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Liquidity Management

A Renowned International Automaker

Centralizing treasury operations in North America


About

One of the world’s largest auto manufacturers, this company employs almost a quarter of a million people worldwide. It designs, engineers, manufactures and sells vehicles. It also sells vehicle-related parts, services, components and production systems worldwide. The company has relationships with dealers and distributors in more than 150 countries.

 

At a Glance

  • J.P. Morgan facilitated the group with the centralization of its Mexican operations in North America, using one single platform across the region
  • The technological solution made it possible to create a host-to-host connection between the customer’s treasury system (SAP) and the local payment systems in Mexico
  • The implementation of cash concentration structures improved the company’s liquidity management

 

The Challenge

 

 

The group launched a request for proposal in 2013. The aim was to standardize its payment processes in North America, eliminate manual local operation tasks, improve controls and reduce the number of banking relationships.

A key requirement was to manage one single file format and one single process to operate across North America.


Mexico Landscape

In Mexico, it is common for corporations to operate on a decentralized model using local electronic banking web platforms which requires each user to have a token to sign in to an internet application and manually upload payment files. If the token is not stored in a safe place, the possibility exists that a manually-uploaded payment file could be altered by a user. J.P. Morgan is offering a host-to-host payment service reducing or eliminating manual intervention and improved treasury controls and efficiencies.


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  • J.P. Morgan offered a regional treasury model on its platform with two cash concentration structures (one in-country structure in MXN and another for cross-border in USD). Both structures are inter-connected by a multi-currency cross border cash concentration service that enable clients to concentrate their funds in US dollars in US with an automated sweep
  • To process their payments, the American automaker implemented J.P. Morgan Host-to-Host, which offers a wide range of automated payment and reporting services using a standard file format. This allowed the standardization of the company’s operation in Mexico and North America. Connectivity between the client’s treasury system (SAP) and the bank eliminated the need for both an electronic banking web platform, as well as manual file handling, thus reducing operational risk. Additionally, the solution considered a local physical cash concentration structure for local subsidiaries
  • In order to expedite the American brand’s payment process, J.P. Morgan provided an intraday overdraft. This allows the client to execute payments immediately with the possibility to cover these funds during the day according to operational flows
  • Key benefits
    • Efficiencies through a regional automated process
    • Regional cash visibility and transaction control
A global coordinated effort between our US and Mexico teams and a focus on client service were key in developing a bespoke solution for the client.

Aldo Chiquini, Mexico Treasury Services Coverage

The Impact

  • Once the payment is authorized according to the company’s internal work flow, the treasury system (SAP) generates the files to be sent to the bank via host-to-host. This solution improved the entire payments treasury operation in Mexico. The entire process is operated and controlled by the company shared service center
  • This new model saves the Mexican team time by reducing manual processes. Once the payments are processed and the bank confirms the transactions, the information is directly loaded into SAP to run the internal aggregation process. The North America team therefore gains total visibility and control of accounts and transactions in Mexico.

 

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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