Best Cash Pooling Solution Highly Commended: Socfin Group

Published: Feb 2023


Photo of Mark Castry, UOB collects the award on behalf of Socfin Group.

Philippe Fabri

Executive Director

The Socfin Group specialises in the development and management of oil palm and rubber plantations. Socfin is present in eight Central African countries and two countries in South-East Asia, managing a total of 15 agro-industrial projects over 200,000 hectares.

in partnership with

APAC cash pooling solution managed from Luxembourg

The challenge

Socfin was experiencing significant growth in its agro-industrial sites. With strong business momentum, large amounts of cash balances were accumulating. Head office (HO) was facing challenges to view its real-time positions and track cash flows accurately. More importantly, HO lacked direct access to these funds. Additionally, there were missed opportunities on potential yield enhancements on the operating cash balances due to the lack of control and visibility. “From a management standpoint, there is a potential objective to move the group’s treasury centre to Singapore in the next three-five years. There is also a need to enhance the deployment of funds between our two key markets in the region; Singapore and Indonesia,” explains Philippe Fabri, Executive Director.

The solution

Socfin collaborated with its regional banking partner, UOB, to deploy a multi-country, multi-currency solution, enabling the group to achieve visibility of their cash positions in Singapore and Indonesia. Full control is enabled via a digital banking platform managed remotely from HO which bridges geographical and time zone gaps. Physical consolidation of funds is enabled by seamless cash sweep solutions comprising two domestic cash sweeps in USD and EUR from five participating companies domiciled in Luxembourg and Switzerland which were set up with the group’s treasury centre (currently incorporated in Luxembourg but may eventually change to Singapore) via non-resident operating and header accounts opened with UOB in Singapore. The domestic cash pools are two-way zero balance sweep structures which provide Socfin with visibility over the group’s cash position while allowing flexibility on daily operating payments. A cross-border cash sweep from Indonesia to Singapore will also be set up to further consolidate Socfin Group’s funds by sweeping surplus USD from Indonesia to their treasury centre based in Singapore, the same will eventually be done for the Group’s Cambodian operation. Lastly, when in place, multibank cash sweeps from Socfin’s other local banks (in Belgium, Switzerland, Luxembourg and Indonesia) will be set up to consolidate surplus cash positions into their Singapore and Indonesia UOB accounts to facilitate the central consolidation of cash positions. Further, a group overlay solution to optimise interest yields on consolidated balances with operational efficiency is planned.

To further enhance yields on the group’s portfolio of balances held with UOB across eligible currencies and locations, the bank implemented an interest optimisation structure covering all Socfin cash pool header accounts in Singapore and Indonesia, where enhanced interest benefit based on total balance portfolio is paid locally to the nine participating accounts.

Where intercompany interest is applicable between entities arising from the sweep transactions, Socfin will leverage comprehensive cash sweep reports to track intercompany loan balances and interest payable, and benefit from automated interest calculation and posting.

Socfin treasury users will benefit from centralised visibility on their UOB accounts with a single sign-on via an online banking platform with the global view functionality, which also offers seamless FX solutions for their FX payments.

Best practice and innovation

Socfin deployed a regional solution transcending geographical and time zone differences, allowing the group domiciled largely in Europe (Luxembourg, Switzerland and Belgium) to effectively manage their group funds remotely. Deploying a seamless regional solution with a bank with the matching country footprint, Socfin was able to streamline and consolidate all operating companies’ accounts under Socfin’s treasury centre supervision, enabling full access and control over the group’s overall funding positions. This becomes even more critical amidst prevailing volatile operating environment due to macroeconomic and geopolitical factors.

Key benefits

  • Process efficiencies.
  • Increased automation.
  • Improved visibility.
  • Number of banking partners/bank accounts reduced.
  • Manual intervention reduced.
  • Increased system connectivity.
  • Future proof solution.
  • Exceptional implementation (budget/time).

The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2022 awards attracted a record-breaking 416 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia

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