Marks & Spencer taps into Virtual Accounts to revolutionise treasury management and empower growth

Established in 1930, Abdullah Al-Futtaim Group (AFG), is one of the largest business houses in the United Arab Emirates (UAE) comprising over 200 companies and operating in more than 20 markets with over 30,000 employees. AFG has held the regional franchise rights for Marks & Spencer (M&S) since 1997, where it operates 46 stores in Bahrain, Hong Kong SAR, Kuwait, Malaysia, Oman, Qatar, Singapore and the UAE. M&S is the leading retailer bringing quality, great value food, clothing and homeware to millions of customers around the world.

M&S’s business in Hong Kong has grown substantially with the company now operating 20 stores in popular areas across the city. With business scaling up, M&S recognised the need to transform its treasury function. The company sought to adopt future-ready treasury solutions to centralise and streamline processes. With the goal of building a leaner and more strategic finance function that could focus on delivering valuable insights to improve customer experience and support overall business growth.

The first step to transforming its finance function was to reassess their collections and reconciliation processes, which had remained heavily manual.

• M&S stores in Hong Kong accept cash and local payment methods such as credit cards, Electronic Payment Service (EPS), stored-value Octopus cards and e-wallets like Alipay. However, cash collections were reconciled into a single physical account for each store, with M&S having to maintain different accounts and no visibility into sales proceeds from each payment method.
• This meant staff had to search through accounts and transaction reports to manually match remittances against the bank account statements of each store, resulting in slow and inefficient reconciliation processes.

M&S worked with HSBC to deploy a next generation Virtual Account Management (ngVAM) solution that rationalises and streamlines collections into a single physical account, while enabling the company to segregate and reconcile transactions by payment types. This will potentially allow M&S to gain better insights into customer behaviours, and payment methods at the store level, to enhance the overall customer experience and most importantly, will allow treasury to operate at a simpler and optimal level.

With ngVAM, each M&S store can now be assigned a unique virtual account number, with a possibility of subsequent virtual accounts to be opened for each payment method, making it simple for M&S to segregate transactions and reconcile by payment types.

Through the ngVAM portal on HSBCnet, both AFG and M&S will have access to a dashboard that automates reconciliation and provides at-a-glance visibility into remittances from each distribution channel, this enables the company to better capture customer insights that may allow the business to formulate more detailed marketing strategies.

This solution required M&S and HSBC to work closely with the numerous third-party payment providers to understand the various payment cycles and how payments were cleared, to integrate the relevant payment data from these channels into the ngVAM solution, enabling information to be reflected accurately on the dashboard, and more importantly help fully rationalise accounts.

The deployment of ngVAM not only allows M&S to rationalise, simplify and centralise their treasury and finance function, but also enable them to future-proof their business to support growth in a strategic market.

• Operate a single physical account for multiple purposes, with the rationalised structure driving improved visibility and better treasury management.
• Optimised working capital by improving cash conversion cycles with same day turnaround.
• 90% improvement in remittance identification. ¹
• Over 30 resource hours saved per month through the streamlined end-to-end reconciliation processes across distribution channels and payment methods. ²
• ngVAM dashboard provides at-a-glance view of payments received by stores across channels.
• Potential ability to run analytics to deep dive into sales performance, consumer behaviour trends and collection efficiency at a channel level to formulate personalised marketing campaigns or loyalty programs.

Al-Futtaim Group / Marks & Spencer is a winner of The Asset Triple A Treasurise Awards 2024 in the Best Payments and Collections Solution category for Consumer Goods / Retail in Hong Kong.