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Best Cash Pooling Solution Highly Commended: MISUMI Group Inc.

Published: Jan 2024
Photo of Hide Hiramatsu, J.P. Morgan, Risa Kawakami, Takami Seto, MISUMI Group Inc. and Ramesh Swamy, J.P. Morgan.

Photo of Hide Hiramatsu, J.P. Morgan, Risa Kawakami, Takami Seto, MISUMI Group Inc. and Ramesh Swamy, J.P. Morgan.

Takami Seto

General Manager, Finance & Accounting Department
MISUMI Group Inc.

Established in 1963, Japan-headquartered MISUMI Group Inc. is a supplier of configurable components for the manufacturing industry. With over 11,800 employees, the company generated ¥373.1bn in sales FY2022, serving over 320,000 customers through 66 sales offices, 19 logistics centres and 22 manufacturing sites in Asia, the Americas and Europe.

in partnership with

J.P. Morgan logo

Against-the-sun sweep solution with no loss of value

The challenge

As a result of MISUMI Group’s business growth and improved profitability in each region, the company has the funds necessary for growth investments. But there was a trend of expanding in a mix of areas with surplus funds and/or areas with short in funds. For this reason, establishing cash management to support aggressive growth investments for further growth of the MISUMI Group was needed.

The key points for building the system were as follows:

  1. Establish optimal fund transfer processes across countries and realise flexible allocation of funds for growth investments.

  2. After stabilising and streamlining funds in each region, there was a need to consolidate funds to Japan where investment is increasing.

  3. Realise optimal fund management by consolidating surplus funds.

  4. Reduce resources by consolidating financial operations for each subsidiary.

The solution

In April 2022, MISUMI embarked on a global treasury transformation – replacing its decentralised structure across eight global markets with a single liquidity platform to consolidate banking relationships.

At the heart of the solution is a single-entity multicurrency notional pool (HQ pool) set up in Tokyo and supplemented with custom sweeps structures involving cross-border, multi-bank, zero-balance account and against-the-sun mechanisms to connect MISUMI’s global liquidity across multiple banks and regions, including integrating complex markets like Mexico and Portugal where MISUMI maintained third-party banking relationships. The innovative use of against-the-sun cross-border sweeps also enables MISUMI to move funds across time zones (from the US and Europe to Japan) without any loss in liquidity value.

Best practice and innovation

Within just a year, MISUMI went from having difficulty with convenient visibility and control of its global cash to today, achieving full visualisation of its global account structures via a single platform. MISUMI applied process innovation across its internal treasury practices across the world, leveraging best in class treasury practices and innovative technologies to automate, streamline and optimise its global liquidity, and instil a centralised treasury governance model in a cost-effective and timely manner.

The deployment of a cross-border liquidity structure fitted with powerful logic mechanisms like multi-bank, cross-border, zero-balance sweeps and against-the-sun mechanisms, has enabled MISUMI to achieve connectivity and cash visibility across all its entities under a pooling structure worldwide – marking a remarkable transformation for the firm, and allowing MISUMI’s HQ treasury to effectively allocate liquidity, and improve use of cash to maximise investments and returns.

Key benefits

  • Cost savings.

  • Headcount savings.

  • Process efficiencies.

  • Increased automation.

  • Risk mitigated.

  • Improved visibility.

  • Errors reduced.

  • Manual intervention reduced.

  • Future-proof solution.

“We have put in place a complex structure within a year further demonstrating the strong collaborative effort and relentless pursuit of our teams to transform our cash management and put in place a robust treasury foundation to empower our next phase of business growth.”

Takami Seto, General Manager, Finance & Accounting Department

Hideki Hiramatsu

Executive Director, Commercial Bank, Corporate Client Banking & Specialized Industries, J.P. Morgan

As MISUMI Group Inc. is a worldwide, international company, J.P. Morgan’s global cash pool for supporting their subsidiaries in Pan-America, Europe and Asia enabled them full and convenient visibility and control over surplus funds. It also allowed funds to be deployed for investment, funding and emergency use, while allowing for better liquidity returns. The success of completing their global cash pool has strengthened the relationship between both companies; we are honoured to be their global partner bank.

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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