1)
2) Collaborate
Innovate
Industrials Casebook
Global Transaction Services
3)
4) “This Casebook is a testimony to
the innovative and creative spirit
of our clients. It demonstrates
how we work in collaboration
with our clients to deliver new
solutions to challenges they
may not have faced before.”
Michael Guralnick
Global Head, Client Sales Management
Treasury and Trade Solutions
Global Transaction Services, Citi
5) welcome
6) It is my pleasure to present our
world-class professionals who
Citi Global Transaction Services
staff our offices across more
Industrials Casebook. This book of
than 104 countries.
client case studies is a compilation
of the innovative solutions that we
have designed, in partnership with
our clients, to help them achieve
excellence in meeting their key
working capital goals.
This Casebook is a testimony to
the innovative and creative spirit
of our clients. It demonstrates how
we work in collaboration with our
clients to deliver new solutions to
challenges they may not have
Against a backdrop of unrelenting
economic challenges and a continued
global best practices, and to help
move towards globalization, our
Michael Guralnick
Global Head
Client Sales Management
Treasury and Trade Solutions
Global Transaction Services, Citi
faced before. It is designed to share
our clients accelerate the realization
clients are focused on achieving
of their transaction services goals.
operational efficiencies across their
businesses and their increasingly
complex supply chains. In this global
business environment, our clients are
also looking to mitigate a wide range
of risks, such as operational risk,
settlement risk, and transaction risk.
At Citi, we are committed to
helping our clients in the industrials
sector respond effectively to these
challenging times. We are delighted
to share with you the insights we
have gained from working with
businesses like yours. I look forward
Citi’s Global Transaction Services
to hearing from you and welcome
business provides a global platform
the opportunity to continue and
of innovative solutions that fully
expand our successful partnership.
utilizes the creative leverage of the
7) foreword
8) Welcome to the global Industrials
achieve greater control and visibility
Casebook. I am delighted to present
over their cash, while driving
you with this first collection of cases
efficiencies and reducing cost.
that demonstrate the added value
that Citi seeks to bring to our clients
in the industrials sector as a whole,
and in the transportation sector
in particular. The transportation
sector encompasses shipping, rail,
trucking, aviation and third party
logistics providers.
This casebook begins with an
in-depth look at some of the trends
that we have observed through our
daily engagement with clients across
the world. We outline some of the
challenges that our clients have been
facing, and how transaction banking
solutions can help equip companies
As with other industrials
Brent Flynn
Global Transportation Sector Head
Global Transaction Services, Citi
to navigate a challenging market and
companies, businesses within the
mitigate risk. The cases that follow
transportation sector have been
give real and practical examples of
under extreme pressure for an
how transportation, and other
extended period, largely affected
industrials companies, have been
by the global recession, volatile
working with us to optimize working
fuel costs, and unexpected events
capital, streamline processes and
such the Icelandic volcano eruption.
drive performance.
The headwinds these companies
have had to face have demanded
that they look for more efficient
ways to conduct business. We at
Citi Global Transaction Services
have been working closely with our
clients in the transportation sector
to develop solutions to help them
I hope you are inspired by the cases
in this book, and I look forward to
exploring further opportunities to
collaborate with you.
9) contents
10) driving growth in the industrials sector
controlling cash
06
16
Norbulk Shipping
EMEA
Payment solution frees up company to focus on adding value
18
Bamburi Cement Limited
EMEA
Supplier finance program safeguards supply chain and optimizes
working capital
22
Cargo Network Services (CNS)
NA
A web-based e-billing and payments solution
26
achieving visibility
30
Panalpina
APAC
Optimizing working capital management
32
Turkish Airlines
EMEA
Target-balancing structure launches visibility and cost benefits
36
driving efficiency
40
Air New Zealand
APAC
Integrating ERP with offshore payments
42
Bombardier Recreational
Products (BRP)
NA
Revving up purchase incentives with a prepaid card solution
46
Michelin North America, Inc.
NA
Consumer incentives drive performance
50
Toyota Motor Sales USA
NA
Driving sales with paperless incentives
54
11) driving growth in the
industrials sector
12) The huge breadth of the industrials sector — it covers automotives, aviation and aerospace, shipping, logistics,
paper and packaging, heavy machinery, cement, power technology and construction — means that at first
glance the companies covered by it appear to have little in common. However, for CFOs and treasurers of
companies from all the sectors contained within industrials, three themes stand out: the need for control,
visibility, and efficiency of the systems they use to manage cash.
Indeed, the experience of the
China, Brazil and the Middle East,
markets such as Asia, Latin America,
financial crisis and tighter liquidity
information has become ever more
the Middle East and Africa are
means that this back to basics
important. These markets are often
greater than in developed markets
approach on cash and how it is
highly regulated and it is crucial
with mature banking sectors.
managed is now a board level
to understand the implications
Moreover, it is important to
concern: not only CFOs and
of that in terms of moving cash.
understand that these markets
treasurers, but also CEOs, want
to know where their company’s
cash is at any given time, who
the company’s counterparties are,
how their cash is collected, and
the risks inherent in the company’s
processes. There is a huge appetite
for information and knowledge that
can be used to improve liquidity.
