Transcription
Treasury and Trade SolutionsOctober 2017Going Global – Business without BordersEnabling International GrowthSimona AnghelRomania Sales HeadTreasury and Trade Solutions, Citi
The Pursuit of Growth Treasury ChallengesEmerging 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.Growth StrategiesKey Treasury Challenges Fragmented banking structures across multiple banksand countriesGrowingdomesticmarket share Managing multiple different currencies High FX costsPartnershipsand JointVenturesBalancingGrowth andRisksAccess tointernationalmarkets Cash forecasting challenges Difficulty funding local businesses Inefficient repatriation of cash Negative rate currencies and trapped cash marketseCommercegrowth1Mergers andAcquisitions Post M&A integration challenges
tStructures & ChallengesAs organisations expand internationally, they frequently maintain fragmented structures across multiple banks & countries.EURSEKSwedenCADUSDEURCanadaGBPUSDUnited KingdomUSDEURUSAUSDFranceEURUSDGermanyJPYUSDKey Pain Points 2High operating costs – multiple banks,platforms & processesFragmented liquidity & negative rate ccysDifficulty funding local businessesJapanEURINRHKDItalyIndiaHong KongUSDBRLBrazilAUDInefficient repatriation of cashAustraliaForecasting challengesHigh FX costsLifting fees on cross border paymentsReconciliation challengesUSDTransactional payments and collections
The Citi Solution – Value PropositionCiti’s solution minimises your overhead costs, reduces FX exposure and optimises working capital to provide you with adirect competitive advantage and a scalable platform for your growth agenda Technology integration and workflowautomation solutions Dashboard tools enable you to view yourpositions & get actionable analyticsOptimise Liquidity Consolidate liquidity acrossCiti and 3rd party banks, withautomated sweeps Bank & AccountRationalization leveragingCiti’s global network Single view of global cashpositions Payments to 190 countries inover 130 currencies with FXtransparency Optimise use of cash acrosscurrencies includingautomated repatriation3Streamline Operations Full Value Transfers tobeneficiariesImprove EBITDA Earnings Credits to offset bankfees and reduce expenses Payer ID accounts toaccelerate cash application &improve DSO Virtual Card Accounts forgreater security & control andextended payment terms
Liquidity OptimisationCase Study
Managing Multiple Currencies across MarketsAs organisations expand internationally, they frequently maintain fragmented structures across multiple banksand countries.Client Characteristics andPain Points Invoicing in different currencies Multiple banks andmultiple currencies Counterparty risk concerns Fragmented balances Negative rates Overdraft costs Inefficient and manualcash repatriation High FX costs and lifting fees forcross border MBGN1MMUSD2MMRomaniaBulgariaUSPayments and Collections4
Solution: Global Cash Concentration via Physical SweepsExtended transactional window and automated cash repatriation.65ConcentrationCentreRomaniaEUR1MM1. Open in-country accounts withCiti branches for domesticpayments and collections2. Open concentration accounts toconsolidate and repatriate liquidity3. Set up automated end of day sweepsbetween country and headeraccounts – single or multi entity3Pre: USD 2MMPost: 0MMUKPre: USD 0.5Post: USD 0BulgariaFXPre: USD 2MMPost: 0MMUSAAutomated End of Day ncyPaymentsGlobally4. Automated FX sweep for balances innon-core currencies5. Reduce levels of negative yieldcurrencies – use EUR to fund paymentsin 100 currencies4Pre: BGN 1Post: BGN 0BulgariaFXPre: EUR 2MMPost: 0MMGermanyPre: EUR -1MMPost: 0MMSlovakiaAutomated FX Sweep (Intraday)6. Single global platform for visibility andworkflow automation
