Viewing Instructions Table of Contents Each page of the publication is represented by a thumbnail. Simply click on the page you would like to visit. Image clipping This icon enables you to select and email a particular area on a page as opposed to an entire page to your friend or client. Print publication Print a selected page or the entire publication. Download a PDF Download a selected page, multiple pages or the entire publication as a PDF file. Search Search by keyword. Publication page navigation These icons will allow you to navigate through the pages of this publication by clicking on the left and right arrows or entering a page number. . Collaborate Innovate Consumer, Retail, and Healthcare Casebook Global Transaction Services . “This Casebook is a testimony to the innovative and creative spirit of our clients. It demonstrates how we work in collaboration with our clients to deliver new solutions to challenges they may not have faced before.” Michael Guralnick Global Head, Client Sales Management Treasury and Trade Solutions Global Transaction Services, Citi . welcome . It is my pleasure to present our world-class professionals who Citi Global Transaction Services staff our offices across more Consumer, Retail and Healthcare than 104 countries. Casebook. This book of client case studies is a compilation of the innovative solutions that we have designed, in partnership with our clients, to help them achieve excellence in meeting their key working capital goals. This Casebook is a testimony to the innovative and creative spirit of our clients. It demonstrates how we work in collaboration with our clients to deliver new solutions to challenges they may not have faced before. It is designed to share Against a backdrop of unrelenting Michael Guralnick Global Head Client Sales Management Treasury and Trade Solutions Global Transaction Services, Citi global best practices, and to help economic challenges and a continued our clients accelerate the realization move towards globalization, our of their transaction services goals. clients are focused on achieving operational efficiencies across their businesses and their increasingly complex supply chains.

In this global business environment, our clients are also looking to mitigate a wide range of risks, such as operational risk, settlement risk, and transaction risk. At Citi, we are committed to helping our clients in the branded consumer, retail and healthcare sectors respond effectively to these challenging times. We are delighted to share with you the insights we have gained from working with businesses like yours. I look forward Citi’s Global Transaction Services to hearing from you and welcome business provides a global platform the opportunity to continue and of innovative solutions that fully expand our successful partnership. utilizes the creative leverage of the .

contents expansion and diversification in the consumer, retail, and healthcare industries 04 efficiency in payments 20 DKV Globality EMEA Creating a global payment solution with WorldLink® Payment Serviceses accelerating collection and reconciliation 22 24 Hindustan Coca-Cola Beverages APAC Virtual accounts facilitate electronic funds transfer and autoreconciliation 26 PepsiCo India Holdings Private Limited APAC Pooling and E Collect: a comprehensive cash management solution 30 Diageo Russia EMEA Innovative receivables program shares risk and improves working capital 34 cash visibility and optimization 40 Orascom Hotels & Development (OHD) EMEA TreasuryVision® web-based service increases visibility and control 42 InterContinental Hotels Group (IHG) EMEA Streamlining short-term investments for the global hotel group 44 Kimberly Clark LATAM An integrated approach to financial process outsourcing 48 . supplier financing 50 Benetton EMEA Facilitating expansion of trade operations with a bespoke supplier finance solution 52 Bosch-Siemens Hausgeraete (BSH) Turkey EMEA Web-based supplier finance supports working capital goals 56 cards programs 58 AstraZeneca EMEA Close collaboration delivers best-in-class T&E program 60 KitchenAid NA The perfect blend of consumer incentives 64 Men's Wearhouse NA Tailored paperless payroll 66 Tractor Supply Company NA Pulling together a paperless payroll 68 centralization and integration 72 Minor Group APAC Overcoming organizational complexity to deliver best-in-class processing efficiency 74 Roche APAC Regional in-house bank solution 76 Amgen EMEA A new treasury structure for Amgen 80 Newell Rubbermaid EMEA Centralized payments and collections improves visibility and efficiency 84 Arcos Dorados LATAM “One-bank” strategy centralizes banking activities across Latin America for vast restaurant operations 88 . expansion and diversification in the consumer, retail, and healthcare industries . While many companies in the consumer, retail and healthcare sectors have fared better than those in other industries, with many posting strong results recently, the past three years have witnessed unprecedented economic challenges, and companies in these sectors have experienced liquidity, cost and supply chain pressures. While top line financials at major hygiene and grooming, and consumer and retail companies biomedical and medical device have held strong through the cycle, industries) has historically been there has been a need to shore considered “recession-proof” as up individual customer budgets consumers require medication through promotions, in turn creating irrespective of the economic pressures on corporate net income. climate. However, in some cases, Similarly, their suppliers and pharmaceutical companies that distributors have also felt the pinch, diversified into hygiene, personal resulting in the need for consumer grooming, and other consumer and retail companies to support goods became more vulnerable and maintain the robustness of to the recession as customers’ their supply chains. Competition personal incomes decreased. in the industry has also intensified Industry trends and challenges Consumer and retail Consumer goods The past three years have been characterized by constrained credit for corporates and consumers, a reduction in discretionary spending, and a delay in big-ticket purchases. Companies often found themselves with cash locked in excess inventory during the crisis. Even those whose While the experiences of consumer, revenues were not seriously affected retail, and healthcare companies experienced constricted financing differ to some degree, they are and were forced to prioritize working united by their desire to keep the capital.

