This solution has streamlined over 120 accounts across the company’s global footprint, with 80% of the solution successfully implemented within an eight-month period. The solution incorporates a regional cash concentration structure via two-way sweeping to a master account in Hong Kong.

Comprehensive cash and liquidity solution delivers foundation to grow

The challenge

The ship management industry is a growing business, as more ship owners, faced with an increasingly dynamic maritime environment, are outsourcing the management of day-to-day fleet operations to third-party firms like AEUG.

While this bodes well for AEUG’s growth, it created complexities for its treasury function. AEUG’s business model of creating separate bank accounts for all its clients to hold and funnel funds for daily operational needs meant its treasury was under increasing pressure to manage a growing number of bank accounts with various financial institutions as its business grew. It also had to cope with the rapidly rising volumes of payments, as well as the challenge of optimising its own cash as the company expanded.

In summary, AEUG was looking to:

• Streamline banking relationships and number of bank accounts, while maintaining its business principle to provide clear segregation of funds between their client-related and in-house accounts without physically co-mingling the funds.
• Improve pricing and efficiency in transacting payments globally.
• Efficiently process high volume, low value FX transactions on behalf of their clients with a standardised method applicable to its global subsidiaries.
• Achieve real-time visibility of its cash balances at both the headquarters and local level.
• Concentrate AEUG’s in-house surplus cash to improve control of cash and liquidity.

The solution

AEUG selected J.P. Morgan as its new core cash management banking provider to implement a comprehensive global cash and liquidity solution, which includes:

• Streamlining of over 120 bank accounts globally and adopting multibank reporting services via J.P. Morgan ACCESS^® to achieve visibility of AEUG’s global liquidity positions through a single banking platform.
• Integrating J.P. Morgan ACCESS^® Host-to-Host^SM to automate payments/record posting in AEUG’s ERP system and reduce operational costs associated with transaction initiation.
• Full transparency and straight through processing (STP) of FX transactions via J.P. Morgan’s ACCESS^® FX to meet AEUG’s workflow, governance and reconciliation requirements.
• Leveraging J.P. Morgan’s existing network provider arrangements for domestic over-the-counter transaction services in a number of markets in Asia Pacific.
• A regional cash concentration structure for in-house accounts through two-way sweeping, ie surplus USD liquidity at the sub-account level is swept up to the master account in Hong Kong while shortfalls are swept down to participating accounts against a target threshold amount. Client-related accounts are not part of the pooling structure in order to preserve the need for such accounts to be distinctly managed.

“We are delighted to receive this recognition and forming part of corporate treasury best practices benchmark in the cash management category.”

Best practice and innovation

By streamlining over 120 accounts across AEUG’s global operations, the solution incorporates innovations in banking technology with industry best practices to address the complexities of treasury management within the ship management industry. In close partnership with the bank, AEUG has successfully implemented 80% of the global solution within an eight-month period through effective optimisation of its resources and prioritising action items.