Senior Treasury Analyst
Investing surplus liquidity was a manual and inefficient process for eBay which saw them gain very little returns on their investment cash. Here, Anderson Childress, Senior Treasury Analyst at eBay explains how implementing HSBC’s LIS has revolutionised their short-term liquidity management process, delivering multiple benefits to the organisation.
Like most corporate treasury departments, the management of short-term liquidity at eBay has traditionally been a very labour-intensive process. Cash was swept from multiple accounts into an operational account that was used for payroll and other working capital needs. Any excess cash needed to be put to work. “To do this we manually pushed surplus funds from our operating account into a savings account which returned less than favourable yields,” says Anderson Childress, Senior Treasury Analyst at eBay.
For a time, this process, whilst not ideal, was manageable for the eBay treasury team. However, changes in the short-term investment landscape would soon demand a fresh approach. “After numerous discussions with our senior management team we decided that it was necessary to invest time into looking at products and services that would better suit our cash management and short-term investing needs moving forward,” notes Childress.
The eBay treasury team went out into the market to see what products might fit its needs and HSBC’s LIS solution quickly caught their attention and that of senior management. “The places to park cash and pick-up favourable yield have become increasingly sparse, so to hear of a solution that could offer this and do so in an automated fashion seemed to tick all the boxes,” he adds. “Because of these factors and the company’s pre-existing relationship and SWIFT connectivity with the bank – which the solution is built upon – it made it an obvious choice to adopt the product.”
Implementation of the solution took just one month and eBay’s treasury were quickly able to begin using the solution to automate the investment of surplus liquidity. “Having entered our various risk parameters, cash trigger levels and selected the funds that we wished to invest in, the product began to work instantly,” says Childress.
“For the first few months we kept a close eye on our cash levels and investment, which are available on a consolidated basis through HSBCnet, to make sure that our parameters were correct and that we didn’t incur any unnecessary fees or charges. But since then we have been hands-off and let it run in the background – the product is essentially self-maintaining.”
With the solution up and running, eBay quickly began to realise the benefits and almost instantly were saving significant manual intervention previously dedicated to managing this process. LIS has also reduced the effort spent generating analysis reports for senior management or investment policy committee as these are automatically generated in the system. What’s more, yield pick-up also increased thanks to the ability to capture the more favourable returns offered by the two MMFs eBay had selected.
The solution also helped deliver some unexpected benefits to the eBay treasury team. “Whilst implementing LIS, we realised that we could also rationalise our account structure at the same time and maintain just a single operational account for our working capital needs,” notes Childress. “This again has helped drive efficiency, as we are no longer required to manually sweep money into the operational account, and also created a substantial saving in bank fees.”
The treasury team and senior management at eBay are all very satisfied with the product and in the few months since LIS has been live, eBay have realised a significant financial benefit. “It has been a win-win for the business,” says Childress. “Not only are we now making our excess liquidity work harder, we have been able to save further costs by reducing our banking fees, and we have also freed up a considerable amount of time in the treasury team, enabling us to focus on more value-add strategic matters. I would certainly recommend that this solution be something that other treasurers look very closely at.”