With consumers moving to needs of consumers at the heart “private label” brands as household of their strategies, and their need budgets were squeezed, branded to adapt these strategies according consumer companies responded On the other hand, the to consumer confidence and by introducing “value labels” or healthcare industry (comprising changing priorities lower cost alternatives in their — both from developing market players, and from a growing credible threat posed by “private label” brands, which have benefited from improved packaging and consumer perception. pharmaceuticals, consumer product ranges. . With consumer demand now beginning to recover in some 6 and distribution strategies, and maintain customer loyalty. markets, companies are better Consequently, consumer goods able to align inventory with sales companies are seeking new ways turnover once again. However, of attracting, maintaining, working capital remains a priority as and delivering to customers, companies seek to maximize cash while gaining insights into their available for business investment buying behaviors. and expansion, particularly in new high-growth markets. Retail Supply chains have been put recent years has been similar to that under pressure –both during of consumer goods companies, with the economic crisis and as the major retailers posting increasingly markets tentatively recover. Supply healthy revenues as economies chains are affected by rising raw recover. Large retailers that have material and energy costs and always operated on tight margins sourcing problems as key suppliers have balanced out the fluctuations experience their own liquidity in customer demand through constraints.

The economics of competitive pricing and creative production are also influenced by a promotions. Product lines are growing recognition for sustainable being rationalized to enable higher- production and sourcing, and an volume purchases, and “own-brand” increased focus on distribution products that can be delivered at to consumers in growth markets. a lower cost are becoming more Understanding changing customer prevalent, especially in Europe and behavior and demand is of critical the United States. importance to help refine product The experience of retailers over . Retailers are also challenged to understanding customer demands but has still experienced a compete with — and embrace and buying patterns, and the use decrease in sales. The industry — a wider range of retail models, of incentives to encourage and has found it more challenging such as online sales, mass reward repeat business. In the US to fulfill growth plans, due to retailers and discount clubs, as for example, 53% of beverage and lower revenues and constrained customers’ appetite to seek the 45% of food were sold on promotion borrowing opportunities. But with best pricing increases. or coupon in 2009. 4 to 6% growth forecast in the pharmaceutical industry over the In addition to offering competitive next few years, with a projected Hospitals value of USD975 billion by 2013, Whatever the economy, people still the opportunities are substantial require medical care for illness or as economic fortunes recover. injury, hence while the number of A major concern, however, is the people taking out private healthcare “patent cliff”.

Patents on at least plans in markets like the US fell during 91 “blockbuster” drugs, with a a period of job losses and income current value of USD150 billion, vulnerability, hospitals in general are due to expire by 2016. This have been largely shielded from includes nine of the 10 top drugs the crisis. A number of institutions globally, with serious implications have however been affected by a for the originating firms in terms drop in non-operating revenues, of direct revenue and increasing such as endowments, and access to competition from generic financing and fund acquisition has “Working capital remains a priority as companies seek to maximize cash available for business investment and expansion, particularly in new high-growth markets.” Healthcare pharmaceutical companies. become more challenging. To manage the financial impact pricing, retailers are seeking to encourage greater customer loyalty Pharmaceuticals in-store and online by enhancing The pharmaceutical industry the customer experience.