Notwithstanding regulatory
barriers and exchange controls,
developments in technology mean
there is now the potential to deliver
control and visibility of cash positions
located almost anywhere in the
are very different — not only from
more developed markets where
companies have operated centralized
cash management structures for
decades — but from one another.
large multinationals still do not have
New thinking for
new markets
world. However, surprisingly many
structures in place — outside the
Working out what treasury model is
Clear, accessible information —
developed banking markets of North
most advantageous for a company
delivered in a timely way using a
America and Western Europe — to
can be a significant challenge. Often
consistent format — is essential to
enable them to oversee and manage
industrial companies are
be able to make informed decisions.
their cash globally.
decentralized and have complex
As the world moves out of recession
and into a new global growth
environment dominated by
emerging markets such as India,
Necessarily the challenges
associated with gaining control and
visibility of cash in rapidly growing
corporate structures. For example,
in the auto sector, there may be
multiple entities in a single country
that are involved in manufacturing,
13) sales, re-selling, franchising and
finance. In addition, there may
8
regulatory and tax issues, but
ultimately must be driven by the
also be scores of companies
potential economic benefits to
operating as part of the
the company.
manufacturing supply chain.
With companies now more global
than at any time in the past, many
are asking whether they still need
people on the ground to manage
local regulatory and compliance
issues. In emerging markets the
answer is invariably yes. Local
treasury hubs are essential for
many large industrials companies
because of time zone concerns and
issues associated with trapped cash
and the regulatory environment.
Corporates in all industrial sectors
need to assess the extent of their
business in these new markets in
order to understand the scale and
growth potential of their
operations. They then need to
consider whether it is worth
investing to gain control of their
cash and liquidity in these countries
and regions. This process must take
into account the potential
“With companies now
more global than at
any time in the past,
many are asking
whether they still
need people on the
ground to manage
local regulatory
and compliance
issues. In emerging
markets the answer
is invariably yes.”
Companies in industrials sectors are
increasingly finding that the scale of
their operations in China, for example,
warrant the creation of a treasury hub
in-country separate to the rest of Asia.
14) Similarly, depending on the scale of
homogenous in terms of rules,
technology and automotive
their operations in Brazil, some
requirements and operating
companies struggled to find
companies are realising that it makes
conditions (in Europe, this process
alternative ways to get components
sense to separate it from the rest of
has been driven by integration
to their factories in order to meet
Latin America or that it is appropriate
of the EU economy). In contrast,
just-in-time manufacturing schedules.
to set up a hub in Dubai covering the
Asia is far from homogenous.
Middle East rather than try to manage
it from Europe. Essentially, the decision
comes down to the importance of
visibility in that particular market to
the overall group.
The transportation sector inevitably
While it is important to consider
goes where its customers need it to
the diversity of countries in which
operate. Consequently, in recent years,
a company operates and develop
customers’ supply chains have become
treasury structures accordingly, that
ever more complex and disparate, so
should not be at the expense of
the operations of transport companies
This new thinking does not affect
visibility and control. While day-to-
have had to expand to cover ever-
existing treasury hub structures in
day treasury management might be
larger swathes of the world on a more
Western Europe and North America,
conducted in China, for example,
routine basis. Trade routes have been
which have developed over many
because it is becoming a core part
opened that only a decade ago would
years and are effectively set in
of the company’s global revenues, it
have seemed unlikely, if not impossible.
stone. However, it does run contrary
is essential to be able to aggregate
to common practice over the past
the information from China with
decade, which has relentlessly
operations elsewhere in the world.
emphasized the importance of
centralization through shared
service centres and common ERP
Transportation
The challenges faced by transport
companies are therefore the same as
those faced by their clients. As global
trade expands, new facilities (such as
ports) will be required and they will
The transportation sector, which
need capital expenditure. Raising
includes passenger travel, freight
finance for such expansion can be
What has changed is the focus of
and logistics by air, sea or land, is
complex and challenging and may
many businesses. Strategies focused
central to the globalized economy.
involve credit export agencies, which
on centralization were developed to
Indeed, its importance was
have become increasingly important
address developed markets in North
highlighted by the volcanic ash
in the wake of the financial crisis, debt
America and Western Europe. Both
cloud over much of Europe, which
finance from banks or capital markets,
of these regions are essentially
grounded flights for weeks. Many
or use of internally generated cash.
systems, for example.
15) From a treasury perspective,
transport companies also face similar
10
Automotive
The complex nature of automotive
challenges as their clients. As they
construction makes it the archetypal
expand into new markets, they need
industrials sector in terms of
to consider how they will manage new
highlighting broader trends. For
cash flows from operations. Will a
example, a leading global automotive
team be required to manage them
manufacturer has announced plans
in-country? If so, will they be local
to open a new plant in China in
hires or will international expertise
response to a phenomenal growth in
be necessary? To what extent will it
sales: the company expects sales to
be possible to take cash out of the
quadruple over a one year period.
country, and if it can be taken out,
Facilitating that growth — and the
how will it benefit the group?
construction of a new plant — is
One logistics company that effectively
inevitably a major challenge.
addressed the challenges it faced in
Automotive companies expanding
its invoicing and billing process in
their manufacturing capabilities
order to improve efficiency is Cargo
into China in order to significantly
Network Services, a subsidiary of
increase capacity, are likely to require
the International Air Transportation
funding for capital expenditure and
Association. It introduced an
careful consideration of treasury
electronic billing and payments
requirements as their businesses
solution that transformed the
grow. Given strict regulations on cash
company’s air-freight bill-payment
management in China, corporations
process. The solution shortened
will need to assess how cash can
days sales outstanding by at least
best be used in-country, and how
10 days and reduced air carriers
they can continue to benefit their
invoice presentment and collection
groups should the funds be required
costs by 18%.
to remain there.
