Packed for optimised cash management

About Huhtamaki

Established in 1920 in Kokkola, Finland, Huhtamaki is one of the world leaders in food and beverage packaging. In the 1970s they expanded their presence and technical capabilities outside Finland, and the company has continued to grow since then. Now operating around the world and manufacturing in six continents, Huhtamaki continues to form partnerships and make acquisitions to support their customers, in addition to growing organically.

 

Trapped cash

In 2014, Huhtamaki successfully integrated the business operations of Hong Kong-based Josco companies, acquired nearly two years before. The management’s focus turned to merging cash and liquidity management processes across the company’s various legacy systems.

However, Josco and Huhtamaki's existing Asia arm had separate IT systems. The acquisition also meant that Huhtamaki inherited numerous bank accounts spread across several banks. This resulted in receivable inefficiencies and large amounts of trapped cash that Huhtamaki could otherwise use for future investments.

A carefully thought-out cash management solution was thus imperative to improve this undesirable situation, not only to manage the trapped cash in Hong Kong, but also to eventually build a platform for growth in Asia.

 

The new package

After discussions with Huhtamaki, DBS used design-thinking to identify three particular key areas to address. The first was the need to devise an alternative cash collection method from Huhtamaki’s small-sized customers to increase the firm's control over cash flow. The second was to streamline bank accounts needed for daily operations to optimise liquidity through cash concentration. The third was to identify automation opportunities for transaction workflows and reconciliations to achieve faster processing times for the company.

With over a thousand customers in Hong Kong, a central aspect to improving efficiency was in minimising the number of the company's bank accounts and increasing automation in reconciliations. A multi-currency saving account achieved the former, while a virtual account solution aided in the latter, enabling Huhtamaki to handle collection recognition almost 50% faster than before.

To help automate cash flow, a two-way daily target balance sweep for Huhtamaki's Hong Kong entities was implemented. This system automatically moves funds between different corporate accounts depending on where payments needed to go.

 

Impressive results, perfectly packed

With all this time saved, Huhtamaki was now able to focus their efforts on collecting outstanding payments. Compared to the average in the previous years, there was an improvement of over 65% of receivables from their Hong Kong based customers, and trapped cash level was successfully reduced by 30%.

But it wasn't just DBS' solutions that impressed. The bank’s team showed a commitment to adapt their working processes to best suit the Finnish firm's requirements. The agile structure of this solution optimised working capital while facilitating payments to company subsidiaries that have cash concentration structures. This means the firm's aggregated balances now obtain the highest possible interest yields and minimised facility costs.

 

"DBS has been one of Huhtamaki's relationship banks for over ten years. Throughout the whole RFI and RFP process, DBS clearly demonstrated its commitment to understanding our needs, and made the extra effort to find the optimal solution for us."

Lifei Li, Treasury Manager at Huhtamaki Group Treasury

Discover a spectrum of opportunities

Explore DBS Treasury Prism to discover how you can create a similar cash management solution for your business. If you'd like to read more case studies, simply click on Case Studies on the left.

 

The information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only.

The information is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

All case studies provided, and figures and amounts stated, are for illustration purposes only and shall not bind DBS Group. DBS Group does not act as an adviser and assumes no fiduciary responsibility or liability for any consequences, financial or otherwise, arising from any reliance on the information contained herein. In order to build your own independent analysis of any transaction and its consequences, you should consult your own independent financial, accounting, tax, legal or other competent professional advisors as you deem appropriate to ensure that any assessment you make is suitable for you in light of your own financial, accounting, tax, and legal constraints and objectives without relying in any way on DBS Group or any position which DBS Group might have expressed herein.

DBS Bank Ltd. All rights reserved. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by DBS Bank Ltd and/or its affiliates/subsidiaries.