This has been less seriously affected requires a considerable focus on by the crisis than other sectors, of patent expiries and to maintain competitiveness, a number of companies are seeking to strengthen their brand positioning and to diversify their revenue . sources. The need to quickly develop new revenue streams 8 has also resulted in consolidation in the industry, with pharma companies buying or merging, to either diversify products lines (into biologics or vaccines, for example) or expand research capability. These are undertakings that will require significant financial investment — which may not be easy to obtain in the continued climate of constrained liquidity. Medical devices The medical devices industry has proven the least vulnerable to recession, with a continuous growth rate of around 9% annually, as a result of steady government spending on healthcare and the needs of an aging population. Companies are continuing to invest heavily in research and development to support future innovation and growth. Responding to the new economic reality For consumer goods companies, investment in production and distribution, particularly in developing markets, protecting margins through efficient supply chains and customer acquisition and retention will be critical to continued success. For healthcare companies, the combination of the “patent cliff”, an increase in generics, and the economic slowdown may have the potential to create a perfect storm for many companies. Companies are positioning themselves to ride the storm and build future success by reducing their reliance on ”blockbuster” drugs and products, expanding their geographical footprint, and reducing production costs. Evolving corporate strategies among consumer, retail, and healthcare companies require flexible banking . solutions from experienced providers to optimize cash flow, enhance efficiency, and increase the resilience and flexibility of the financial supply chain. Citi supports thousands of companies globally across these industries, and has a proven track record of delivering innovative, pragmatic solutions that facilitate customers’ business strategies and enable them to achieve their financial goals. Mergers and acquisitions (M&As) A striking development since the economic downturn has been “Working with a banking partner who is experienced in supporting cross-border M&A and who has the tools to facilitate rapid visibility and integration is key to managing the impact of M&A effectively.” sector, reflecting a significant change in companies’ business models. This trend is expected to continue or even accelerate as companies seek to create momentum in their expansion plans and capitalise on new market opportunities. companies that add significantly to their future revenue opportunities. The medical devices industry has also seen an increase in M&As, growing to well above 200% of 2009 levels. With the likelihood of continued industry consolidation and demergers as companies realign their business strategies, there is pressure on treasurers and finance managers to integrate new entities quickly into existing account structures to gain visibility and control over cash, and manage the increase in M&As across the consumer, retail, and healthcare active in acquiring smaller, biomed In the consumer goods industry, there were important deals in mature and developing markets. Pharmaceuticals also continued to extend their product set and research capabilities via M&A, with some high-profile deals bringing significant biologics and vaccines During 2009, for example, and a variety of consumer health the markets saw a number of products to acquiring entities. highly significant acquisitions. Larger companies have also been risk at a group level. This can be challenging when acquired entities have disparate partner banks and different payments, collections, and treasury technology. Treasurers are playing an increasing role in supporting M&A activities: from arranging acquisition finance through to integrating new assets into the business.

This involvement is critical as treasurers need the ability to anticipate and address . the significant implications of all M&A activities on liquidity and risk. 10 a single account. For instance, it is used effectively by companies Working with a banking partner who is experienced in supporting cross-border M&A and who has the tools to facilitate rapid such as DKV Globality, part of the International Health Division of Munich Re, for making claims payments globally. visibility and integration is key As the experiences of these to managing the impact of companies illustrate, frequent M&A effectively. For example, acquisition typically results in establishing centralized financial the group’s customer and processes (as demonstrated by supplier base expanding Newell Rubbermaid and Minor geographically, requiring a Group), and leveraging multi-bank banking partner with global electronic banking tools, such as reach and extensive experience Citi’s TreasuryVision , enables that can match the company’s rapid visibility over group balances. current and future needs. ® Payments can be standardized through CitiDirect® Online Banking, Citi’s web-based banking platform. And multi-currency payments can be supported from a single shared service center through Citi’s Integrated Payment Services, which includes WorldLink® Payment Services, the bank’s cross-currency and cross-border payment tool. WorldLink enables payments to be made in 137 currencies from Expanding into high growth markets As purchasing power strengthens, state health insurance expands, and public focus on health increases in developing markets, the Asia Pacific region becomes increasingly important to companies in the consumer goods, retail, and healthcare sectors. For example, China is now the third-largest market for pharmaceuticals after .