16) Automotive companies expanding on
More generally, automotive
Similarly, in the US, infrastructure
such a scale should also effectively
manufacturers are under pressure as
spending is a core element of the
manage their supply chains. For
they expand overseas to continually
economic stimulation package
example, they must be flexible in their
innovate, especially in relation to
designed to re-start the economy
approach to sourcing materials.
environmental performance. Given
following the financial crisis. The
Initially, sourcing components for
the financial constraints that many
American Recovery and Reinvestment
production may be done both locally
companies in the sector face, such
Act is thought to be worth $787 billion
(for instance, in China) and from
a responsibility can be onerous.
and covers roads, bridges, public
Europe, but as the scale of production
Freeing up cash for new investment
transport and dams, as well as the
in China increases, it may become
in plant and model design through
electricity grid and investment in
financially efficient to source a greater
more efficient management — and
alternative power generation: the
proportion of parts domestically.
ensuring a cost effective supply
package is the largest since the
However, an expanding company
chain — is therefore crucial.
1950s when the inter-state highway
system was created.
needs to be aware of the potential
implications of such a decision in terms
of quality control and consistency.
Similarly, companies will need to
Engineering,
manufacturing and
construction
What is dramatic about this wave
of infrastructure spending is the
nature of the companies that will be
Many of the world’s largest
involved in it: six out of the world’s
with new suppliers: an assessment of
engineering firms are already among
top 10 infrastructure companies are
the robustness and quality of
the most global of all companies
now Spanish. Consequentially, some
suppliers must extend beyond the
— often operating in more than 100
of those companies currently bidding
parts they will produce for their cars.
markets. Nevertheless, the pace of
for toll road contracts in Texas will be
Auto manufacturers must also make
their expansion internationally
operating in the US for the first time,
decisions about costs. Will it aim to
continues to accelerate. In particular,
and should they be successful in
source parts at a lower cost to those
infrastructure spending in the Middle
their bid, could see familiar issues
sourced in other regions? What
East — not least associated with the
of how capital will be raised and
payment terms will it set for
reconstruction of Iraq — and Asia is
how they will manage cash.
suppliers in China and how do they
booming as countries struggle to keep
differ from common market practice?
pace with rapid economic growth.
In such circumstances, it can be
consider the credit risks associated
essential to work with a bank that
17) not only understands the home
market of the company expanding
12
This new era of globalization has
resulted in a reassessment of how
but is an integral part of the market
companies need to operate and
it is expanding into. Similarly,
manage their cash. Globalization
expansion overseas — especially
was once perceived to mean that
in the areas of engineering,
operating conditions would
manufacturing and construction
eventually be effectively the same in
— may require a joint venture.
all countries. In a world where China
Understanding and managing the
has overtaken the US as the world’s
counterparty risk of joint ventures
largest automotive market, that is
— and ensuring confidence in the
clearly no longer the case. Instead,
associated cash flows — often
globalization is about accessing
requires the involvement of a
markets and making decisions based
trusted third party, such as a bank.
on local circumstances.
A new globalization
The only constant across all markets
in which a company operates must
The financial and economic crisis has
be information. While cash may not
undoubtedly opened a new chapter
be easily transferable from some
in the world’s economic growth.
emerging markets, timely and
The relatively strong growth of major
accurate data is. Consolidation of
emerging markets such as India,
that data is the key to success in the
China and Brazil compared to weak
new global economy. Without that
growth in the US, and especially
aggregated information, companies
in Europe, is rapidly changing the
cannot make effective and informed
dynamics of world trade. There is
decisions and therefore cannot
a realization among companies in
continue to prosper in what is an
the industrials sector that emerging
ever-more competitive environment.
markets are going to drive global
growth for the foreseeable future.
18) For CFOs and treasurers
of industrials companies,
three themes stand out: the
need for control, visibility,
and efficiency of the systems
they use to manage cash.
19)
20) Corporates in all industrial sectors
need to assess the extent of their
business in new markets in order to
understand the scale and growth
potential of their operations.
21) 16
controlling cash
22) Notwithstanding regulatory barriers and exchange controls, developments
in technology mean there is now the potential to deliver control and visibility
of cash positions located almost anywhere in the world.
23) 18
Norbulk Shipping
Payment solution frees up company to focus on adding value
Norbulk Shipping is a global leader in ship management and the provision
of vessel services.
