SCAFP 2013: True Religion and JPMorgan April 25-26, 2013

Transcription

1 SCAFP 2013: and JPMorgan April 25-26, 2013 S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

2 Table of Contents Overview of Analysis of regarding banking and its international expansion Outcome: Account Structure and Functions Specifics to Retailers abroad: Two Bank Method: Overlay bank and local integrated depository One Bank Method: Fully integrated Armored Car

3 Best practices: New Imperatives for Treasury Management Managing working capital in a distressed economic environment requires innovative measures across the full spectrum of financial functions Visibility In a dynamic and volatile market, accurate and robust reporting is critical for a clear line of sight into the current firm-wide and global cash position Automated Treasury reporting and analytics Multibank reporting Ability to provide both global and local view Control and Security To manage costs, many companies are setting up centralized procurement and collection hubs, implementing e-payables solutions, reviewing purchasing card programs and generally reducing operational risk Consolidate accounts at a strong global or regional bank Single global electronic banking system Minimize operating risk Account rationalization In-country concentration and pooling Overlay structures between local banks and global or regional providers Consolidated payments Migration to electronic and automated processes Fully-invested cash positions Outsourcing of investment management and reporting Inter-company netting Optimized Structures: In-house banks, Global and regional treasury centers, Finance Companies, Share service centers, Payment factories T R E A S U R Y B E S T P R A C T I C E S Optimized Liquidity and Working Capital Efficiency Risk Mgmt Due to increased credit cost and availability, companies are facilitating supply chain flows by focusing on internal cash generation for financing Companies are optimizing working capital management through improvements in receivables/payables processes by extending window of USD collections and automate the concentration of funds and global payments For effective liquidity management, leverage technology investments in ERP and/or treasury management systems in order to unlock trapped cash in the working capital cycle and benefit from a global interest optimization program Managing counterparty risk is paramount as companies seek confidence in their banking partners while rationalizing banking relationships to limit their total exposure Companies must protect their credit rating through proactive dialogue about cash flow dynamics, liquidity positions and potential initiatives to ensure steady and reliable credit 2 Comprehensive review of risk management policies and procedures that may encompass interest rate, foreign exchange, manufacturing, operational, investing and contingency planning risks

4 Global Treasury Management Strategies s structure helped determine what needs its bank partners should fulfill Commonly used structures: Bank Structure Global Regional Local Centralizing physical banking functions in a single location Regional centers provide services to specific subsidiaries Single banks are designated for key countries Functional Organized by operational functions needed Requirements Control and visibility Economies of scale in pricing, technology Lower operating costs Single transaction bank relationship Local business, banking practice, and cultural expertise Less concentrated counterparty risk than global model High level of local business, banking practice, and cultural expertise Less concentrated counterparty risk than global or regional model Economies of scale in pricing and technology Efficiencies from functional expertise T R E A S U R Y B E S T P R A C T I C E S Considerations Example Balancing global control with need for local presence High tech company with primarily electronic channels to customers Additional personnel, sites, systems, bank partners to manage both locally and across regions Natural Resources company whose concern is accessing working capital in order to invest in local projects 3 Highest number of personnel, sites, systems, bank partners to manage Mining firm with significant operations in regulated markets such as China and Brazil Stronger reliance on banking partner to provide diversity of functions Chemicals distributor with three banks; FX, cash concentration, disbursements

5 Bank and account rationalization is the foundation to achieving four key treasury objectives World-class treasury management Increase cash visibility and control Improve counterparty risk and controls Leverage bank technology Consolidate treasury activity G L O B A L B A N K A N D A C C O U N T R A T I O N A L I Z A T I O N Fewer accounts to manage and reconcile Frees up cash for investment Fewer bank relationships to manage Optimize exposure with strong counterparty banks Less complexity for regulatory reporting Fewer bank partner integrations Reduced time spent on account reconciliation Rationalized banks and accounts globally Centralized AP/AR Centralized FX management Facilitates adoption of advanced treasury structures Easier post-m&a treasury integration Fewer accounts consolidated with key banks also generates cost savings and pricing advantages: Transparent pricing across countries Reduce borrowing costs from self-funding Volume purchasing/scale Lower account and transaction fees and FTE costs A clean house of accounts sets your treasury up for improved visibility, control and efficiency, in addition to saving bank fees and freeing up cash for investment 13

6 Brand Jeans - Account Structure Guru Denim Inc USD Funds Transfer Individually Billed Account Analysis Brand Jeans EMEA Sagl Zurich Branch CHF Individually Billed Account Analysis Brand Jeans SARL Euro Individually Billed Account Analysis Brand Jeans Italy S.R.L Milan Branch Euro Individually Billed Account Analysis * Group Account Analysis Brand Jeans EMEA Sagl London Branch USD Brand Jeans EMEA Sagl GBP Brand Jeans EMEA Sagl Euro Local UK Activity APAC Accounts Brand Jeans UK Ltd GBP Brand Jeans UK Ltd Euro Brand Jeans Korea Branch KWN Brand Jeans Hong Kong Branch HKD Brand Jeans Japan Branch JPY Multi bank Swift draw downs - Retailers

7 Integrated one bank solution Armored car picks up coin and currency at London based stores Armored Service Cash Processing Center JPMorgan Chase Bank Same Day Reporting via JPMorgan Access to Vernon, CA Head Office

8 Two Bank Solution Cash picked up at Tokyo Area Stores Deposit cash at local Japanese Bank Yen moved actively or passively by TR Tokyo or Vernon, CA to JPMorgan Tokyo Same Day Reporting via JPMorgan Access to Vernon, CA Head Office