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October 2017
Treasury and Trade Solutions
Going Global – Business without Borders Enabling International Growth
Simona Anghel
Romania Sales Head
Treasury and Trade Solutions, Citi
The Pursuit of Growth Treasury Challenges Emerging market companies are increasingly expanding their businesses beyond home borders into international markets.
These companies face numerous challenges and risks in the pursuit of global growth.
Fragmented banking structures across multiple banks
and countries
Managing multiple different currencies
High FX costs
Cash forecasting challenges
Difficulty funding local businesses
Inefficient repatriation of cash
Negative rate currencies and trapped cash markets
Post M&A integration challenges
Growth Strategies Key Treasury Challenges
Balancing
Growth and
Risks
Growing
domestic
market share
Mergers and
Acquisitions
eCommerce
growth
Partnerships
and Joint
Ventures
Access to
international
markets
1
AUD USD
Australia
BRL
Brazil
France
EUR USD Germany
EUR USD
Hong Kong
HKD USD INR
India
EUR
Italy
JPY
Japan
Sweden
EUR SEK
EUR
United Kingdom
GBP USD CAD
Canada
USD
USA
USD
USD
Typical Cash Management Structure
As organisations expand internationally, they frequently maintain fragmented structures across multiple banks & countries.
Typical Cash Management Structures & Challenges
Key Pain Points
High operating costs – multiple banks,
platforms & processes
Fragmented liquidity & negative rate ccys
Difficulty funding local businesses
Inefficient repatriation of cash
Forecasting challenges
High FX costs
Lifting fees on cross border payments
Reconciliation challenges Transactional payments and collections
2
The Citi Solution – Value Proposition Citi’s solution minimises your overhead costs, reduces FX exposure and optimises working capital to provide you with a
direct competitive advantage and a scalable platform for your growth agenda
Optimise Liquidity Streamline Operations Improve EBITDA
• Consolidate liquidity across
Citi and 3rd party banks, with
automated sweeps
• Single view of global cash
positions
• Optimise use of cash across
currencies including
automated repatriation
• Bank & Account
Rationalization leveraging
Citi’s global network
• Payments to 190 countries in
over 130 currencies with FX
transparency
• Full Value Transfers to
beneficiaries
• Earnings Credits to offset bank
fees and reduce expenses
• Payer ID accounts to
accelerate cash application &
improve DSO
• Virtual Card Accounts for
greater security & control and
extended payment terms
• Technology integration and workflow
automation solutions
• Dashboard tools enable you to view your
positions & get actionable analytics
3
Managing Multiple Currencies across Markets
Client Characteristics and
Pain Points
Invoicing in different currencies
Multiple banks and
multiple currencies
Counterparty risk concerns
Fragmented balances
Negative rates
Overdraft costs
Inefficient and manual
cash repatriation
High FX costs and lifting fees for
cross border payments Romania
RON
3MM
UK
USD
2MM
Bulgaria
BGN
1MM
Slovakia
EUR
(1)MM
US
USD
2MM
Germany
EUR
2MM
Payments and Collections
As organisations expand internationally, they frequently maintain fragmented structures across multiple banks
and countries.
4
Solution: Global Cash Concentration via Physical Sweeps
1. Open in-country accounts with
Citi branches for domestic
payments and collections
2. Open concentration accounts to
consolidate and repatriate liquidity
3. Set up automated end of day sweeps
between country and header
accounts – single or multi entity
4. Automated FX sweep for balances in
non-core currencies
5. Reduce levels of negative yield
currencies – use EUR to fund payments
in 100+ currencies
6. Single global platform for visibility and
workflow automation
Automated FX Sweep (Intraday) Automated End of Day Sweep
Concentration
Centre
Romania
In-country
Accounts Pre: USD 2MM
Post: 0MM
UK
Pre: USD 2MM
Post: 0MM
USA
Pre: USD 0.5
Post: USD 0
Bulgaria
Pre: EUR -1MM
Post: 0MM
Slovakia
Pre: EUR 2MM
Post: 0MM
Germany
Cross
Currency
Payments
Globally
Pre: BGN 1
Post: BGN 0
Bulgaria
Extended transactional window and automated cash repatriation.