24) The challenge
its franchise network and its ability
header account for each ship owner
Norbulk Shipping makes payments to
to provide a transparent audit trail.
to enable bulk payments. In addition,
suppliers globally in various currencies
In addition, the bank’s solution also
each ship got a separate euro or
on behalf of the ships that it manages.
offered a significant cost advantage
dollar account and WorldLink branch
Its invoices were paper-based,
for the company due to its fixed-cost
linked to the ship’s account. Foreign
processed manually, error-prone,
structure, which made forecasting
currency payments would be processed
costly, and time consuming for Norbulk
easier for Norbulk. Most importantly,
automatically using favorable WorldLink
and its suppliers. The company was
Citi’s technology, including its proven
Online bulk rates with an agreed spread.
eager to use technology to improve
WorldLink Payment Services, meant
efficiency. Moreover, it wanted to
the bank could offer a complete global
eliminate the need for multiple
transaction solution that interfaced
currency accounts. An additional
seamlessly with Norbulk’s ERP system.
challenge for the company was that
®
The result
Following the completion of the initial
paperwork, the implementation of the
Citi’s technology,
including its proven
WorldLink® Payment
Services, meant the bank
could offer a complete
global transaction
solution that interfaced
seamlessly with
Norbulk’s ERP system.
payment solution was straightforward.
Norbulk appointed Citi in 1991 on
“Citi was — and remains — ahead of the
immediately,” explains Victoria Burns
the basis of its flexible payment
competition for online payments and
at Norbulk. Citi’s success in meeting
offerings, including CitiDirect® Online
banking,” says Ian Davidson, Finance
Norbulk’s needs is reflected by its
Banking for immediate payments,
Director at Norbulk. Citi opened a
17-year relationship with the bank.
ship owners wanted expenses, such as
crew salaries and docking fees, to be
differentiated for each ship Norbulk
managed. However, the ship owners
wanted to make only one consolidated
transfer of funds each month to
minimize costs and complexity.
Meeting these two objectives using
a traditional paper-based payments
system was difficult.
The solution
As Norbulk gains new clients, it has
proven easy to integrate them into
its payment system. Norbulk has
experienced substantial productivity
gains from using Citi’s solution.
“Our ship accountants can now
handle a larger workload and focus
on offering value-added services,”
says Mr Davidson. Norbulk’s suppliers
have also benefited. “Citi’s system
allows us to trace payments quickly
and send PDF copies to suppliers
25) “Citi was — and remains — ahead of
the competition for online payments
and banking.”
Norbulk Shipping
26)
27) 22
Bamburi Cement Limited
Supplier finance program safeguards supply chain and
optimizes working capital
Bamburi is part of the French building materials giant Lafarge, and is
the largest cement manufacturing company in East and Central Africa.
28) The challenge
operations with borrowing at high
Citi committed to providing timely
The objective of the program was
costs, given their relatively small
and efficient service to ensure the
to assure continuous supplies to
size and limited collateral. As a
success of the program. Payment
Bamburi by providing working capital
result they faced financial distress
instructions received before 12 p.m.
support to Bamburi’s key suppliers.
and high costs.
are processed on a same-day basis;
In addition, the program also aimed
to optimize Bamburi’s working capital
cycle (i.e. stretch the payment period
for some suppliers from 15 days to
30 days) without increasing costs
Ultimately, the suppliers’ additional
cost of borrowing (due to increased
Bamburi has a tightly controlled
supply chain designed to reduce
borrowing costs. It continued to
pay its suppliers and logistics
partners on invoice due date,
and tried to match payments to
logistics partners and suppliers with
receipts from customers in an effort
on a next-day basis.
days outstanding) led to repricing
By supporting its suppliers, Bamburi
their services to Bamburi.
was able to demand better payment
terms and improve the efficiency
to the supply chain, and to improve
relationships with its suppliers.
payment instructions received after,
The solution
Citi proposed a supplier finance
solution — the first of its kind in
East Africa. Under the program,
it paid Bamburi’s suppliers on the
due date of their invoices by
drawing on Bamburi’s credit
of its working capital. Bamburi also
benefited from improved cash flow;
its days payables were effectively
increased because the final
liquidation of the supplier finance
loans were an average 30 days after
the due date of invoices.
facilities. However, the interest
The benefit of the increased days
cost was passed onto suppliers.
payables allowed Bamburi to
to optimize working capital and
The financing cost for suppliers
reduce borrowing costs. As a result,
was lower due to the substitution
payment to suppliers would only be
of the suppliers’ credit risk for
made on due date and on occasion,
that of Bamburi’s. The solution
would get delayed. Consequently,
therefore enhanced suppliers’
suppliers had to finance their
loyalty to Bamburi.
extend enhanced credit terms
to its distributors, giving it a
competitive advantage.
29) The result
Citi began a pilot implementation
24
of the supplier finance solution
with one supplier in August 2008,
after working extensively with the
company to identify and eliminate
potential implementation problems.
Following due diligence, a further
14 suppliers were added to
Bamburi’s supplier finance program.
Bamburi estimates it will make
opportunity cost savings of over
USD200,000 a year and it is
considering expanding the program
to its subsidiary in Uganda.
30) By supporting its suppliers,
Bamburi was able to demand
better payment terms and improve
the efficiency of its working
capital. Bamburi also benefited
from improved cash flow.
31) 26
Cargo Network Services (CNS)
A web-based e-billing and payments solution
The logistical “gatekeeper” for the US air cargo industry.