the US and Japan, and is projected rapidly and emerging as significant the US as Brazil’s largest trading to grow at 20% annually. Fastmoving consumer goods companies competitors. This is due to a high level of investment in research and partner, and Chinese trade with have opened new bottling plants development, and the ability to Trade between Latin America and other major infrastructure to support new consumer demand. seize opportunities to produce generic drugs as patents expire. and Africa is also increasingly For example, it is predicted that and the rest of South America, annual sales of new generics will grow by around 29% to USD10 billion over the coming years. so Western multinationals can “Emerging markets such as China and India are not only important as new consumer markets, but companies headquartered in these countries are also expanding rapidly and emerging as significant competitors.” High growth markets such as China and India are not only important as new consumer markets, but companies headquartered in these countries are also expanding Growth opportunities are not the Middle East is growing rapidly. significant, such as between Brazil expect to experience considerable competition from emerging multinationals from these regions. restricted to Asia Pacific. Brazil Not only is there a geographic has proven largely resilient to the shift in key growth markets, crisis, sustained by high commodity but demographic changes are prices and a growing middle class. having a considerable impact Already the 10th largest economy on the consumer goods sector. in the world, with efficient and The percentage of over-60s is automated financial markets, there expanding by 2.6% annually, more are high expectations that Brazil’s than double the overall population success will continue strongly, increase and the fastest growing with the potential to become the population group.

Thirty percent fourth largest market by 2050. of the population in mature Africa is also becoming increasingly markets will be over 55 by 2030 significant for sourcing and (UN Population Division), and consumer markets, as is the Middle companies are targeting their East. However, Western companies product and marketing strategies with strong brands and geographic accordingly. Health and wellbeing reach cannot take new markets are becoming increasingly for granted.

China has eclipsed important, as is the trend towards . environmental and ethical sourcing and production. However, within an 12 across the group to address local cash-flow requirements without environment of evolving customer resorting to external financing, demand and growing competitive pay down debt, and maximize pressures, companies are tasked investment opportunities. Citi to retain margins and secure combines in-depth knowledge customer loyalty. and expertise in each market, with the regional and global cash Companies seeking to extend management and trade solutions activities into new territories, either to mobilize cash successfully. organically or through M&A, need the confidence that their banking Optimizing cash and partner can steer them through working capital uncharted regulatory complexities While the cost of external financing and help them maximize the has increased, so too has the need opportunities that new markets to undertake capital expenditure present. Working with unfamiliar and business investment to customers and suppliers in new maintain competitive advantage. markets increases the need for Consequently, consumer, retail, trade instruments such as letters and healthcare companies are of credit.

In some countries, using focusing on optimizing working letters of credit for international capital. According to REL’s Annual trade is now an obligation. Supply Working Capital Survey 2010, chain and distributor financing, in some industries such as food and new and existing markets, can be a beverages have made considerable valuable way of strengthening the improvements in working capital, financial supply chain.

Cash and and these rank among the global liquidity management solutions leaders. Pharmaceutical companies enable cash to be mobilized currently lag behind other industries . in working capital metrics such as enhancing their payments process to be freed up quickly, allowing days payable outstanding (DPO), through shared services or customers to do more business. days sales outstanding (DSO) and payment factories, and there are Hence, collections is an area that days inventory outstanding (DIO), a number of benefits that can be a number of consumer goods as these factors have not been a derived by implementing an end- companies have been seeking to priority in the past. With an average to-end procure-to-pay solution. improve. Citi works closely with days working capital (DWC) of 85 A truly efficient payments cycle customers to create solutions days for European pharmaceuticals, requires automation of each stage that are highly specific to their compared with 46.9 days for the top of the chain, from purchase-order needs — such as setting up virtual 1,000 European companies, there management through e-invoicing accounts for Coca-Cola Beverages are significant improvements that to approval and payment. By doing in India, into which customers can be made.

While US companies so, companies can reduce costs, make payments — enabling rapid have fared a little better, according enable visibility throughout the reconciliation and account posting. to the same research, US companies process, increase compliance with alone have USD71.4 billion tied up workflow requirements, enhance in working capital, around 30.6% of reconciliation, and control the the overall working capital potential. timing of payment as part of a Supplier financing Consumer goods companies often rely on smaller suppliers who may wider working capital strategy. themselves have been experiencing techniques for its consumer, retail, Accelerating collection particularly as their customers seek and healthcare customers that and reconciliation to extend payment terms or simply are quickly resulting in major Centralizing and mobilizing cash, delay payment. These suppliers improvements to working capital and making payments, are critical typically find it more difficult and metrics and the financial health elements to an effective working expensive to secure working capital of these customers’ businesses. capital strategy, but arguably, the financing, leading to the risk of Citi has implemented a variety of working capital challenges, most important aspect is to collect business disruption to their Efficiency in payments cash in a timely fashion, and ensure customers. In the case of key Large multinational companies prompt reconciliation.

