- Article
- Managing Cash Flow
- Improve Efficiency
Global liquidity structure delivering increased efficiency and reduced costs
JAS is one of the global leaders in logistics, operating across 100+ countries. JAS handles all modes of transportation and other digital driven supply chain solutions, with a focus on innovation and sustainability.
Managing working capital and liquidity across hundreds of bank accounts and legal entities in the many jurisdictions that JAS operates in was an increasing challenge for the business. JAS partnered with HSBC to help deliver a global liquidity solution to improve efficiency and reduce costs.
Inefficient Liquidity Management
Historically JAS leveraged a network of intercompany loans to manage working capital throughout the global organisation. This created both an extensive amount of manual work, documentation requirements, and frictional costs related to cross border payments, invoicing and interest charges. These processes also increased unwanted foreign exchange exposure that needed to be mitigated.
Working in partnership with HSBC, JAS and the bank were able to craft and create a nimble liquidity structure to eliminate intercompany loans, automate funding (and reporting where loans were required) and allow a more fungible basket of cash to facilitate the working capital needs of participating entities.
The cash pool has generated hundreds of thousands of dollars in interest and has eliminated some 50-100K of frictional transaction costs (from intercompany loans).
These hard dollar benefits go hand in hand with the time and energy savings on actively managing working capital across bank accounts in over a dozen countries. Now everything simply, "works".|
Global Liquidity Solutions
HSBC delivered a global liquidity structure for JAS centralised in the Netherlands. HSBC’s Cross-Border Cash Concentration and Multi-Bank Cash Concentration solutions sweep funds automatically from 20 HSBC and third-party accounts, located in 11 countries, into header accounts within the Netherlands.
Encapsulating the header accounts within the Netherlands is a Multi-Entity, Multi-Currency Notional Pool which consists of four nested Single-Currency Notional Pools in EUR, USD, AUD and SGD, as well as standalone accounts in 11 other currencies. The balances across the different currencies are notionally converted into a base currency to determine offsetting positions. No physical FX is required, and preferential interest rates are calculated on covered balances which generates enhanced yield.
HSBC’s Global Liquidity Solutions Self-Service (GLS SS) module, available via single sign on to our electronic banking platform HSBCnet, provides JAS with total visibility and control over the liquidity structure. GLS SS provides JAS with the ability to self-administer the parameters enabled for Cash Concentration and other automated Pooling arrangements.
The Success
- Streamlined global structure
- Increased automation
- Reduction in manual processes
- Reduced costs
- Reduced FX exposure
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This document is intended for discussion only and should not be considered as creating any contractual commitment on the part of HSBC. HSBC shall only become contractually bound on formal written agreement acknowledged by HSBC as creating such contractual commitment.
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Global Cash Concentration
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