Best Cash Management Solution Highly Commended: Lear Corporation

Published: Apr 2021


Photo of Chen Yi, Joanna Li, Jared Fedele, Angela Li and Luo Huiting, Lear Corporation.

Angela Li

Treasury Director APAC

Lear, a global automotive technology leader in seating and e-systems, enables superior in-vehicle experiences for consumers around the world. Our diverse team of talented employees in 39 countries is driven by a commitment to innovation, operational excellence, and sustainability. Lear is making every drive better™ by providing the technology for safer, smarter, and more comfortable journeys.

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Digital agenda delivers for Lear Corporation in Asia

The challenge

In Asia, supporting global original equipment manufacturers (OEMs) local operations is an important element of Lear’s strategy. With manufacturing facilities located across ten different Asian countries, Lear has a significant portion of revenue and expenses in non-USD currencies.

Lear’s Just-in-Time operating model results in a broad manufacturing footprint that aligns with the footprint of the various customers the company serves across the region. This unique operating structure provided an opportunity to Lear’s lean regional treasury team of five in Shanghai to align and streamline its treasury systems and processes across all facilities in Asia.

Intercompany and vendor payments were made through various means without a single automated end-to-end process. In India, Thailand and the Philippines, paper-based processing lengthened turnaround time which risked damaging Lear’s relationship with its suppliers.

An extended period of low interest rates coupled with dynamic regulatory environments prompted Lear to re-examine its liquidity structures in Thailand when Eagle Ottawa was merged.

The solution

Lear India centralised payment processing from more than ten manufacturing plants to one shared service centre (SSC) in Pune with a deep-dive analysis on channel, transaction, and account structures. The company implemented Citi’s paperless import and export solution, where payment instructions, invoice data and supporting documentation are all transmitted digitally to Lear’s centralised banking platform which is fully integrated with the Reserve Bank of India’s Import Data Processing and Monitoring System (IDPMS), where Lear can provide trade data by simply inputting the invoice reference.

Lear Treasury partnered with the SSC and the bank to move its SSC flows to a situation where payment files are initiated from a central location and sent to a unique entry point in compliance with Lear’s security requirements. For enhanced control, Lear enabled the pre-validation feature where all outgoing payments are validated against the list of beneficiaries.

Emails are automatically delivered to beneficiaries along with payment advice and invoice information once the payments are processed, achieving straight through processing.

Lear Thailand implemented a fully automated zero balance accounts cash pooling system.

Best practice and innovation

Lear ran several scenarios, collaborating with the bank to empower the company’s journey towards smart treasury. This journey provided the opportunity for Lear to move beyond descriptive analytics to predictive and prescriptive decision automation, strengthening Lear’s fundamental business planning, procurement and production activities. The transformation of legacy system, usage of data, business process automation, centralised control, and strategic cash consolidation in restricted markets underpins Lear’s business leadership and cultivates the company’s growth through more productive and innovative allocation of resources.

Key benefits

  • Centralisation of control and visibility – a single SSC in India for AP/AR.
  • Infrastructure (TMS/ERP) integration.
  • Process digitisation and automation.
  • Cash flow optimisation in restricted market (Thailand).

Lear’s APAC treasury team has demonstrated its commitment to achieve a forward-thinking digital agenda to its future-state cash management capabilities by unlocking the value of data and automation. Executions were realised in six to nine month increments to drive tangible business benefits. Time was invested in process mapping transaction flows, cash flow cycles, and vetting authorisation frameworks among treasury, local finance and manufacturing plants. The cross-team collaborations have resulted in significant account structure rationalisation, straight through processing, same-day payment turnaround, and centralised visibility and control at regional treasury.

The successful implementation of end-to-end digital solutions at Lear Asia SSC’s handling ten countries, more than 10,000 suppliers and 15 currencies has opened up the opportunity for Lear to move forward to decision automation, strengthening Lear’s fundamental business planning, procurement and production activities.

“The transformation we underwent was significant and the evolution has meant many positive outcomes for our business. The digital evolution has allowed us to execute more efficiently and strengthens our overall capabilities,” says Angela Li, Treasury Director APAC.

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Karen Tsai

Regional Account Manager, Treasury and Trade Solutions
Citi, China

We collaborated with Lear to unlock the value of data and automations in driving a forward-looking cash forecasting agenda. The focus was on synchronising banking and regulatory digital platforms, streamlining treasury infrastructures and AP processes, consolidating shared service centre flows, as well as optimising cash positions for merged entities in restricted markets. Time was invested in mapping transaction flow, vetting authorisation framework, leveraging data to transform legacy systems, and strategically navigating regulatory environments. The cross-team executions resulted in significant structure rationalisation, straight through processing, and centralised visibility and control at regional treasury.

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