Photo of Chris Kwok, Inner Mongolia Mengniu Dairy Co., Ltd and Anna Chang, Citi.

This is an extensive solution comprising many processes and technologies and is the first of its kind in Inner Mongolia which is why it is this year’s Judges’ Choice.

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First of its kind solution in Inner Mongolia

The challenge

Mengniu was looking to upgrade its treasury operations and control mechanisms and practices. Specifically, Mengniu was looking to enhance its operational efficiency vis-à-vis an automated, host-to-host global accounts visibility, overseas expatriate travel and expense management, collections and payments solution to support its global business growth. It faced the following challenges:

1. The management of numerous bank accounts with multiple partners globally created a lack of visibility and concentration of cash balances, unharmonised connectivity and different file formats used globally, high volume of cross-border and cross-currency payments, time consuming reconciliation and cash forecasting exercises, and manual pooling of funds with sub-optimal returns.
2. Many manual processes such as payments handling, receipt reporting, cash position reporting, bank reconciliation and cash forecasting.
3. Relying on spreadsheets as a key reporting tool to evaluate cash positions, ascertain financial transactions and derivative reporting and cash forecasting which can be subject to errors.

Citi was mandated as the global core bank for Mengniu for its global account visibility, global payment and settlement project. It had to work with Mengniu’s current ERP provider, Kingdee. The aims following the Kingdee ERP integration were:

1. To improve efficiency and internal controls (including rationalising the bank account structures, consolidating the banking platforms, improving connectivity between ERP and the banking platforms, straight through payments).
2. To enhance yield and reduce cost (improve visibility of cash, automate pooling of funds, reduce bank charges and transaction costs).
3. To rationalise internal funding structures.

The solution

After careful consideration, Mengniu Group decided to implement a customised solution suite which featured the following:

On the cash management front, Mengniu Group appointed Citi as its global banking partner to help it with its overall treasury and cash management structure, to deliver optimisation, standardisation and efficiency to support its growth. The overall solution presented by Citi has enabled the following:

• Reduction of number of bank accounts globally by more than 20%.
• Consolidation of the majority of bank accounts in ASEAN countries (Hong Kong, Singapore and Indonesia) by a single banking partner, thus enabling centralisation of cash and bank accounts to improve cash visibility and operational efficiency.
• Optimising FX solution for cross currencies/cross border payments via the WorldLink functionality.

• Adopting a new global harmonised file format (XML).