In turn, suppliers, this could pose a major have often been successful in this enables customer credit lines risk to a company’s supply chain. . Citi has invested heavily in structures and program designs 14 it becomes vitally important to maintain central visibility and that are approved by major external control over cash flows so that auditors, enabling companies cash, risk, and financing decisions such as Benetton to support are made in the overall interests their suppliers by offering invoice of the group. This becomes even discounting at a competitive rate, more challenging, yet essential, while maximizing its own days when engaging in M&A. Citi has payable outstanding (DPO). been helping companies to establish Suppliers have the option of regional and global treasury centers discounting invoices when required, and integrate M&A for many years, and receiving immediate payment and enabling treasurers to maintain from the financing bank. The central visibility of cash balances. company providing the program Although difficult to achieve when then makes a single payment to working across multiple regions and the bank on an agreed date for the with multiple banking partners, it is relevant invoices.

Although supplier impossible to make strategic cash- financing and similar programs such flow decisions and mobilize cash as distributor financing are not new, effectively without accurate and they have emerged with renewed timely cash visibility. By using Citi’s focus in the new economy, bringing multi-banking tool, TreasuryVision, working capital advantages to the as was done by Orascom Hotels buyer and its suppliers, increasing and Development, treasurers the resilience of the supply chain gain visibility over their global and strengthening relationships cash balances and enhance their between commercial partners. forecasting capability. In-country, regional and global cash pooling Cash visibility and optimization solutions then enable treasurers to As consumer, retail, and healthcare centralize cash flows to meet the companies expand geographically, cash-flow needs of their businesses. .

This could include inter-company Zeneca. There are considerable to staff and distributors without the lending (using surpluses in one part economic benefits to be gained from cost and risk associated with cash of the business to finance deficits the use of commercial cards, or check payments. in another), paying down debt, or including rebates, workflow centralizing investment to manage efficiencies, ease of reconciliation, risk and maximize returns. tighter control over costs, and increased buying power with key “Although supplier financing and similar programs such as distributor financing are not new, they have emerged with renewed focus in the new economy.” suppliers. Multiple payments to suppliers with varying payment terms and due dates are replaced by a single payment of a known amount on an agreed date. While most banks promote card programs regionally or in-country, banks with long-standing experience worldwide such as Citi deliver creative and Centralization and integration With companies in the consumer, retail, and healthcare sectors focusing on reducing costs and maximizing cash for investment in R&D, product innovation, and geographic expansion, there is increased focus on centralizing and rationalizing systems and processes to enhance efficiency. There is also a growing focus on using liquidity management cohesive programs on a global basis. techniques to concentrate cash In addition to purchasing and T&E supporting clients’ efforts with cards, prepaid cards have proved expertise, solutions, and technology Card programs increasingly attractive to consumer that can be integrated closely Companies across the consumer, goods companies, such as within their businesses.

This retail, and healthcare industries are KitchenAid (part of the Whirlpool includes pioneering proprietary becoming increasingly aware of the Group), that have used local- solutions and leading the industry merits of commercial card solutions currency Visa® or MasterCard® in promoting SWIFT Corporate as a means of managing travel and prepaid cards as a means of Access and packaged solutions entertainment (T&E) expenses and delivering highly attractive for companies setting up shared ensuring that procurement spend is incentives for customer acquisition service centers. Comprehensive performed in line with corporate and retention. Prepaid cards also in-country, regional, and global processes, as illustrated by Astra enable companies to pay incentives pooling solutions, physical and and optimize interest.