Solution – Financial and Operational BenefitsCurrent StateAverage Bal(USD Equiv.)ItemProposed Structure with CitiInterest Rate Interest/CostAverage Bal(USD Equiv.)Interest Rate Interest/CostUSD Balances4,000,0000% 0USD Balances4,500,0000.20% 9,000EUR Balances2,000,000(0.40)% (8,000)EUR Balances1,000,000(0.40)% (4,000)(1,000,000)(1.00)% (10,000)EUR Overdrafts0 01,000,0000% 0BGN Balances0 0EUR OverdraftsBGN BalancesTransactional Costs across 6 different banks (30,000)Total Treasury Economics (48,000)Balances scattered over multiple bank accounts heldat different banksClient Challenges High operating cost Fragmented liquidity in multiple banks Low yield and overdraft charges Forecasting challenges Counterparty risk concerns6ItemTransactional Costs (e-banking, Payments,FX, etc.) (30,000)Total Treasury Economics (25,000)Cost reduction from lower e-banking maintenance costsand operational efficiencies from end to end automationBenefits of Citi Solution Cost Savings Elimination of unnecessary overdrafts Improved returns Funding of local businesses automatically Extended transactional window
CASE STUDYThe proposed structure implies the centralization of funds at the level of the US entity. Non-resident accounts will beopened with Citi Romania and the funds collected from all subsidiaries through TBA sweeps will be transferred to theseaccounts and further exchanged into USD using the Auto-FX solution.Citi’s CustomerCiti’s CustomerNon-Resident accounts(USD)Non-Resident accounts (RON, EUR, GBP, JPY)RONEURGBPJPYUSDRON, EUR, GBP, JPYAuto FX SolutionRON AccountCustomer RoEUR AccountGBP AccountJPY AccountCustomer RoCustomer RoCustomer JapanCustomer UKCustomer UKUSD AccountCustomer RoCustomer UKCustomer USManual FXCustomer JapanCustomer SingaporeSGD AccountSingapore – we cannot preform cash pooling on the SGDcurrency. Manual FX should be performed by the customer,from SGD to USD.7
Collection & PaymentGlobal innovative solutions
Accelerate Cash Application – Payer ID AccountsFor 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 tomake payments. Payments to these accounts are posted to a single physical collections account.What are Payer ID Accounts?1 Account number(s) assigned to the collecting clientReal account –Entity A1000123456as a means of identification / visibility2 A Payer ID Account is visible as if it is a RealAccount Number3 Payer ID accounts map to, and actual funds flow to,a single Real account owned by a single entityUnique Payer ID Accounts:Range of account numbers Usable in the market (payer, payerbank, clearing etc.) Identification / mapping to realaccountClient reporting / visibility: Transactions at Virtual Account level Funds aggregated at real 607001234561RO 12 CITI 1234 1234 1234 1234Benefits of Payer ID Accounts Identification: Each payer identification account number will map into the transaction reference field which is reported on thestatements 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)8
Citi Virtual Card Accounts OverviewClients can gain financial benefits, process improvements, and greater security & control by leveraging Citi Virtual CardAccounts (VCA) for supplier payments.Virtual Card Numbers (VCNs) Unique, non-plastic account numbers used for securepurchasing Secure VCN can be delivered via encrypted email to suppliersVirtual CardNumbers(VCNs)IncreasedTransactionLevel ControlEnhancedClientSupplied DataThree InterfaceOptions9Increased Transaction-Level Control Define authorization controls for each VCN: Number of transactions (single- or multi- use) Transaction amount limit (exact, maximum) Validity Period & moreEnhanced Client-Supplied Data Capture client-specified data elements with each VCN forenriched data analysis, allocation, and reconciliationThree Interface Options Request website with customizable approval workflows Batch File Interface Real-time API
Virtual Card Accounts TechnologyVCN requests can be completed using one of three interfaces: Web, Batch, or API.InterfaceDescriptionRequest VCNA web-based application that allows a user to login and request a virtual cardnumber (VCN). Additionally, approval flows can be configured to have arequestor and approver review prior to receiving a card accountWEBThe companyWebBATCHThe company can request a batch of virtual card numbers for payments via filetransfer. Web portal upload returns the payments file with VCNsUploads FileThe companyBatchAPILeverage the company’s system using a real-time web service to generate VCN’sfrom its eProcurement system or any other payment systemIntegrationThe companySystem10API
Global Banking Connectivity
