Upload
kyriba-corporation
View
256
Download
1
Tags:
Embed Size (px)
Citation preview
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2
Drew ArnoldDirector, Global Solutions, Americas, Global Transaction [email protected]
Greg PersonGlobal Vice President of [email protected]
Today’s presenters
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3
Do I have visibility to my corporate liquidity, and can I access it?
Do my global subsidiaries have the liquidity they need to be successful?
Do I have confidence in my global cash forecast?
Do I have the right banking partners to provide liquidity for my global regions?
Do I have the available liquidity necessary to fund major capital or corporate expense?
Do I have the technology infrastructure to support the business and balance my employees’ time?
How do I answer….
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 4
Investment returns versus available liquidity
– Preservation of capital vs. higher yielding investments
– Rate of return vs. cost of capital
– Cash on my balance sheet vs. shareholder activism
Ensuring adequate liquidity to fund corporate investment strategies and global business units
– Optimal liquidity at appropriate level of risk and cost
– Executing corporate capital allocation strategy; share buyback, M&A, debt pay-down
Corporate liquidity balance
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5
Discussion framework
Liquidity visibility (today and tomorrow)
Leveraging intercompany liquidity sources
Strategic working capital initiatives
Bank relationships
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6
Do I understand my current liquidity structure… globally?
Global bank balance visibility
Corporate and local debt obligations (including i/c)
Available local credit lines
Local business and cash flows
Insight to future liquidity demands
– Forecasting objectives and process
– Seat during the planning process
– Internal alignment and buy-in
Current global liquidity profile
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 7
Three-pronged approach to treasury liquidity
Intercompany
Banking Partners
Working Capital
Mobilizing intercompany cash to enhance global liquidity and positively impact P&L
Working capital strategies to reduce the cash conversion cycle
Utilizing bank partners to provide liquidity resources in strategic markets
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8
Intercompany liquidity considerations
Low cost liquidity source
Internal cash is cheapest form of finance
Automation through bank pooling structure
Global deployment involving global entities, currencies and multiple bank relationships
Initial investment and due diligence
Collaboration with treasury, tax, local finance and legal
Financing entity (in-house bank) and loan documentations (participants)
Optimization through automated bank pooling
Technology investment and transparency
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9
Intercompany liquidity techniques
Intercompany infrastructure for cash mobilization
Intercompany term notes
Cash pooling and appropriate authorities to move the cash
In-house bank legal structure, intercompany facilities
Capital contributions, intercompany dividends
Multi-lateral netting agreements, disciplined intercompany invoice settlement
Local bank balance targets and enforcement
Challenge local balance requirements (show me your plan)
Backstop of local credit line
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 10
Address Kyriba Singapore liquidity deficit with Kyriba Canada surplus
Reduce SGD external expense, achieve higher consolidated investment balance
In-house bank liquidity example
Kyriba BV(IHB Entity)
Kyriba Canada
Kyriba Singapore
Deutsche Bank
Deutsche Bank
Deposits USD 50M
Sell USD 10M
Buy SGD 15M
Invests USD 40M
Borrows SGD15M
(USD 10M)
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11
Working capital optimization approach
Pay Suppliers with Cash -
DPO
Sell Acquired Inventory for AR -
DIO
Collect on Accounts
Receivable -DSO
Reduce the Cash Conversion Cycle
Time cash is tied up in working capital
Reduce DSO
Extend DPO
Optimize inventory balance
Cross functional strategic initiatives
Demonstrate liquidity and P&L benefits
AP, AR, manufacturing and procurement effort
Involve your banks and technology partners
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 12
Working capital payable strategies
Supply chain finance:
“The use of financial instruments, practices, and technologies to optimize the management of working capital and liquidity tied up in supply chain processes for collaborating business partners.”
Improve corporate liquidity, cash flow and support your supply chain:
Extend your DPO, shorten CCC and improve liquidity
Help your suppliers access credit and lower cost
Improve your suppliers cash flow (DSO) and issue of late payments
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13
Regional liquidity constraints due to US/OUS cash allocation
Achieving operating cash flow targets
Large companies generally have stronger credit ratings and excellent access to credit when compared to their suppliers
Suppliers generally fund themselves via expensive working capital solutions with higher funding costs
Suppliers often encounter issue of late payments which places major strain on their cash flow
Factors driving supply chain finance programs
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 14
Payable financing steps
1. Supplier requests early payment from buyer invoice
2. Bank pays supplier early at discount
3. On due date of invoice buyer pays the bank full value of invoice
A win-win-win for supplier, buyer and bank
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 15
Workflow: payable financing example
Day 10 – approved invoice
Buyer Supplier
Day 10 – bank pays discounted 3% APR invoice of $99,583
Scenario: Buyer receives $100,000 invoice from supplier with 60-day payment terms
Technology Solutionand Bank Partner
Day 60 – debit original invoice amount of $100,000
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16
Benefits – payable financing
Supplier
Receive payments for 100% of invoice value, less any financing charges
Improve DSO metrics to enhance working capital
Opportunity to discount receivables at a better rate than other trade finance options by leveraging buyer’s credit
Buyer
Extend payment terms without negatively impacting supplier’s cash flow
Improve DPO metrics to enhance working capital
Minimize counterparty risk from improved financial health through the supply chain
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17
Internal best practices to optimize receivables
Revisit internal collection processes and data enrichment enhancements to reduce DSO
Electronic invoice and
dispute management
Promote ACH and
automatic customer collection methods
Electronic reconciliation, invoice data
enrichment to streamline
cash application
Renegotiate, adopt credit terms and
limits – and enforce
compliance
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 18
Receivable financing solutions
• Sale of accounts receivable, or invoices, to a third party commercial financial institutionFactoring
• Facility typically with financial institution to convert individual receivables and aggregate into a new security, which is then sold as marketable investment to outside investors
Securitization
• Insurance policy that provides protection against non-paymentCredit Insurance
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 19
Local banking partners
Partner with corporate and regional offices to provide reliable liquidity solutions
Overdrafts (intraday and overnight)
Guarantees / Letters of Credit
Regional pooling solutions
Regional AR/AP working capital solutions
One-off programs to meet local needs
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 20
Champion strategic alignment
– Involve your stakeholders; communicate value to internal partners
– Senior management sponsorship
– Engage technology and banking partners
Set realistic implementation goals
– Distinct deliverables, consistent ‘wins’
Pay attention to local needs
– Propose solutions to liquidity problems that impact the organization
– Ensure regulatory compliance
Commencing new liquidity project
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL.
Summary
Ensure liquidity programs in place
• Optimize intercompany cash flow sources
• Working capital solutions
• Banking partners
Improve cash and liquidity visibility
• Technology
• Banking channels
• Cash consolidation and optimization tools
Access to available liquidity
• Cash pooling
• Target balancing
• Payment authorities
Treasury as strategic partner to support global business objectives and execute corporate investments
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 22
Manage global liquidity and financial risk Mitigate liquidity and currency risk through
comprehensive visibility and cash control
Support liquidity demands of global companies by optimizing intercompany cash positions
Execute corporate strategic investment and capital allocation strategies
Improve shareholder sentiment by optimizing balance sheet cash position by improving long-term cash forecast
Treasury’s business value
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL.
Related Resource
Liquidity Management Treasury & Risk Special Report
Learn from experts at Kyriba, Deutsche Bank and Citi how to optimize your organization’s liquidity. This special report, developed by Treasury & Risk magazine, contains a number of features and essays from thought leaders in the industry, on topics ranging from reducing the cash conversion cycle, to receivables management and the impact of regulatory chance on liquidity management.
DOWNLOAD>>