Adam Smith Awards 2017

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HIGHLY COMMENDED WINNER
Best Liquidity
Management Solution
Toyota Motor Europe NV/SA
Brussels, Belgium
Stan Blykers, Senior Treasury Specialist
Liquidity solution to ruble challenge for Toyota in Russia
Company profile
Toyota is one of the world’s largest automobile manufacturers and a leading global corporation. Founded in 1937,
Toyota now sells vehicles in 170 countries and employs over 300,000 people. Based in Brussels, Belgium and staffed
by 2,700 people and more than 60 nationalities, Toyota Motor Europe (TME) handles the wholesale marketing of
Toyota and Lexus vehicles, parts and accessories, and manages Toyota’s European R&D, manufacturing and
engineering operations.
The challenge
The major challenge in the region for Toyota Motor Europe (TME) has
been the RUB flows and Toyota Motor Russia (TMR) was using
several banks in Russia. Due to the peculiarities of the domestic
clearing system, the lack of multi-bank solutions in the domestic
market and the geographic disposition of the country, expanding in 11
time zones, it has been almost impossible for large overseas
treasuries to manage their domestic flows efficiently. Over three
billion of operational balances, in local currency, remained
fragmented, creating significant cost, working capital and operational
inefficiencies. TME acknowledged the problem and despite efforts to
reach a solution over the past few years, the cross border flows
remained challenging.
They set out the following objectives to:
• Extend the transactional window and gain at least one additional
day of value on their FX swap transactions.
• Reduce the fragmented positions across the different
legal entities.
• Eliminate idle balances.
• Improve the repatriation process to Japan through effective
cross-border flow management.
• Reduce the cost on the intercompany loans.
• Improve the cash flow forecast.
• Manage more effectively counterparty and country risk.
The solution
TME, TMR and their bank worked to structure a multi-layer solution
that enables the clearing of all daily operational transactions in Russia,
the funding of the local accounts and the automated integration into a
London liquidity overlay account, enabling TME to utilise the funds
with good value and eliminate idle cash that was held in fragmented
positions across multiple domestic accounts.
The solution combines a full payments and collections platform for
the RUB transactions, a fully automated domestic physical pool to
consolidate all positions in a single hub, a true end-of-day automated
sweep for the excess operational cash and an offshore interest
bearing RUB account to centralise the net position of all daily activity.
An additional FX swap is performed from the offshore account
without the need to add additional account layers.
Best practice and innovation
The solution achieves optimal results by fully eliminating idle and
fragmented positions and transferring the excess liquidity of different
legal entities and accounts into an offshore domiciled IHB account.
This arrangement maximises the liquidity and delivers working capital
efficiencies without the need of manual intervention, thus generating
operational efficiencies too.
Toyota is one of very few companies to start managing their cross
border flows in a more holistic manner. The cross border element
along with the integrated domestic collections and centralised FX
activity is a creative way to eliminate any manual element through the
process. An additional element that makes this solution even more
innovative is the scalability and the option to fund the Tokyo EUR
Account on a same day basis without any loss of value.
Stan Blykers, Senior Treasury Specialist explains, “A key differentiator
for us is that this solution is fully scalable and can support the
international and domestic growth of the company in a much more
effective manner.”
Key benefits
• Elimination of substantial pockets of liquidity held in Russia.
• Working capital optimised.
• Further enhancement of working capital cycle by the
additional value of two days for the billions of the RUB/EUR
FX swap.
• Incremental interest earnings from the consolidating
position in a high-yielding currency.
• FX and risk management process optimised.
Stan Blykers and Koji Minami, Toyota Motor Europe and Yuki Ohashi, Citi