The challenge

Adient was looking for options to manage its idle cash maintained in China and optimise its global non-restricted liquidity efficiently and cost effectively.

The solution

To address the challenge, Adient collaborated with Citi on a pilot multi-currency RMB cross-border pooling programme in China. Adient China – the header is not a Shanghai Free Trade Zone (SFTZ) registered entity that other options would require. The structure features flexibility to convert foreign currencies as needed with the centralised overseas non-resident account while providing cross-border two-way sweeping. The solution also involves an automated earmarking of funds across participant accounts on a real-time basis to facilitate funds flow and visibility.

A link is also being built for Adient between different processing systems, leveraging the SWIFT network for a multi-bank solution. A host-to-host connection has been set up between Adient’s treasury management system (TMS) and its cash management banks.

“At its core, the solution needed to recognise the importance for us to maintain relationships with local banks that is crucial to facilitate the functioning of cross-border pooling and multi-bank set-up across various countries that ultimately enhance our non-restricted global liquidity positions,” says Steve Wong, Executive Director and APAC Treasurer.

Best practice and innovation

Adient’s decision to pilot the SFTZ cross-border pool, one of the first MNCs, demonstrated its leadership to address treasury challenges in a restricted market.

The cash management projects prioritise automation, visibility and control, while maintaining important relationships with third-party banks via a SWIFTNet-based host-to-host set up.

Key benefits

• Enhanced non-restricted global liquidity efficiently.
• Reduced idle trapped cash.
• Reduced entrusted loan costs and avoided FX costs from other options.
• Simplified inter-company settlement.
• Increased STP and visibility.
• Improved working capital efficiency.