Citi is . notional, enable cash held with multiple banks globally 16 created by changing demographics, evolving consumer behavior and to be centralized, thereby requirements, and geographic maximizing yield. diversification pose fresh growth By creating bespoke customer solutions that recognize their individual requirements, Citi enables companies to utilize intercompany financing and net cash surpluses and deficits to reduce the need for external financing, respecting local fiscal and tax regulations in each country in the process. Looking ahead The consumer, retail, and healthcare industries face challenging times ahead, but a new economic environment also creates new opportunities. The demands on businesses opportunities for companies that are sufficiently equipped. The right banking partner can help these companies to better understand regulatory implications, manage payments and collections requirements, support supplier and customer initiatives, and contribute to business success. Citi has the experience, global footprint, solution breadth, and technological innovation to enable consumer, retail, and healthcare companies to respond to the current challenges and to position their businesses for success now and in the future. . Evolving corporate strategies among consumer, retail, and healthcare companies require flexible banking solutions from experienced providers to optimize cash flow, enhance efficiency, and increase the resilience and flexibility of the financial supply chain. . Citi has the experience, global footprint, solution breadth, and technological innovation to enable consumer, retail, and healthcare companies to respond to current challenges and to position their businesses for success now and in the . . efficiency in 20 payments . In today’s increasingly complex global market, making payments efficiently and cost-effectively remains a priority for consumer, retail & healthcare companies. Citi’s global network, technology platform and broad-based capabilities help us deliver seamless payment solutions that reduce costs, increase control and improve efficiencies throughout the procure-to-pay cycle. . 22 DKV Globality Creating a global payment solution with WorldLink® Payment Services DKV Globality, established in Luxembourg in 2008, provides private health insurance to expatriates around the world and is part of the International Health Division of Munich Re. . The challenge DKV Globality’s treasury department wanted to set up a cash management function that would run efficiently and at an optimal cost. The function would need to make payments in many currencies to beneficiaries around the world, provide timely and accurate foreign exchange conversion information, control the costs of single to maintain multiple currency be added under a new WorldLink accounts. identity using the same set-up One of WorldLink’s biggest attributes is its ability to save costs since it eliminates the need for The result multiple foreign currency accounts By using WorldLink, DKV Globality’s and associated idle balances, as treasury department has cut well as the extra charges and time its international payment costs; consuming reconciliation that are integrated its payments systems; often required. updates on the payments are “By using WorldLink our clients have benefited from greater reliability and a quicker turnaround within the claims settlement process.” then fed back into the ERP. and minimized the risk of check transactions, be reliable and secure WorldLink also facilitates systems in all countries, have automated integration — it submits payment reconciliation processes, and be instructions from the client’s ERP useable by Munich Re subsidiaries system via a Citi® File Xchange worldwide. host-to-host solution, known as CP2E. Account statements, The solution DKV Globality appointed Citi as its transaction banking partner in 2008 to provide a range of cash management services through WorldLink® Payment Services, a complete international payments solution that allowed its users to make secure, efficient, crossborder payments in more than 135 currencies, without having procedures. payment reports, and status Other features of WorldLink are that it minimizes risk by reducing check fraud, counterparty risk, fraud, counterparty default, clearing and settlement, and currency fluctuations. clearing and settlement risk, and Thomas Merten, DKV Globality’s currency devaluation; provides Chief Executive Officer, says: competitive foreign exchange “Through WorldLink, we have rates; streamlines clearing; and achieved a transparent and lean allows Munich Re subsidiaries to . accelerating 24 collection and reconciliation . A critical component of any working capital strategy is establishing process efficiencies to unlock cash trapped in the order-to-cash cycle. For consumer, retail & healthcare companies, streamlined collections and rapid reconciliation free up credit lines, thus allowing customers to do more business. Citi works closely companies in these sectors to create receivables solutions that improve efficiencies and extract liquidity from their supply chains. . 26 Hindustan Coca-Cola Beverages Virtual accounts facilitate electronic funds transfer and auto-reconciliation The Indian operations of the world’s largest non-alcoholic beverage company include 22 bottling operations and eight contract packers. . The challenge In recent years, the Reserve Bank of India has encouraged corporates to switch from paper-based clearing to electronic payments using the Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. At the same time, CocaCola wanted to make the switch to electronic payments from its 5,000 customers in India in order to improve efficiency. However, RTGS and NEFT limit remitter information, making it impossible to identify the source of funds or to reconcile payments. Coca-Cola wanted to resolve this problem with a system that automatically updated and reconciled customer credit information to ensure that goods were dispatched promptly and sales maintained. reliable, and efficient manner. at operating units and regional The targeted enrollment was about level.

In addition, Coca-Cola would 5,000 and virtual accounts were receive email alerts at operating created and linked to Coca-Cola’s unit level when customers remitted 30 operating units’ accounts funds so that goods could be across India. Customers would dispatched. remit funds to these virtual accounts allowing their source to be noted and enabling automatic reconciliation in real-time. Once the funds reached Coca-Cola’s operating unit accounts, they could be concentrated in a centralized account at Head Office. Citi proposed a virtual accounts solution to allow Coca-Cola to realize its receivables in a fast, Citi implemented Coca-Cola’s efficient receivables management solution, starting with 50 virtual accounts and reaching 4800 virtual accounts for the company’s customer network.

