Photo of Sharath Gopinath and David Davies, Bacardi Limited and Christine (Jang) Tan, J.P. Morgan.
Bacardi wanted to establish an optimal global liquidity structure for the Asia Pacific region to fully connect into the company’s global in-house bank (IHB). At the same time, they wanted to automate their payments and reconciliation processes with connectivity to their ERP and TMS.
Mark Smith
Vice President, Global Tax and Treasury
Bacardi Limited (“Bacardi”) is the world’s largest privately-held spirits company. Headquartered in Bermuda for more than 50 years, Bacardi sells more than 200 brands and labels of spirits and wines in more than 160 global markets, and operates 29 production facilities for bottling, distilling and manufacturing across 16 countries.
in partnership with
The challenge
As Bacardi grew in the Asia Pacific region, it established bank relationships and accounts in an increasing number of countries, which limited the company’s visibility over cash as well as its ability to deploy funds effectively across the globe.
Bacardi wanted to establish an optimal global liquidity structure for Asia Pacific to fully connect into the company’s global in-house bank (IHB), so that it could:
- Enhance cash visibility.
- Rationalise the number of bank accounts and relationships.
- Eliminate local credit facilities.
- Minimise the costs of foreign exchange (FX).
The company also wanted to automate its payments and reconciliation processes with connections into SAP and treasury management systems (TMS), and reduce manual processes to facilitate the migration of functions into their global treasury centre.
The solution
Bacardi is setting up a streamlined account structure which allows the company to consolidate its bank relationships and rationalise accounts across the Asia Pacific region. The solution includes:
- Consolidation of surplus cash in Hong Kong automatically with cross-border sweeps and single-entity, multi-currency notional pool capabilities under the master accounts held by the IHB. The “Net Balance Sweep” capability provides an effective means for Bacardi to concentrate its liquidity globally without creating physical FX or additional intercompany loans. Phase 1 of the cash pool was expected to go live on October 1st, 2016.
- Just-in-Time funding from the accounts in the notional pool to the in-country Asia Pacific accounts to achieve funding efficiency.
- Seamless and secure connectivity for end-to-end payments processing via J.P. Morgan’s ACCESS® Host-to-HostSM channel, which is being fully integrated with Bacardi’s SAP and TMS systems leveraging SWIFTNet File Act and ISO 20022 standards.
- Increased visibility and real-time analytics for global cash positions and cash concentration structures across all countries and currencies via the ACCESS® Liquidity Solutions (ALS) portal with a robust range of reporting capabilities.
- A cheque collection pick-up service in selected markets and over-the-counter deposit facilities in branches to provide more touch points.
Best practice and innovation
With the combined solutions, Bacardi will be able to:
- Optimise the regional liquidity structure and gain access to participating subsidiaries’ cash surplus funds, which are automatically swept to the master accounts in Hong Kong.
- Rationalise the number of bank accounts as non-restricted countries are funded by the IHB whilst restricted countries leverage a global credit facility with J.P. Morgan.
- Improve visibility and control by mobilising cash positions real-time across its banking relationships globally – in local currency and an equivalent base currency.
- Establish intercompany loans, set up counterparty limits at an account level and implement intercompany loan tracking and reporting.
- Utilise the single global platform to automate, streamline and centralise payments, which increases standardisation, raises efficiency, minimises risk and reduces costs.
- Use the account structure, cross-border sweeps and single-entity multi-currency notional pool in Hong Kong to take steps towards consolidating surplus liquidity positions in the region via the IHB.
Mark Smith, Vice President, Global Tax and Treasury explains: “These combined solutions will provide us with the secure and robust infrastructure we need to support continued growth, and enable the group’s treasury activities to function smoothly in any situation. By automating our cash and liquidity management processes, we have seen significant improvements in our regional treasury efficiencies.”
Key benefits
- Yield enhancement.
- Improved risk management.
- Better visibility over company cash.
- Number of bank accounts reduced.
