Photo of Lim Boon Kiat, Concordia Agritrading and Adesh Sarup, ANZ.

With domestic cash concentration structures in Singapore, Australia, China and India, the consolidated balance in Singapore is pooled through a multi-bank sweep arrangement to the company’s European treasury account maintained with a European bank, while retaining a target balance in Singapore to support local operating needs. Flexible cut-off times and SWIFT SCORE are key components of the solution.

The challenge

The company operates across multiple geographies and was looking to achieve the following key objectives:

• To optimise cash flow positions across different operating currencies.
• To ensure surplus cash is deployed with Europe treasury automatically at end of day.
• To implement sound system integration between the bank and company in Singapore which supports transaction processing, reporting and account information that is also simple and bank agnostic.

The solution

The liquidity management solution covered the following aspects:

• Account structure rationalisation.
• In-country and regional liquidity management structure.
• Multi-bank sweep to connect with European treasury.
• SWIFT SCORE implementation to connect with the bank.
• Balance and transaction reporting through SWIFT.

The solution comprises the following key building blocks:

• Singapore

  Domestic zero balance cash concentration with the option to sweep funds to the treasury header in Europe above a target balance.

• Australia

  Domestic zero balance cash concentration with the option to consolidate funds into the regional header in Singapore.

• China

  Domestic cash concentration using entrustment loans with limited options to consolidate cross-border.

• India

  Domestic account structure. Cross-border flows restricted.

With the above domestic cash concentrations, the consolidated balance in Singapore is pooled through a multi-bank sweep arrangement to the company’s European treasury account maintained with a European bank, while retaining a target balance in Singapore to support local operating needs. This ensures that the company is able to achieve global pooling to optimise the group’s cash flow position while operating efficiently within a highly comprehensive platform in Asia.
This was made possible with a target balance sweep set-up between the header account in Singapore and the company’s treasury header in Europe (with another bank) that deploys funds in excess of daily operating target balance to their parent company’s European treasury account.

The customer’s back-end system connects with the bank through SWIFT SCORE, enabling the company to initiate payments, receive transaction information and report account balances which allows the company full control and visibility of its transactions and cash flow positions in various accounts.

Best practice and innovation

Flexible cut-off times and seamless transition management were a key factor in this solution. The customer is in the trading industry which often requires time critical payments. Hence an extended cut-off time for payments and for pooling into an account in Europe, which operates on a different time zone, was critical. This required flexible arrangements with Treasury System Integration. ANZ’s vast experience in implementing SWIFT SCORE and following through with effective project management to provide a smooth seamless implementation was also key to success.

Key benefits

• Implementation of a robust liquidity management platform to support cash visibility and automated pooling across multiple locations, including with a third-party bank in Europe.
• Complex system integration with the company’s ERP platform.
• Unique liquidity structuring to enable the company to effectively manage surplus cash across its key Asian and European markets, with same day value.