Unilever has taken the bold, but increasingly popular, move of consolidating its cash management operations with one bank. The UK consumer goods company has picked HSBC to handle its payments and liquidity management structure across the region.
It is a move likely to be mirrored by other multinational companies in Asia this year as they attempt to reduce transaction costs and improve transparency on accounts. Other benefits include maximizing surplus cash for internal funding and enhancing yield on investments.
Speaking about the move, Shonaid Jemmett-Page, Unilever's senior vice president of finance and IT in Asia, says the benefits for the company will be significant. "The project is an integral component of our 'World Class Finance' vision," says Jemmett-Page.
HSBC Connect, the bank's host-to-host system, will be integrated with Unilever's ERP making it the prime delivery channel for payment files in 17 countries.
At the same time, Lawrence Webb, head of cash management for HSBC in Asia, says the web-based platform, HSBCnet, will be used for balance and transaction reporting. Webb says that while the RFP (request for proposal) from Unilever covered payments and liquidity management, HSBC also spent time with the company's satellite offices in an attempt to understand their collections needs.
"If you want to improve liquidity it is sub-optimal to only look at payments since this is only one side of the process," he comments. "So we've come up with some suggestions as to how receivables can be improved and it is now up to the country offices to decide whether they also want us to handle collections."
Unilever's bank selection process was democratic with each country office voting on the best service provider. The RFP process began last May with banks making final submissions in December and January. At least five regional banks were in the running.
Unilever previously used a combination of regional banks and domestic banks to meet its cash needs.
The company's RFP set specific objectives including the establishment of domestic and regional cash pools to improve foreign exchange management, the ability to gain economies of scale and process efficiencies, and the need for a robust, secure and scalable IT infrastructure.
