Photo of Manoj Dugar, J.P. Morgan, Binit Mishra and Didier Chatenet, Louis Drefus Company India Pvt Ltd.
Louis Dreyfus India has successfully rationalised over 100 bank accounts to just 40 with the help of virtual reference numbers and support from J.P. Morgan. More efficient liquidity management and cost savings and customised and automated real-time reporting tailored to meet the needs of various business units are just some of the benefits accrued.
Binit Mishra
Head of Treasury, India
Gurgaon, India
Headquartered in Rotterdam, Netherlands, with active presence in over 100 countries, Louis Dreyfus Company is a leading merchant and processor of agricultural goods. Since 1851, its portfolio has grown to include oilseeds, grains, freight, global markets, coffee, cotton, sugar, rice, dairy and juice. Its Indian subsidiary, LDC India, was incorporated in 1997, with business activities in coffee, cotton, oilseeds, grains and sugar. The company’s operations in India include processing assets, commercial offices and a shared service centre, employing some 500 employees across the country.
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Louis Dreyfus Company India reaps rewards from account rationalisation
The challenge
To support business growth, Louis Dreyfus Company India (LDC India) has over the last few years accumulated over 100 bank accounts under a decentralised cash management set-up. The company held separate payment and collection accounts for each of its five lines of business, which managed their own accounting books to meet tax, regulatory and reporting requirements. It also held accounts with various banks in different states across India. This led to the following areas being identified for improvement:
- Strengthen liquidity management as collections and payments were being managed across multiple banks.
- Reduce/eliminate repetitive and manual processes around segregating and sharing payments and collections data.
- Increase real-time visibility of cash balances and reporting for collections.
LDC India wanted to rationalise as many bank accounts as possible with the aim of getting down to one account which could be used for entire cash management activities across all businesses, without compromising on visibility, reporting standards and efficiency of response to internal stakeholders.
The solution
LDC India partnered with J.P. Morgan to implement a virtual reference solution to rationalise its accounts using virtual reference numbers (VRNs) – unique identifiers assigned to individual business units – which can be used for tagging both collections and outgoing payments. This made it easy for treasury to keep track of its collections, maintain accounting books and handle bank reconciliation. Since implementing the solution in November 2017, over 100 bank accounts have been rationalised to less than 40.
The solution also empowered LDC India to automate reconciliations and reporting across business units that do not share a centralised ERP system. By leveraging a host-to-host connection, LDC India can send files to the J.P. Morgan Access online platform through a secure FTP connection and access bank statements in real time.
The use of VRNs helped LDC India to standardise its cash management process. The company can now easily segregate collections and payments by individual business units and generate a master account statement in XLS format that can be used across all its business platforms.
Best practice and innovation
LDC India is the first J.P. Morgan client in India to use VRNs for both outgoing payments and collections – VRNs are typically used for collections in the market.
The innovative solution enabled the company to streamline payment and collections reporting for individual business units without having to maintain separate bank accounts. This allows for the segregation of checks and electronic payment information for easy reconciliation, and delivers automated and real-time sharing of payment and collections data across various business lines that do not share a centralised ERP platform. By using VRNs, LDC India achieved automation for a high number of transactions across several business units.
Key benefits
Implementation of the solution yielded many benefits, including:
- Rationalisation of bank accounts from over 100 to less than 40, with further more to come.
- More efficient liquidity management and cost savings.
- Customised and automated real-time reporting tailored to meet the needs of various business units.
- Straight through payments using encrypted payment files and transfers through a host-to-host secured channel.
- Establishment of a facility for second-level approvals of payment files through an online platform.
- Enhanced transaction security through encrypted payment files.
Last but not least, the solution also meets the core requirements of treasury ERP, which is currently in the implementation phase and is expected to bring more benefits in terms of cash matching and atomisation of bank reconciliation.
