The challenge

Kuala Lumpur Kepong Berhad (KLK) encountered some complexities in its treasury management processes. With over 100 subsidiaries and a global revenue exceeding RM27bn in 2022, the company managed a considerable operational load and extensive banking processes of more than 700 bank accounts.

1. Cash visibility: KLK effectively managed bank balances but had room for improvement. Users needed to log in to each bank’s portal separately, albeit functional, led to minor inefficiencies in terms of cash management.

2. Authorised signatories: various teams within KLK lacked full awareness of the latest authorised signatories within the wider group subsidiaries. These records were manually maintained in Excel, which occasionally led to minor errors and was highly time-consuming.

3. Trade financing: communication between KLK’s subsidiary teams handling trade financing and headquarters (HQ) can be improved. Occasionally, HQ missed information about banks’ interest rate updates, which could affect opportunities for more favourable financing terms.

4. Investments: KLK’s handling of investments, including fixed deposits (FD) and money market deposits (MMD), were generally well organised. However, these were managed by teams in HQ and subsidiaries, resulting in varying interest rate offers. This variation had some impact on the optimisation of investment returns.

5. Intercompany loans: KLK’s management of intercompany loans relied on individual lender and borrower records, which occasionally introduced minor inaccuracies in financial reporting and the management of intercompany transactions. The absence of a centralised system made ensuring accuracy and consistency a challenge.

6. Decision making: KLK’s decision-making process has always been fast and efficient. However, the occasional lack of timely and accurate data made it somewhat challenging to make well-informed, strategic decisions regarding cash management, investments, trade financing and intercompany transactions.

The solution

As KLK strives to improve its processes with a digitalised and streamlined solution, the team implemented Kyriba – a centralised system to provide a single source of information to improve cash visibility for the organisation. Instead of requiring individual logins to each bank’s portal, the data is consolidated. Users have access all bank balances in one place, which enables a comprehensive view of cash positions across multiple accounts.

In 2022, KLK managed bank borrowings of over RM9bn and held a total cash balance of RM3bn worldwide. By monitoring the interest rates offered by different banks, KLK will save millions of MYR. Using Kyriba’s deal capture function, KLK significantly improved the efficiency of negotiating banking rates, and the organisation can more effectively monitor external loans and intercompany loan details to ensure the pricing aligns with arm’s length basis. This helps to optimise investment returns and manage debt effectively.

“By implementing Kyriba, we have improved our ability to monitor and manage cash, optimise investment and debt strategies, and make well-informed decisions for our treasury operations,” says Kelvin Tee Ping Jian, Treasury Manager.

The solution is implemented across all our operations in Malaysia, Indonesia, China, Europe, Australia and Singapore, and the implementation was conducted by Deloitte.

Best practice and innovation

KLK has established new best practices due to its digital treasury transformation with the implementation of Kyriba. With improved operational efficiency, the team reduced time needed to monitor cash movements, which enables them to focus on more critical tasks.

Key benefits

• Cost savings – €200,000 per annum.

• Better process efficiencies.

• Return on investment (ROI) – cash pooling with regional bank increased the notional pooling rate by 0.15% and led to significant savings of more than RM500,000.

• Increased automation.

• Manual intervention reduced – annual saving of 16,800 hours.

• Risk mitigated.

• Improved visibility and reduced errors.

• Number of banking partners/bank accounts reduced.

• Increased system connectivity.

• Future-proof solution.

• Exceptional implementation (budget/time).