Best Cash Management Solution Winner: Valeo China

Published: Feb 2019


Photo of Emilie Ha, Valeo China and Tracy Ge, Citi.


Valeo China deals with more than 700 overseas clients and suppliers in over 30 countries globally, with local entities managing over 12,000 transactions annually, constituting USD, EUR and JPY. The company was looking for, and found, a holistic FX cash management solution that would link treasury seamlessly with its shared service centre.

Emilie Ha

Finance Director

Shanghai, China

Headquartered in France and operating in 32 countries, Valeo is an automotive supplier and partner to automakers worldwide. In China, Valeo has more than 30 affiliates, located in different provinces and cities across the country.

in partnership with

Taking the holistic approach to FX and cash management

The challenge

Valeo China deals with a lot of imports and exports, with more than 700 overseas clients and suppliers in over 30 countries globally. Entities of Valeo in China manage over 12,000 transactions annually, constituting USD, EUR and JPY. This includes currency conversion, cross-border payments and collections, with the bulk of the work executed by the local team to prepare and present supporting documents for these transactions. With high volumes and a large number of counterparties, Valeo was looking for an all-inclusive FX and cash management solution.

The solution

Partnering with Citi, Valeo was able to successfully obtain the green light, which was an uncommon approval, from State Administration of Foreign Exchange (SAFE) in 2017 for FCY cross-border POBO ROBO netting. The company then implemented a holistic FX cash management solution with the seamless cooperation of its treasury and shared service centre (SSC). This included:

An FCY POBO/ROBO programme between Valeo’s 25 affiliates in China and over 700 overseas counterparties, with Valeo Auto Parts Trading Co. (the entity located in the Shanghai Free Trade Zone) serving as the leading company for the China group.

The leading company centrally managed the FX conversion, cross-border payments and collection processes on behalf of local subsidiaries:

  • Leading SWIFTNet host-to-host (H2H) infrastructure between Valeo’s payment system and Citi’s processing hub, for instructions and reporting exchange.
  • Paperless solution for FCY cross-border payments and collections, with seamless remote support by Valeo’s SSC in Nanjing.
  • FCY Virtual Account solution applied on ROBO flows for Valeo to perform immediate AR identification and reconciliation.

With high volumes and a large number of counterparties, Valeo found an all-inclusive solution that meets its treasury objectives. Right from the beginning, the entire solution package offered by Citi encompassed both FX and cash management by leveraging transformative and leading banking technologies, with digitisation a core element of the packaged solution.

The large number of domestic and overseas counterparties and high transaction volumes involved had intensified the difficulty in implementation and daily transaction processing. This was simplified via the seamless cooperation between Valeo China, Citi China, Valeo France and Citi France which resulted in a successful implementation.

Best practice and innovation

The unique three-layered structure with both FCY and RMB accounts allows Valeo China to centralise all of its FX conversions at leading-company level, for both FX buying and selling. China subsidiaries now settle funds in RMB with the leading company.

SWIFTNet H2H for FCY transaction is not commonly used, as regulations requiring additional documents makes the process difficult to automate. Citi’s unique paperless solution means FX reporting and documentation can seamlessly integrate with Valeo’s H2H structure.

Valeo faced difficulties in identifying actual payees, given incomings are typically centralised into a single account in the beginning. Citi’s Virtual Account solution means Valeo’s system can easily identify payees, achieving funds settlement automatically.

To ensure the success of the project, Valeo assigned dedicated experts from HQ to work in China, guiding local treasury and SSC teams on detailed flows, in harmonising solutions, and implementing tailor-made solutions with the banks.

Key benefits

  • Manage FX conversion and related processes in a consolidated manner.
  • Lowered FX transaction costs and reduced manual intervention.
  • Other cost savings from aspects such as:
    • FCY payment and collection charges.
    • FX conversion costs.
    • Labour costs for FCY document printing and delivery.
  • Improved SSC’s operational efficiency.
  • Package completed within months after the regulator’s approval.
  • Encouraged seamless collaboration between Citi and Valeo, in China and France.

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