Best Cash Flow Forecasting Solution Highly Commended: Huntsman Corporation

Published: Jan 2024
Photo of Joey Koh, J.P. Morgan.

Photo of Joey Koh, J.P. Morgan.

Claire Mei

Vice President & Treasurer

Ivy Cheng

APAC Treasury Manager
Huntsman Corporation

Founded in 1970 in Texas, USA, Huntsman Corporation is a manufacturer of differentiated organic chemical products. The company operates more than 60 manufacturing, research and development, and operations facilities in approximately 30 countries and employs approximately 7,000 associates.

in partnership with

J.P. Morgan logo

AI-powered cash flow intelligence (CFI) helps address spin-off of cash rich division

The challenge

As part of its strategic goal, in 2023 Huntsman divested its Textile Effects division, a mature and cash-generating business unit that accounted for about 60% of Huntsman’s flows in Asia Pacific.

Before the divestiture, Huntsman utilised a sophisticated liquidity structure that enabled cash-positive entities like Textile Effects to automate intercompany funding to those that required cash. But with the impending spin-off, Huntsman needed more accurate projections into the cash flows of other entities as it could no longer rely on continuous funding from the textile division. Huntsman also sought the ability to better monitor cash positions to avoid expensive overdraft fees or other disruptions to operations.

The time and effort to ensure accurate and efficient working capital stretched resources thin on Huntsman’s regional treasury team as it prepared for the impending sale. At the same time, Huntsman maintained operating accounts at local banks across several highly restricted Asian markets, which added to the complexity of the situation.

The solution

To address these challenges, Huntsman implemented J.P. Morgan’s artificial intelligence (AI) powered cash flow intelligence (CFI) solution which helped the firm automate cash predictions needed over the immediate and mid-period, enabling Huntsman to put excess cash to better use while minimising risk to operations.

CFI analyses historical data, identifies patterns and trends, flags outliers and excludes one-off transactions to provide Huntsman with insights into potential flows in the day-to-day operations across entities, with the ability to track flows across multi-bank accounts, including in restricted markets.

“The solution also allows us to categorise cash flows into mutually exclusive reporting categories, allowing for easier category-level analysis of flows like vendor payments or funding,” explains Ivy Cheng, APAC Treasury Manager.

With the solution enabled on its digital banking platform, J.P. Morgan Access, Huntsman can utilise the CFI solution within a day, without any required bank documentation, providing its Asia Pacific treasury team with necessary insights to effectively manage cash flows during a critical time. The speed, accuracy and effectiveness of the solution ensures the smooth running of treasury operations across numerous accounts, avoiding impact of day-to-day operations and preventing overdrafts or the use of external credit facilities.

Best practice and innovation

Huntsman tapped into an AI-powered CFI solution provided by J.P. Morgan that leveraged Huntsman’s own historical big data to automate and make more accurate cash projections across entities and multi-banks, maximise internal cash use, and minimise the need for costly external borrowing.

Mergers, acquisitions and other major organisational changes require careful attention and resources from treasury teams to ensure accounts stay funded and day-to-day operations proceed as usual. In Huntsman’s case, a divestiture required the company to remove a cash-generating division out of its intercompany lending ecosystem.

With the feature quickly made available to Huntsman within 24 hours through its existing banking platform, CFI provided Huntsman’s Asia Pacific treasury team with immediate access to working capital projections across accounts with multiple banks and in multiple currencies, using historical data to flag and address any anomalies or special circumstances.

Key benefits

  • Cost savings.

  • Headcount savings.

  • Number of banking partners/bank accounts reduced.

  • Process efficiencies.

  • Improved key performance indicator (KPI) metrics.

  • Increased automation.

  • Risk mitigated.

  • Improved visibility.

  • Errors reduced.

  • Manual intervention reduced.

  • Increased system connectivity.

  • Future-proof solution.

  • Exceptional implementation (budget/time).

  • Quality accreditation achieved.

From improved automation to more accurate cash projections to maximised returns on internal cash including multi-bank balances in restricted markets, CFI has provided significant value-add to Huntsman’s APAC treasury team at minimal cost, time and resources.

Joey Jerome Koh

Executive Director, Regional Coverage Executive, J.P. Morgan

J.P. Morgan’s AI-powered solution provided Huntsman with a simple, quick yet powerful cash flow projection tool to meet complex funding needs across entities, banks, currencies and markets, in the midst of a major divestiture. Leveraging on historical data and transaction patterns, Huntsman was able to reassign treasury resources to other key tasks of the spin-off, while still ensuring accounts stay funded and disruptions to daily operations kept to a minimum to avoid tapping into credit facilities. This cash flow forecasting solution, delivered to Huntsman within 48 hours, allowed cost savings, financial risk mitigation, process efficiencies and an exceptional implementation.

in partnership with

J.P. Morgan logo

The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2023 awards attracted 450 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia

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