The The solution included a half-hourly solution has minimized manual statement sent using a secure reconciliation by providing credit web-based protocol and host-to- information about customer host connectivity with customer activities. Coca-Cola’s ERP systems code, customer name, and other can now automatically update and information in a comma-separated the company will be less dependent value format. This enabled the data on its service channels.

Coca-Cola’s to be interpreted by Coca-Cola’s 50-55% collection is now through system as different fields and virtual accounts. facilitated auto-updating. The solution The result Citi’s solution created customized reports provided on a daily and monthly basis for reconciliation The system is helping Coca-Cola: • Be eco-friendly by cutting usage of paper-based instruments and supporting documents, which also . saves on courier costs. 28 • Reduce turnaround times from two days to a couple of hours. • Lower value-at-risk due to immediate credit. • Gain a cost-effective alternative to demand draft customers. • Save costs by lowering collection/ instrument charges for the system. “The e-collection initiative with Citi has given us tremendous advantages by improving service to our customers, reducing valueat-risk and float-of-funds in the banking system by two to three days, saving on cost of direct debit instruments and bringing in efficiencies to our back-end processing by automating the process from the customer to the books of account,” says Gunjan Dhawan, Corporate Treasurer for Hindustan Coca-Cola Beverages. . Citi’s solution created customized reports provided on a daily and monthly basis for reconciliation at operating units and regional level. . 30 PepsiCo India Holdings Private Limited (PIH) Pooling and E Collect: a comprehensive cash management solution PIH operates a diverse and extensive distribution model encompassing over 3,000 dealers across India. . The challenge Historically, PIH’s collection and manual reconciliation were primarily paper-based, leading to increased costs and time for managing receivables from compliant with Indian regulations the capability to immediately reject relating to the intercompany transactions failing validation. transfer of funds, concentrating the Importantly, this enabled real- company’s cash balances in a single time credit, followed by instant entity in India, thereby reducing alert and hourly intraday MIS in external funding costs. a format that would enable auto reconciliation in PIH’s ERP system. dealers. PIH wanted to move a large part of its receivables to an electronic model that had a strong focus on the availability and visibility of funds, without compromising reconciliation. Complete visibility of remitter information was of prime importance to enable PIH to identify sources of funds. This was supported by a robust MIS to automatically update PIH’s system, enabling the reconciliation of customer credit information, and leading to a prompt and timely dispatch of goods. PIH also wanted to utilize the funds in various bank accounts effectively, with complete visibility and control over them and without manual intervention. It wanted a structure The solution Citi India proposed an E Collect solution to allow PIH to realize its receivables in a faster, more efficient, and more reliable manner. Citi further proposed a three-tier, automated, zero-balancing cashpool structure that would ensure funds did not co-mingle. The E Collect solution involved the assignment of a unique fourdigit prefix, followed by a dealer code, to each PIH unit office, both of which remitters would state when sending funds via Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

This ensured the solution would be user friendly as it limited customer input errors and offered The solution further included daily, weekly, and monthly MIS for analysis and reconciliation at operational and regional levels. It also facilitated real-time remitter notification through SMS and email, ensuring an increase in dealer acceptability. To address the visibility and effective utilization of funds, Citi structured a three-tier, automated, zero-balancing sweep structure using an operation account at the first tier and an entity-level account and header account in second and third tiers, respectively. The structure was designed with an adherence to government regulations in mind. The biggest challenge was the cumulative tracking of the movement of funds .

between entities and the confining of fund movements between the 32 enabled auto reconciliation as Citi’s robust MISs were in PIH’s ERP parent and subsidiaries as per the system in an uploadable format. limits set by the Indian Companies PIH is no longer dependent on the Act. This meant that the pooling bank to do any kind of preliminary of funds should automatically stop work before rolling in customers when it reached the level set by under this model. The company the regulations. Furthermore, the also benefited through a reduction solution was designed to take care in collection costs and improved of interest allocation between the cash-realization times. borrowing and lending entities as per the regulations, with a detailed, date-wise MIS for the interest allocation and the movements of funds between entities. The result Having centralized its account balance, PIH now enjoys the optimum utilization of cash balances, reduced interest costs, and increased operational efficiencies, without losing focus on regulatory compliance.

