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Liquidity Management

A Leader in Agribusiness, Food Products and Fertilizer

Optimizing liquidity through a global and local earnings credit rate (ECR) program


About

Through its agribusiness, fertilizer and food products divisions, this corporate giant has established a global presence in the farm-to-consumer food chain. The company is among the world’s largest oilseed and vegetable oil processors, as well as one of the most important suppliers of fertilizers across the globe.

At a Glance

  • J.P. Morgan is the company’s main bank in Mexico, playing an important role in its treasury operations
  • The company relies on J.P. Morgan to support liquidity management and facilitate all payment processes
  • Mexican peso (MXN) surplus balances in Mexico contributed to reducing the firm’s transactional costs in the U.S. through the implementation of both global and local ECR

The Challenge

The company required a cash management zero balance structure to improve its liquidity management, using surplus balance accounts to fund deficit accounts as well as allowing them to process payments.

An additional objective was to reduce transactional fees in Mexico and the U.S. by taking advantage of liquidity flows in Mexico.

The J.P. Morgan Solution

  • J.P. Morgan developed a liquidity management and electronic payment solution for cash management that uses a zero balance structure to consolidate all of the company’s receivables flows in one master account (MA). As part of the solution, J.P. Morgan implemented an overdraft line in the MA to facilitate the company’s payment processes. As complementary services, J.P. Morgan also implemented virtual references and reference deposits (over-the-counter payments*) to improve the firm’s reconciliation processes.
  • This structure enables the company to:
    • Centralize liquidity management within a single bank
    • Use the consolidated funds to improve liquidity management
    • Enhance visibility and control
    • Reduce transactional costs (fees) in Mexico and the US as a benefit for the implementation of a global and local ECR model

J.P. Morgan Access® provides visibility and reporting for the cash concentration structure, receivables and e-banking payments.

The Impact

  • The solution positioned J.P. Morgan Mexico as the company’s main payment and cash concentration bank. J.P. Morgan Mexico manages most of the company’s cash flows, leaving other services like over-the-counter collections, customs and local taxes with local retail banks.
  • The surplus balances in Mexico offset total local transactional fees and contribute to reducing the firm’s transactional cost in the U.S. through the implementation of the Global ECR.
  • The solution improved liquidity management in the Mexico branch and facilitated the company’s payment processes.

  Mexico Liquidity Services

   J.P. Morgan offers a wide range
   of products and solutions for
   corporations to improve their
   local cash management
   operation, including:

  • Liquidity Portal/Intercompany Report
  • Multi-level physical cash concentration
  • Intraday and End-of-Day Sweeping services/ZBA structures
  • Cross-border/multicurrency sweeping services
  • Global and Local ECR
* Over-the-counter payments are processed through our partner banks in Mexico. The corporation maintained accounts in other retail banks to give its clients different options to make payments.

 

This webpage was prepared exclusively for the internal use of the J.P. Morgan client to whom it is addressed (including the client’s affiliates, the “Company”). This webpage is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan.

This webpage is confidential and proprietary to J.P. Morgan and is not intended to be legally binding. J.P. Morgan makes no representations as to the legal, regulatory, tax or accounting implications of the matters referred to in this presentation. The products and services described in this webpage are ordered by Banco J.P.Morgan, S.A., Institución de Banca Múltiple, J.P.Morgan Grupo Financiero and/or its affiliates, subject to applicable laws, regulations and service terms.

J.P. Morgan is a marketing name for the Treasury Services businesses of JPMorgan Chase Bank, N.A. and its affiliates worldwide.
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