The challenge:

Following a number of acquisitions, most notably the purchase of engineering company Sinclair Knight Merz (SKM) in 2013, Jacobs Engineering’s business in the Asia-Pacific region tripled in size. Naturally, this lead to some significant integration challenges.

The treasury team wanted to put in place a comprehensive working capital management solution which would integrate the new business while also putting the Jacobs stamp on the company’s treasury operations across the region. “That transaction included a significant spread of business activity – in ten operating countries and numerous project based countries – throughout Asia Pacific,” says Carlin. “The banking operation for both companies was fragmented and inefficient. Our key objective was to come up with an efficient structure that would allow us to look at our working capital needs throughout the region, optimise interest income, minimise interest expense and transaction costs. We wanted a single bank solution which would give us better visibility of our day-today working capital and cash needs, whilst avoiding having multiple banks with multiple systems.”

The new solution would need to cover a diverse range of countries including China, Thailand and the Philippines, as well as Australia and New Zealand. With 214 bank accounts across the region, the treasury team wanted to pare back the accounts structure and reduce the number of signatories – with corporate governance being a key factor; the ideal outcome was for a single bank relationship to be put in place to replace the seven existing bank relationships.

The solution:

After embarking on a thorough RFP process, Jacobs appointed Bank of America Merrill Lynch to provide the new solution, which incorporated working capital management optimisation, credit facilities and FX facilities throughout the region, as well as a notional pooling structure. With the company’s CFO paying close attention to free cash flow, Jacobs also adopted CashPro Accelerate in order to access real-time information on the company’s cash position.

Winning the award provided an outside recognition of our efforts on improving our Asia Pacific cash management program. The success was due in part to the strong partnership with Bank of America Merrill Lynch and I would encourage other treasury professionals to fully utilize the services available from the banking industries. The end result of a competitive RFP to several of our core banks resulted in a much better cash management program in Asia Pacific.

Standardised documentation and processes were also adopted, while the company’s straight through processing (STP) rate increased to 99%. Days Sales Outstanding (DSO) and Days Payables Outstanding (DPO) were also improved thanks in no small part to enhanced reporting and alerts to key parties.

Best practice and innovation:

The Jacobs Treasury team took a rigorous approach to the project, creating an innovative traffic lights system to map the progress made in different areas of the implementation. “Stakeholders were looking at a schedule with key deliverables and timelines,” explains Power. “We used red, green and yellow flags to signify whether different parts of the project were on track, and we periodically tested whether these labels were being used accurately. This was based upon a very open and transparent relationship built on trust: people had to know that they wouldn’t be jumped on if they had a red flag.”

Best practice was demonstrated by the stringent approach taken to streamlining the company’s bank accounts structure – a task which has to be approached sensitively, in order to strike a balance between the need for efficiency versus communication with clients. With a close eye on this balance, Treasury reduced the number of accounts held from 214 to 80. While this is a significant achievement, the team is continuing to challenge this number – and is even going as far as reviewing the new accounts in order to identify further opportunities for efficiency.

“Our ability to identify goals, deliverables and actions, engage with stakeholders and communicate expectations made this project a success,” concludes Power. “Our success has enabled Jacobs’ treasury to be a more responsive business partner.”