Photo of Lillian Sim, J.P. Morgan, Shania Ren, Rachel Wang and Nader Fleury, Saint-Gobain (China) Investments Co., Ltd and Chris Hua Chen, HSBC.

Saint-Gobain is highly proactive in seeking leading edge treasury solutions and its latest programme has focused on cash management and developing digital solutions for short-term investments. Key outcomes include an enhanced state-of-the-art liquidity solution and full automation of transaction management operations.

Saint-Gobain’s transformation on track with leading-edge cash management solution

The challenge

Today’s treasury functions face increased pressure to achieve greater efficiency and automation, driving treasurers towards using an integrated management solution from a qualified bank provider. Saint-Gobain had been highly proactive in seeking advanced solutions that not only integrate efficiently and effectively along the entire value chain to boost speed and straight through processing, but are also intuitive, easy to use by its customers, and accommodate the needs of business transformation.

Cash management is an area that has been a major focus for upgrading at the company and over the past few years Saint-Gobain has been collaborating with HSBC very closely on developing innovative solutions for its operations in this area.

The solution

As of 2017, Saint-Gobain has upgraded its current traditional cash pool to an automated tax-saving domestic cash pool associated with a cross-border cash pool under the PBOC’s nationwide scheme. The state-of-the-art solution helped Saint-Gobain to achieve a significant reduction in value-added tax as well as enhancing the cash liquidity between China and overseas counterparties.

In transaction management, Saint Gobain has established a host-to-host channel between its bank’s e-platform and the company’s ERP system. This has enabled a high degree of automation in payments, collections and account reconciliation. Electronic supporting document submission and e-BOP has also been set up to further reduce manual paperwork. Furthermore, a virtual account and automatic receivable management system has been actioned so that Saint-Gobain can automate its AR process with accurate invoice reconciliation with its vendors.

Apart from the above best-in-class practice on liquidity and transaction management initiatives, Saint-Gobain has also been in close discussion with its bank on digital solutions that can enable, for example, automatic placing of corporate surplus funds into short-term investments like money market funds to generate instant interest allocation.

The company is also intent on developing an omni channel solution that rides on the bank’s digital platform to provide flexibility on collection across Saint-Gobain’s physical and online shops via a variety of channels including Wechat and Alipay.

Best practice and innovation

Based on the costs and benefits of the solutions implemented, and the company’s particular circumstances, Saint-Gobain has delivered best practice on several fronts:

• To create the best banking structures, Saint-Gobain has chosen an optimal number of providers (J.P. Morgan and HSBC), with benchmarking carried out on effectiveness of services, relevance of technology and competitiveness of pricing.
• A good balance between credit and cash management services is the primary objective of any successful banking relationship and communication is a key part of making a bank relationship work. To get the best value out of banking relationships, Saint-Gobain has re-bid its accounts and service needs periodically and efficiently managed the liquidity between two cash banks through system integration.
• The best performing treasury divisions have a high percentage of electronic versus paper payments and should use new technologies, such as omni channel and auto reconciliation systems to accelerate payment/collection. Saint-Gobain is constantly focused on the need for lean operations, for instance, controlled disbursement accounts with full reconciliation services and no manually generated checks.

Key benefits

• Enhanced state-of-the-art liquidity solution.
• Full automation on transaction management.
• Digitisation of corporate treasury management.
• More engaged and productive employees.
• Straight through processing rates and reduced costs.
• Consistent, seamless and intuitive customer experience.

Saint-Gobain has a reputation of being ahead of the curve in seeking advanced treasury management solutions. With this latest programme of improvements it has positioned itself to not only be the best treasury practice in the industry for years to come, but to reap the benefits of higher revenues, margins and market share.