Standardised Global Platforms - Global Banking ConnectivityCitiDirect BECitiConnect for Files Global web-based electronic banking tool supports transactionservices in a real-timeenvironment Single channel for global transmission andreceipt of files and formats such as ISO20022XML Payments and collections in over 90countries, supports 26 languages Manual (or scheduled) fileimport/export available formany file formats Host-to-Host gateway for integrationwith TMS/ERPCitiDirect BECitiConnect forFiles CitiConnect API Cost effective, real timeaccess to Treasury Servicesvia API to deliver a straightthrough processing solutionCitiConnect for SWIFTCitiConnect APICitiConnect forSWIFT Access Treasury Services directlyfrom your application of choice Collaborate through an API ecosystemwith ERP and TMS vendors11Connects with treasury centres andlinks with Citi’s Integrated PaymentServices for global paymentprocessing Full payment and reportingcapabilities globally Centralised hub: Connection to Citivia one local branch BIC via FINand FileAct for global accessConsistent SWIFT messages for true STPReduce SWIFT costs up to 3x by eliminating crossborder traffic fees
CitiConnect APIThe Challenge:Our clients are in need of fully automated solutions to process transactions directly from their ownTreasury Workstation (TWS) and Enterprise Resource Planning (ERP) platforms to their bankingpartners, without having to rely on banking portals.The solution:CitiConnect API provides cost effective, real time access to Treasury Services that deliver a straightthrough processing solution for our ccountStatementRequest12Value for our clients:BalanceInquiryAccountStatementDownload Flexibility and choice to accessTreasury Services directly from theirapplication of choice Accelerate implementations bysimplifying integration and reducingonboarding time
What is an API?Business AssetsCiti API PlatformBusiness AppsAPIs providing access toBusiness AssetsUse services and datathrough Web APIsDevelopersEnd UsersUse Web APIs tocreate appsUse Business AppsExposable Citi TTS Data andServicesApplication Programming Interface (API) is the primary entry point for business whether it iscalled from a company’s own applications (Internal API) or by client or business partner. APIenables nimble interactions in digital ecosystems.Source: IBM (adopted by Rene Schuurman13
WRAP-UP
Wrap Up: Best Market Practices Cash Management Solutions14IntegrationAutomationRisk ManagementFlexibility
Citi Contacts15Simona AnghelMihai CocheciRomania Sales HeadCommercial Subsidiaries Group Head, RomaniaTreasury and Trade SolutionsCommercial Bank 40 21 203 67 31 40 21 203 52 ti.comAlexandru TomaAidar KalievFX Corporate DealerCommercial Subsidiaries Group Head, USMarkets RomaniaCommercial Bank 40 21 203 55 20 1 (212) com
IRS Circular 230 Disclosure: Citigroup Inc. and its affiliates do not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not intended or written to be used, and cannot be used or relied upon, by youfor 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 basedon 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 enterinto 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 forany Transaction.We are required to obtain, verify and record certain information that identifies each entity that enters into a formal business relationship with us. We will ask for your complete name, street address, and taxpayer ID number. We may also requestcorporate formation documents, or other forms of identification, to verify information provided.[TRADEMARK SIGNOFF: add the appropriate signoff for the relevant legal vehicle] 2017 Citibank, N.A. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world. 2017 Citibank, N.A. London. Authorised and regulated by the Office of the Comptroller of the Currency (USA) and authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limitedregulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. All rights reserved. Citi and Citi and Arc Design are trademarks and servicemarks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
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
![GLOBAL MASTER IN BUSINESS ADMINISTRATION [GMBA]](/img/9/cat-p-192-i.jpg)