32) The challenge
freight from the US, and to take
remittance information to the e-billing
CNS was incorporated in 1985
advantage of the growing market
platform and creates payment
following the deregulation of
demand for a paperless service,
files. Finally, files are disbursed
the US aviation industry. This
CNS wanted to provide these
electronically to the airlines’ banks
subsidiary of the International Air
customers with an Internet-based
along with remittance details.
Transportation Association (IATA) is
invoicing and payments service.
dedicated to the entire air logistics
chain and provides a unique set
of business solutions that meet
the requirements of the air cargo
industry in the US. CNS serves
as a key gatekeeper by requiring
air cargo agents and forwarders
The solution
are delivered instantly instead of
having to spend several days in
solution that significantly enhanced
transit. The increased visibility of
CNS’s existing service, CASS-USA.
approved and paid invoices has
set of financial, operational, and
transmit their waybills via electronic
compliance standards.
file delivery to CNS’s data center.
and billing process was a critical
pain point. Carriers were looking
for ways to further utilize the
technology inherent in the air
cargo solution.
To cement its close collaboration
with airlines, air cargo agents, and
freight forwarders who export
for CNS. For airlines, invoices
electronic billing and payments
With the new solution, the airlines
airlines revealed that the invoicing
e-billing and payments solution
CNS and Citi developed an
(or intermediaries) to meet a
Discussions with CNS and the
There are many benefits of Citi’s
CNS then consolidates the invoices
and sends them to the airlines’
customers: cargo agents and other
companies consigning goods by
air. These companies approve
the invoices, with adjustments if
necessary, and authorize their banks
improved the predictability of
cash flows. In addition, the
solution’s standardized dispute
codes and rebilling capabilities
have reduced disputes between
airlines and agents. As a result,
days sales outstanding (DSO) have
been slashed by an average of
10 days, creating dramatic savings
for the airlines.
to pay. Payments are sent to CNS’s
For cargo agents, invoices can be
Citi bank account, either manually
reviewed and approved electronically.
via paper checks processed through
Standardized dispute codes and
a lockbox or electronically via wire
rebilling capabilities have reduced the
or ACH transfers. Citi then loads the
33) number of disputes — and accounts
payable staff required — saving an
28
The Citi solution was initially deployed
in 2003. Since that time, more
estimated USD13 million a year.
than 1,200 freight forwarders and
95 airlines have used the system
The result
Citi’s invoicing and payments
solution for CNS has transformed
the company’s air-freight billpayment process. The solution has
shortened DSO by at least 10 days
and reduced air carriers invoice
presentment and collection costs
by 18%. It has also streamlined
freight forwarders’ invoice review
and approval process. And it has
reduced dispute rates by 45%,
creating more transparency and
trust in the billing process among
airlines and forwarders.
to connect, interface, and settle
payments. Over 15 million air waybills/
invoices have been settled using this
system (over 2.8 million in 2008
alone). And more than USD18 billion
in payments have been processed
and settled through the system (more
than USD5 billion in 2008).
34) CNS and Citi developed an
e-billing and payments solution
that significantly enhanced
CNS’s existing service.
35) 30
achieving visibility
36) While it is important to consider the diversity of countries in which a company
operates and develop treasury structures accordingly, that should not be at
the expense of visibility and control.
37) 32
Panalpina
Optimizing working capital management
Panalpina is one of the world’s leading forwarding and logistics services
providers with 500 branches in over 80 countries. With the emergence of
China as a major manufacturing center, Panalpina’s substantial business
in the Asia Pacific region has been growing at double-digit rates.
38) The challenge
US through separate public tenders.
file delivery backbone of its cash
Working capital made up the
In each region, Citi proposed a
payments network and CitiDirect®
biggest component of Panalpina’s
single bank solution that would
Online Banking for information.
balance sheet. Any improvement
allow Panalpina to centralize its
Transactions were handled by
to the management of liquidity and
treasury management through the
Citi’s back-end international Mass
integrating payments would provide
concentration of surplus cash, the
Payments System.
the largest potential to deliver gains
streamlining and automation of in-
for Panalpina.
house processes, and the provision of
an Internet-based e-banking platform
Panalpina’s Group Treasurer,
Marcel Kellerhals, notes: “Citi is a
to support its payment factory.
global bank that has always been
subsidiary surpluses to offset local
With implementation in Europe
The IT part of its solution was
deficits on a region-by-region basis
and Asia Pacific complete, some 16
very competitive. It gave us the
and concentrate surplus cash in
local Panalpina entities in Europe
possibility to do a lot of things
two currency pools: euros and US
now maintain euro and US dollar
without having a completely new
dollars. It also sought to streamline
accounts with Citi that are zero
set-up everywhere in the world.
in-house processes by introducing
balanced at the end of each day,
Citi keeps investing money and
automated processing and moving
and surpluses are swept into the
upgrading its software. We could
away from check-based to electronic
two cash concentration accounts.
not have done what we did without
payments. Panalpina also wanted
Surplus dollar balances from Asia
such a partner.”
to leverage its volumes for better
Pacific are also swept into the same
pricing from a reduced number of
dollar account.
“We deal with Citi through a parent
The accounts payable/account
in Zurich. Citi assisted us in our
receivable process was streamlined
project with clear planning and
The solution
to accommodate electronic funds
weekly conference calls. We had the
Panalpina chose Citi as its cash
transfer, automated data upload
right methodology and maintained
management provider in Europe,
and auto-matching. Panalpina
momentum — which can easily be
Asia Pacific, Latin America and the
chose Citi File Xchange to be the
lost in a large project like this.”