6
FX
1
3
EUR
1MM
USD
4.5MM
RON
3MM
2
4
5
FX
5
Solution – Financial and Operational Benefits
Item
Average Bal
(USD Equiv.) Interest Rate Interest/Cost
USD Balances 4,000,000 0% $0
EUR Balances 2,000,000 (0.40)% $(8,000)
EUR Overdrafts (1,000,000) (1.00)% $(10,000)
BGN Balances 1,000,000 0% $0
Transactional Costs across 6 different banks $(30,000)
Total Treasury Economics $(48,000)
Current State Proposed Structure with Citi
Balances scattered over multiple bank accounts held
at different banks
Client Challenges
High operating cost
Fragmented liquidity in multiple banks
Low yield and overdraft charges
Forecasting challenges
Counterparty risk concerns
Benefits of Citi Solution
Cost Savings
Elimination of unnecessary overdrafts
Improved returns
Funding of local businesses automatically
Extended transactional window
Item
Average Bal
(USD Equiv.) Interest Rate Interest/Cost
USD Balances 4,500,000 0.20% $9,000
EUR Balances 1,000,000 (0.40)% $(4,000)
EUR Overdrafts 0 $0
BGN Balances 0 $0
Transactional Costs (e-banking, Payments,
FX, etc.) $(30,000)
Total Treasury Economics $(25,000)
Cost reduction from lower e-banking maintenance costs
and operational efficiencies from end to end automation
6
The proposed structure implies the centralization of funds at the level of the US entity. Non-resident accounts will be
opened with Citi Romania and the funds collected from all subsidiaries through TBA sweeps will be transferred to these
accounts and further exchanged into USD using the Auto-FX solution.
CASE STUDY
RON
RON Account
EUR
EUR Account
GBP
GBP Account
JPY
JPY Account
Citi’s Customer Non-Resident accounts
(USD)
Citi’s Customer Non-Resident accounts (RON, EUR, GBP, JPY)
USD
USD Account
RON, EUR, GBP, JPY
Auto FX Solution
SGD Account
Manual FX
Singapore – we cannot preform cash pooling on the SGD
currency. Manual FX should be performed by the customer,
from SGD to USD.
Customer Ro
Customer UK
Customer US
Customer Japan
Customer Singapore
Customer Ro Customer Ro
Customer UK
Customer Ro
Customer UK
Customer Japan
7
Accelerate Cash Application – Payer ID Accounts For organisations facing challenges to reconcile incoming payments to open debtor entries in a fast and efficient manner,
Citi offers Payer Identification Accounts which are virtual account numbers that can be assigned to individual payers to
make payments. Payments to these accounts are posted to a single physical collections account.
• Account number(s) assigned to the collecting client
as a means of identification / visibility
• A Payer ID Account is visible as if it is a Real
Account Number
• Payer ID accounts map to, and actual funds flow to,
a single Real account owned by a single entity
What are Payer ID Accounts?
1
2
3
Unique Payer ID Accounts:
Range of account numbers
• Usable in the market (payer, payer
bank, clearing etc.)
• Identification / mapping to real
account
Client reporting / visibility:
• Transactions at Virtual Account level
• Funds aggregated at real account
level
1000123456
7001234567
7001234568
7001234569
7001234560
7001234561
Real account –
Entity A
• Identification: Each payer identification account number will map into the transaction reference field which is reported on the
statements of the physical account. For Romania, a next day reconciliation file is provided.
• Efficiency/ Administration: Payer ID accounts are faster and easier to set up and require no account level documentation
• Cash Management: Actual funds are consolidated into single real account
• Cost Efficiencies: Minimizes the number of collection accounts required by the Citi client (collector)
Benefits of Payer ID Accounts
RO 12 CITI 1234 1234 1234 1234
8
Citi Virtual Card Accounts Overview
Clients can gain financial benefits, process improvements, and greater security & control by leveraging Citi Virtual Card
Accounts (VCA) for supplier payments.
Virtual Card Numbers (VCNs)
Increased Transaction-Level Control
Enhanced Client-
Supplied Data
Three Interface Options
Virtual Card Numbers (VCNs)
Unique, non-plastic account numbers used for secure purchasing
Secure VCN can be delivered via encrypted email to suppliers
Increased Transaction-Level Control
Define authorization controls for each VCN:
Number of transactions (single- or multi- use)
Transaction amount limit (exact, maximum)
Validity Period & more
Enhanced Client-Supplied Data
Capture client-specified data elements with each VCN for enriched data analysis, allocation, and reconciliation
Three Interface Options
Request website with customizable approval workflows
Batch File Interface
Real-time API
9
Virtual Card Accounts Technology
VCN requests can be completed using one of three interfaces: Web, Batch, or API.
