The challenge
Cargill Treasury has been focusing on rationalising its cash management bank relationships and is diligent in working with its key banking partners to build new capabilities to improve efficiency and helping to support innovation and the roll out of new age solutions through the pilot of revolutionary ideas in cash management. The fact that Cargill has had to deal with locally specific situations in some of the more remote parts of Asia while keeping global consistency in its cash management operations has been a key challenge.
There are three key countries where the value of relationships shine through:
Indonesia – Cargill’s cocoa suppliers are farmers who typically bank with the predominant local bank in the region and expect to be able to withdraw and use funds paid to them almost immediately upon the sale of the cocoa beans at the Cargill plant.
Thailand – Cargill was keen to improve and modernise its cash management operations, especially with businesses where cash is still being used. Cargill runs local retail stores which sell by-products to the local farmers and customers. Cash is the main mode for collection and arrangements are made with the local banks to facilitate periodic cash deposits at the local bank branch.
Korea – Cargill had to maintain multiple accounts with local banks to facilitate payments and promissory notes that are issued by customers who mainly bank with them. Cargill needed a solution that allows the company to automatically consolidate funds across all its local banks with a single bank.
Cargill also wanted to improve the liquidity management solution locally to allow for automated sweep of excess USD liquidity in the country into its central treasury account in Singapore which is held with the company’s global liquidity provider. Given the regulatory constraints in sweeping funds from Korea, Cargill needed a new, innovative solution that allows for such sweeps, which still lies within the regulatory parameters allowed in the ‘Consolidated Management of Funds’ framework.
The solution
Indonesia – Deutsche Bank worked with their partner bank in the country to connect to the ATM Bersama network which interlinks the ATM network of banks across Indonesia, which made sighting of funds from payments made via the ATM Bersama network almost instantaneous.
Thailand – the Cargill team conducted an RFP for the Thailand cash management business and found a good solution through another global relationship bank which allowed the company to deploy the new PromptPay instant payment solution. This allowed Cargill to deploy QR codes for collections locally and provided an option for the company to make payments instantaneously to their suppliers.
Korea – Deutsche Bank was able to offer the Multi Bank Reporting Solution as well as invest in a new Firm banking solution that allows for the reporting of balances and transactions from third-party accounts and the sweeping of balances to the main operating account through a host-to-host solution. Deutsche Bank was also able to facilitate a customised automation solution for the sweeping of funds up to the allowed limits approved by the Bank of Korea from Cargill’s accounts in Korea to the company’s account in Singapore held with their global liquidity provider.
Best practice and innovation
It is the excellent work Cargill has done in consolidating and managing the cash management activities with its relationship banks in the region which has provided for mutual benefit.
The company has been a willing co-creator of new and cutting-edge solutions in the industry and has championed the efficiency agenda from a corporate perspective which is a model for other corporates and industry players to follow. Cargill has been judicious in managing cash management mandates and streamlining and consolidating the existing banking relationships to core banking partners by leveraging technology.
Key benefits
- Consolidation of cash management banking relationships.
- Improved operational efficiencies.
- Better cash and liquidity management.
“This great partnership has helped our bank push the boundaries of their own innovation and drive their solution offerings. Cargill remains keen to explore more new and revolutionary ideas,” says Nyet Sian Kiew, Head of Treasury Services Group, Asia Pacific.
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