Enterprises embarked on a benchmarking project that would identify the important benchmarks of success around areas such as improved fund management precision, greater resource efficiency, and a more controlled risk environment. In doing so Amway India Enterprises benchmarked its current performance and then went into the market to see what was available in order to improve this.

Amway India Enterprises piloted India’s first automated, multi-bank pooling structure in partnership with Citibank. This solution has optimised Amway India Enterprises’ treasury activities perceptibly, as measured by the following key performance indicators (KPIs), the financial benefits of which have been highly significant – see table below. The company has set a new best-inclass industry benchmark for efficient treasury management in the country.

Best practice and innovation:

Amway India Enterprises has raised the bar on treasury excellence as much for industry peers as for internal stakeholders.

Together, Amway and Citi achieved end-to-end inter-bank funds automation through an innovative, market-first liquidity management platform. This solution was designed to produce efficiencies of scale within the complex Indian banking infrastructure, with a focus on eliminating paper instructions and facilitating straight through processing. The resultant design was a multibank pooling solution with adjustable target balances maintained through automated sweeps.

Amway India Enterprises’ new liquidity management model was implemented with strictly no impact to their existing banking set-up, divided between 14 plus banks. Given this result, the rapidity with which this structure was launched is also extremely noteworthy. Amway set and achieved best-inclass efficiency benchmarks, positioned itself as a pioneer in India’s treasury management space, and created a liquidity model for companies across the spectrum to aspire to.