WEB
BATCH
A web-based application that allows a user to login and request a virtual card
number (VCN). Additionally, approval flows can be configured to have a
requestor and approver review prior to receiving a card account
The company can request a batch of virtual card numbers for payments via file
transfer. Web portal upload returns the payments file with VCNs
Web The company
Request VCN
Batch
The company
Uploads File
API Leverage the company’s system using a real-time web service to generate VCN’s
from its eProcurement system or any other payment system
API The company
System
Integration
Description Interface
10
Standardised Global Platforms - Global Banking Connectivity
CitiConnect for SWIFT
Full payment and reporting
capabilities globally
Centralised hub: Connection to Citi
via one local branch BIC via FIN
and FileAct for global access
Consistent SWIFT messages for true STP
Reduce SWIFT costs up to 3x by eliminating cross
border traffic fees
CitiConnect for Files
Single channel for global transmission and
receipt of files and formats such as ISO20022
XML
Host-to-Host gateway for integration
with TMS/ERP
Connects with treasury centres and
links with Citi’s Integrated Payment
Services for global payment
processing
CitiConnect API
Cost effective, real time
access to Treasury Services
via API to deliver a straight
through processing solution
Access Treasury Services directly
from your application of choice
Collaborate through an API ecosystem
with ERP and TMS vendors
CitiDirect BE
Global web-based electronic banking tool supports transaction
services in a real-time
environment
Payments and collections in over 90
countries, supports 26 languages
Manual (or scheduled) file
import/export available for
many file formats
CitiConnect for
Files
CitiConnect for SWIFT
CitiConnect API
CitiDirect BE
11
CitiConnect API
The Challenge:
Our clients are in need of fully automated solutions to process transactions directly from their own
Treasury Workstation (TWS) and Enterprise Resource Planning (ERP) platforms to their banking
partners, without having to rely on banking portals.
The solution:
CitiConnect API provides cost effective, real time access to Treasury Services that deliver a straight
through processing solution for our clients.
Value for our clients:
Flexibility and choice to access
Treasury Services directly from their
application of choice
Accelerate implementations by
simplifying integration and reducing
onboarding time
Payment
Initiation
Transaction
Status
Inquiry
Balance
Inquiry
Account
Statement
Request
Account
Statement
Download
12
What is an API?
Business Assets Exposable Citi TTS Data and
Services
Citi API Platform APIs providing access to
Business Assets
Developers Use Web APIs to
create apps
Business Apps Use services and data
through Web APIs
End Users Use Business Apps
Application Programming Interface (API) is the primary entry point for business whether it is
called from a company’s own applications (Internal API) or by client or business partner. API
enables nimble interactions in digital ecosystems.
Source: IBM (adopted by Rene Schuurman
13
Wrap Up: Best Market Practices Cash Management Solutions
Integration Automation
Risk Management Flexibility
14
Citi Contacts
Simona Anghel
Romania Sales Head
Treasury and Trade Solutions
+40 21 203 67 31
Simona.anghel@citi.com
Alexandru Toma
FX Corporate Dealer
Markets Romania
+40 21 203 55 20
Alexandru.toma@citi.com
Aidar Kaliev
Commercial Subsidiaries Group Head, US
Commercial Bank
+1 (212) 559-0996
aidar1.kaliev@citi.com
Mihai Cocheci
Commercial Subsidiaries Group Head, Romania
Commercial Bank
+40 21 203 52 65
mihai.laurentiu.cocheci@citi.com
15
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for the purpose of avoiding any tax penalties and (ii) may have been written in connection with the "promotion or marketing" of any transaction contemplated hereby ("Transaction"). Accordingly, you should seek advice based
on your particular circumstances from an independent tax advisor.
Any terms set forth herein are intended for discussion purposes only and are subject to the final terms as set forth in separate definitive written agreements. This presentation is not a commitment or firm offer and does not obligate us to enter
into such a commitment, nor are we acting as a fiduciary to you. By accepting this presentation, subject to applicable law or regulation, you agree to keep confidential the information contained herein and the existence of and proposed terms for
any Transaction.
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corporate formation documents, or other forms of identification, to verify information provided.
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