Panalpina wanted to optimize
internal funding by allowing local
banking partners.
®
committed to cash management.
account relationship manager
39) The result
Panalpina succeeded in migrating
34
the majority of its payments in
Asia Pacific and elsewhere to full
automation. Panalpina achieved
considerable annual savings with Asia
Pacific accounting for a significant
portion of this. The company
managed to leverage its relationship
with Citi on a global basis. “Citi is
our main supplier in terms of bank
services. We have a mutual interest
in having the relationship working
in the proper way. Citi can help
us with risk management, trade
finance, and capital markets. Just
as our customers see Panalpina
as a ‘one-stop shop’ for logistics
solutions, so we see Citi as a ‘onestop shop’ for banking solutions. Citi
is well positioned to be a partner for
Panalpina in the long-term,” says
Mr Kellerhals.
40) Citi helped Panalpina centralize
cash management, concentrate
surplus cash, streamline receivables
and payables, and develop an Asia
Pacific payments factory.
41) 36
Turkish Airlines
Target-balancing structure launches visibility and cost benefits
Turkish Airlines flies 20 million passengers annually to 138 cities in
69 countries.
42) The challenge
global and regional capabilities and
transaction flow analysis tool,
Following a period of ongoing
expertise. To improve the efficiency
TreasuryVision®, which provided
business growth, cash flow visibility
of Turkish Airlines’ cash flows,
real-time balance information
at Turkish Airlines’ head-office
Citi began a phased implementation
on accounts across the world in
treasury department was severely
of a regional cross-border target-
customized formats. At the client’s
restricted. Turkish Airlines held
balancing structure that would
specific request, the new structure
250 bank accounts with 91 banks
sweep the vast majority of the
was supported on a 24/7 basis by
in 69 countries and commonly
firm’s balances into Citi London.
a customer service team based in
used manual processes to transfer
cash between its 107 offices.
Cash reporting relied heavily
on phone communication and
faxed spreadsheets. But following
its stock listing, Turkish Airlines
conducted a company-wide cost-
Because most of Turkish Airlines’
sales were euro-denominated,
these were centralized in phase
Istanbul in coordination with staff
across Citi’s global branch network.
one, with euro balances swept
The result
automatically from Citi or third-
Turkish Airlines has benefited from
party accounts.
a streamlined account structure
and reduced banking costs, an
control drive that led the company
In phase two, selected additional
to issue a tender for its global
elimination of manual payment
currencies, including US dollars,
cash management business
processes, and significantly
were introduced to the structure.
enhanced visibility and control
aimed at improving payment
process efficiency, increasing
Phase three saw the rationalization
visibility through real-time
of currency balances that could
electronic reporting, and reducing
not participate for legal or other
transaction charges.
practical reasons. In addition to
implementing CitiDirect® Online
The solution
Banking, Citi’s electronic baking
system, to eliminate manual
Citi was awarded the tender on the
payment initiation, Turkish
basis of its matching geographic
Airlines also became the first
footprint and its combination of
Turkish customer to install Citi’s
over its cash flows. Though many
of the benefits accrued from being
the first Turkish multinational to
implement a regional, cross-border
target balancing structure, balances
in currencies that remained outside
the structure have also achieved
improved investment rates.
43) Turkish Airlines has benefited from
a streamlined account structure and
reduced banking costs, an elimination
of manual payment processes, and
significantly enhanced visibility and
control over its cash flows.
Turkish Airlines Case Study
44)
45) 40
driving efficiency
46) Corporates in all industrial sectors need to assess the extent of their business
in these new markets in order to understand the scale and growth potential of
their operations.
47) 42
Air New Zealand
Integrating ERP with offshore payments
Air New Zealand is New Zealand’s national airline and a member of
StarAlliance. It has a fleet size of 100 aircraft and flies to 52 destinations
in Australasia and the Pacific, Europe, Asia and North America.
48) The challenge
into the local clearing system in
payments could still be made via
With business spanning the globe,
almost every country in which Air
other means included in the same
Air New Zealand makes thousands
New Zealand operated. The solution
payment file. Through CFX and
of payments annually to its
involved a combination of Citi® File
CitiDirect, Air New Zealand was
international suppliers. Payments
Xchange (CFX), GXS Enrichment,
able to investigate the progress
vary in size from USD10 million to
CitiDirect Online Banking,
and details of payments. Moreover,
below USD10.
®
WorldLink ACH, WorldLink Wires,
CitiDirect provided Air New Zealand
WorldLink® Remote Check and,
with comprehensive reporting and
Air New Zealand was keen to look
in Asia, PayLink . Wires and
reconciliation ability at country and
for new payables solutions that
remote checks are required in
head office level.
could help it reduce costs and
countries where an automated
increase efficiencies in its offshore
clearing house (ACH) infrastructure
payment processes.
is not available and for more exotic
®
The crux of the issue was obvious:
®
SM
payments requiring the use of
Many aspects of this
groundbreaking solution had to
be negotiated from scratch, where
intermediary banks.
