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The challenge

Aihuishou’s international expansion in China and overseas accelerated its gross merchandise volume (GMV) to CNY12bn at the beginning of 2019, and with disparate legacy systems, the manual management of cash and liquidity across products became ineffecient for the corporate treasury team. Cash management was fragmented and there was no cash planning with a lack of visibility on the global cash position. For example, the statements of more than 130 bank accounts required manual download from excel. The cash account types had to be manually marked on bank transaction details.

Cash flow reports were time consuming, up to 15 days, and often inaccurate due to human coding errors.

The solution

The company determined it needed to invest in its treasury team, improve its processes and implement a modern treasury solution. Initial requirements included the ability to centralise all bank accounts onto a single platform to reduce manual errors, gain time and efficiency, and the ability to improve cash management with real-time visibility of cash positions and balances while supporting the expansion of business overseas.

Kyriba’s treasury management, payments and connectivity software consolidated remote processes and systems into one, unified solution. Aihuishou treasury leveraged connectivity to Kyriba’s 1,000 banks through one API and gained visibility to payment approvals and reduced risk with fraud protection. Builtin country and regional protocols, 45,000 formats and access to H2H when needed enabled Aihuishou to scale with minimal IT support.

Best practice and innovation

The team required real-time, accurate data reporting for cash forecasting and positioning. Partnering with Kyriba empowered the team with a centralised cash management solution that delivered a daily cash report with regional and group level analyses.

“By mastering cash flow trends of each business unit and combining actual business needs, we now have intelligent cash forecasting and variance analysis data to equip the team to maintain stable cash flow,” says An Shuang, Head of Treasury.

ESG is crucial to Aihuishou as it has two main businesses – mobile phone recycling and recycling of recyclable waste of residential life, which have made great contributions to environmental protection in China and around the world. Faced with the challenge from investors of financing ESG programmes with heavy fixed assets investment (CNY1bn), the treasury team solved this problem with lease financing. It reduced the big investment on fixed assets and strengthened their business and financial structure at the same time.

Key benefits

• 200+ domestic and overseas bank accounts centralised and managed on the platform, enabling real-time visibility into daily cash positions and balances.
• 400% improvement in cash flow reporting time from 15 to three days.
• Optimised cash flow from intelligent cash forecasting and analyses that generated multiple ‘what if’ cash flow scenarios.
• Secured six months of cash stability with reliable cash positioning – gained valuable recognition from investors and capital markets.
• A fair, transparent, and secure supply chain finance (SCF) system has been established to support the enterprise’s vast e-business.
• CNY1bn reduction of fixed assets through a financial leasing method to support the enterprise’s light internet business.

Aihuishou has taken giant steps in the PRC with its technology platform partner. Its next step is to connect network payments (eg Alipay, WeChat payments and other third-party payments) to the platform to enable a large amount of transaction funds out of bank accounts into the payments hub to gain more financial control, advanced fraud protection and intelligent management of payments.

While bottom line value is clearly a priority for Aihuishou, evidenced by the valuation the market placed on its initial public offering (IPO), the treasury team also prioritises ESG as a function of their treasury culture and ambition to build value across the enterprise.