Citi customized the solution for
its payment process by integrating
The solution had many attractive
Treasurer of Air New Zealand,
Air New Zealand could streamline
Air New Zealand. Paul Kelway,
its ERP system (PeopleSoft ) with
features. A single file format for
notes: “The whole process has
a global payments supplier. In
all payment types would allow a
been a huge success. Once we
doing so, Air New Zealand would
one-time interface with Air New
had done the hard yards — setting
obtain access to a straight-through
Zealand’s PeopleSoft platform.
up the unified file format — it
payment capacity that would enable
High-volume payments in USD, AUD,
became relatively easy to bring
it to make payments to its many
CAD, GBP, EUR and HKD would be
on new currencies. Citi had the
offshore suppliers at a lower cost.
handled at low cost through an ACH.
technical ability and the coverage
For time-sensitive payments, Citi
of currencies and countries. They
provided a gateway that enabled
offered low-cost per transaction
Air New Zealand to achieve same-
and capacity to handle strong
day payments. For countries that
growth in volumes.”
®
The solution
Citi’s team provided a low-cost
solution, using a single file format
to deliver payment transactions
did not support ACH infrastructure,
49) The result
By working with Citi, Air New
44
Zealand has achieved savings in
reconciliation and processing costs.
Mr Kelway says: “It took around
three months to get the new system
up and running. We have gotten
to the point now where virtually
all payments, i.e. 99.9% by value,
are paid electronically. We know
precisely what our cashflows are
from the payables side. Recs are
done almost in a flash. The benefits
are significant.”
Air New Zealand was very impressed
with the solution that had been
designed and implemented for it.
The airline has implemented the
solution for its Engineering Division
— a separate organization with
similar requirements that uses
SAP as its ERP.
50) By working with Citi,
Air New Zealand has achieved
savings in reconciliation and
processing costs.
51) 46
Bombardier Recreational Products (BRP)
Revving up purchase incentives with a prepaid card solution
A world leader in motorized recreational vehicles and powersports
equipment, with brands like Sea-Doo, Ski-Doo and Can-Am ATV, BRP
provides recreational products to several dealers and distributors in
over 70 countries.
52) The challenge
The solution
The result
Bombardier Recreational Products
Citi Prepaid Services enables a
With Citi’s prepaid electronic payment
(BRP) found it challenging to design
paperless, electronic payment to
solution, the complexity, bureaucracy,
consumer payment promotions owing
deliver consumer incentives. BRP
and time delay associated with cutting
to complex and often slow payment
adopted this program to eliminate
checks was eliminated, easing the
issuance processes. Lacking direct
the traditional paper check from its
distribution process and removing the
channels to its consumers, BRP had
processes and replace the check
burden on BRP’s operation. Its custom
the choice of either relying on its
with a Visa® prepaid card. The fully
Fuel Card incentive was delivered over
North American network of over 2,500
customized program, which included
10 times faster than the traditional
dealers to deliver incentive payments
a branded Fuel Card, marketing
paper check (check: nine weeks vs. card:
or issuing incentive payments by paper
collateral, and customer service
six days), which was significantly more
checks directly to the retail consumer.
support, eliminated BRP’s reliance
effective in motivating consumers.
on checks by establishing a payment
Additionally, the 24/7
/365 toll-free
channel directly with the consumer.
customer service support made it
Although using checks was the more
acceptable choice, it required
®
easier for consumers to access their
burdensome levels of approvals,
Using the Citi Prepaid Services
starting with a qualifier process at
solution, upon purchase of a BRP
dealer level and often elevating to
product, the dealer enters the
management level in finance. This
consumer’s information into BRP’s
process delayed productivity across
electronic system. That information is
the organization and required lengthy
automatically uploaded to a database,
The Citi Prepaid solution not only
timeframes to complete, with the
bypassing traditional approval steps
streamlined BRP’s incentive payment
average incentive payment taking
and procedures. Within days, the
process, but dramatically increased
eight weeks to reach the hands of
consumer receives a personalized Visa
consumer satisfaction, winning “rave
the retail consumer. Faced with this
prepaid card, loaded with the incentive
reviews” according to the BRP team.
challenge, BRP needed to find a
payment, allowing immediate access
faster, more efficient way of delivering
to funds. The Fuel Card incentive not
incentive payments directly to the
only motivates consumer purchases,
consumer to enhance user experience
but aligns extremely well with BRP’s
and ultimately, boost sales.
products, like Sea-Doo Watercraft.
account information from anywhere,
further relieving BRP and dealers of
having to provide incentive payment
and balance updates on request.
53)
54) Citi® Prepaid Services enables a
paperless, electronic payment to
deliver consumer incentives.
Bombardier Recreational Products Case Study
55) 50
Michelin North America, Inc.
Consumer incentives drive performance
For over a century, Michelin has utilized its technological leadership, capacity
for innovation, high-quality products and services, and powerful brands to
enhance the mobility of its customers. As a global leader in the car and light
truck tire market, Michelin produces over 150 million tires annually.
56) The challenge
funds with online and point-of-sale
The result
Michelin was in need of an innovative
purchasing capabilities, fund security
consumer incentive payment solution
with continuous fraud monitoring,
incentive solution eliminated the
that was user-friendly and easy
“Zero Liability” and FDIC fund
need for paper rebate checks,
to understand for its consumer
protection for consumers and overall
replacing them with immediate
population. Michelin also wanted the
performance with rapid delivery,
electronic payments delivered directly
program to mirror the quality of its
comprehensive 24/7 multilingual
to personalized Michelin Prepaid
tires in terms of technology, safety,
cardholder support, and unique brand
Visa® Cards. This solution allowed
and performance. This solution was
extension for Michelin. The solution
funds to be instantly accessed by
needed to provide payments for
also provided streamlined payment
the cardholder and gave Michelin
consumer incentives that would
delivery operations, with a dedicated
a unique opportunity to extend its
drive purchases of Michelin tires.
Citi Prepaid support team overseeing
brand in providing true “wallet share”
Initially suggested by its Purchasing
the file processing and financial
by placing the “Michelin Man” directly
Department, Michelin’s Marketing
operations of the program.
in cardholders’ wallets, reminding
Group decided to investigate
delivering its consumer incentive
payments via prepaid cards given the
payment speed, flexible fund access,
consumer protection and unique
brand communications it provides.
The solution
Citi® Prepaid Services rapidly
implemented a fully customized,
consumer incentive program for
Michelin, which delivered a focus
on quality through innovative
technology. It allowed its customers
immediate access to their incentive
This Citi Prepaid
Services consumer
incentive solution
eliminated the need
for paper rebate
checks, replacing
them with immediate
electronic payments
delivered directly to
personalized Michelin
Prepaid Visa® Cards.
This Citi Prepaid Services consumer
them of the Michelin brand every
time they use their card.
Also, the Citi Prepaid Team provided
comprehensive, dedicated marketing,
creative, and operational program
support for Michelin. According to
Mitzi Cooley, Promotions Manager for
Michelin: “The prepaid card program
Citi Prepaid provides for Michelin
continues to improve significantly
and meet the payment needs of our
organization and customers. I have
been pleased.”
57)
58) “The prepaid card program Citi Prepaid
provides for Michelin continues to
improve significantly and meet the
payment needs of our organization and
customers. I have been pleased.”
Michelin North America, Inc.
59) 54
Toyota Motor Sales USA
Driving sales with paperless incentives
Known globally for progressive, efficient products, Toyota’s decision
to adopt paperless payments aligned with its efficient, clean solutions
that make an environmental impact.
60) The challenge
The solution
The result
With thousands of sales
Toyota realized it had to find a
Toyota quickly eliminated the need
professionals at over 1,400 dealers
solution that would free up its
to purchase and inventory paper,
across the US, Toyota faced a major
team, reduce and even eliminate
ink, and envelopes. Its hardware
challenge on the production and
its costs, and get it out of the
costs to run the check process
distribution of its sales incentive
check-writing business. The answer
were also eliminated, requiring less
payments. For years, paper checks
came with a program that quickly
space and personnel to manage.
seemed like the only legitimate
and effectively transitioned every
Toyota also saved countless hours
payment method on which it could
incentive payment from the
producing, sorting, packaging, and
rely. Yet despite its simplicity in
inefficient paper check to seamless,
shipping checks, not to mention
concept, the use of paper proved to
electronic delivery. For the solution,
the required post-distribution
be incredibly complex, expensive,
the company turned to Citi
management and research for
and inefficient for Toyota. The
Prepaid Services, which helped
inbound payment questions. The
company had to produce the
design a fully custom-branded
program also gave the company a
checks, purchasing large volumes
Toyota program that immediately
unique and direct communication
of paper, ink, and envelopes, and
eliminated its burdensome checks.
channel to its sales professionals,
also had to establish a dedicated
At the heart of the program is
who were usually employees of the
infrastructure of printers,
the customized and personalized
dealership rather than Toyota.
computers, and software; all major
Toyota Visa® Prepaid Card, which
costs to continually produce
every qualified sales professional
upwards of around 150,000 checks
received. Sales incentives could be
annually. Finally, Toyota had to
automatically placed directly onto
distribute these checks, typically
the card, cutting payment delivery
batched for priority shipment,
time from weeks to days. Within
which cost around USD10–12. So,
weeks, Toyota launched and was
the distribution costs alone topped
delivering paperless payments
USD180,000 annually.
nationwide, at a dramatically faster
®
rate and at a fraction of the cost.
The program’s impact can be
best illustrated with Toyota’s
most recent new market entry.
When it launched the program,
Toyota was entering the US truck
market, a challenging segment
traditionally dominated by a few
select manufacturers. “When we
launched our program, we decided
61) to utilize the unique channel it
gave us by putting the newly
56
introduced Tacoma truck on the
program website and materials,
and even on our Toyota Card,”
said Warren Keckeisen, Incentives
Administration Director, Toyota
Motor Sales USA. “Our Citi
Prepaid program allowed us to
communicate directly with our
individual sales professionals
to educate them on our new
truck line, and it also allowed us
to dynamically reallocate our
incentive structure and enhance
their performance. It was a solution
that came at the right time for us.”
62) The program gave the company a
unique and direct communication
channel to its sales professionals,
who were usually employees of
the dealership rather than Toyota.
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64)
65) Industrials Casebook 2010 — 2011
Global Transaction Services