The In its first phase, the E Collect solution also facilitates the solution was implemented, piloted, accounting of inter-entity funds and moved to production, followed transfers through the development by the cash pool structure. of the MIS, which was uploaded to The solution quickly gained PIH’s ERP system. customer acceptance, resulting in a substantial increase in PIH’s collections. The solution also . PIH now enjoys the optimum utilization of cash balances, reduced interest costs, and increased operational efficiencies, without losing focus on regulatory compliance. . 34 Diageo Russia Innovative receivables program shares risk and improves working capital Diageo is the world’s leading premium drinks business and established its presence in Russia in the early 1990s. . The challenge In 2008, Diageo Russia decided it wanted its 100 distributors to take early delivery of November/ December goods (the drinks industry’s peak period) in September/October to mitigate some operational challenges. In return, it offered the distributors extended credit. “As the financial environment worsened, the company became unwilling to assume a similar exposure in 2009 and sought an alternative solution to manage the risk while achieving the same operational objectives,” explains Selim Baraz, Finance Director for Russia and Eastern Europe Region for Diageo. this insurance policy afforded at once: managing risk and us a greater opportunity than reducing working capital,” says simply managing the risk of our Baraz. distributors,” says Baraz. “In early 2008, we had talked to Citi — our main bank in Russia and a long-time partner domestically and internationally — about receivables finance. However, given the exposure to a number of small domestic distributors, the only possible solution at the time entailed full recourse, which failed to get the risk off our balance sheet, and was consequently rejected.

The insurance policy made a nonrecourse program possible.” Citi developed an innovative Credit Insurance Account Receivables The solution program that leveraged the cost of Diageo Russia began negotiations Diageo Russia’s insurance policy with Russian insurance company with ROSNO more effectively. “By ROSNO (which is 97% owned by combining ROSNO’s insurance with Allianz/Euler Hermes) to insure a factoring program to monetize some of its exposure to the Diageo Russia’s receivables and distributors in summer 2009. improve cash flow, the company “We rapidly recognized that was able to achieve two objectives The result A deal between Citi and Diageo Russia was signed in mid-2009. On 31 December 2009, a first tranche of receivables was financed through the Credit Insurance Account Receivables program.

The parties expect the program to be expanded to a wider universe of distributors in 2010. Although documentation for the program was time-consuming in order to meet the needs of Diageo Russia, ROSNO, and Citi, its implementation went smoothly. Diageo Russia has improved its working capital — and offloaded its receivables from its balance sheet — through a receivables financing program that was feasible only because of Citi’s innovative risksharing with ROSNO. Diageo Russia is currently considering whether . “By combining ROSNO’s insurance with a factoring program to monetize Diageo Russia’s receivables and improve cash flow, the company was able to achieve two objectives at once: managing risk and reducing working capital.” Diageo . . 38 Nigerian Bottling Company (NBC) Two-part solution delivers secure and transparent receivables collection NBC is the market-leading soft drinks manufacturer in Nigeria. It has 13 bottling facilities and over 75 distribution warehouses located across Nigeria. . The challenge NBC, a subsidiary of CocaCola Hellenic, the producer and distributor of Coca-Cola beverages worldwide, has a vast network of distributors across Nigeria. NBC wanted a convenient, reliable, and secure way of collecting receivables from its customers, and an efficient method of managing its accounts receivables. NBC wanted to receive credit from distributors immediately and the ability to view distributors’ payments in real time. The company required reliable web-based access to detailed account information for control and reconciliation. NBC also needed real-time notification for credits payments and give it an effective insufficient funds.

Moreover, by accounts receivables process. using a book transfer between the For large distributors, a mobile point-of-sale (POS) terminal supported by Interswitch was proposed. This solution offered the correspondent banks and Citi, NBC received the value of checks on a same-day basis. same certainty as cash payments, The result with sales reflected in NBC’s The mobile POS terminal operating account immediately solution for larger distributor- following a transaction between designated key account buyers was a salesperson and merchant. implemented in 2008. The solution for smaller merchants, using For around 150 smaller merchants correspondent banks and checks, who do not have the volume is being progressively rolled out of business to warrant the with the ultimate objective of POS terminal-based system, completing the implementation an innovative alternative was across NBC’s 13 plants in Nigeria, proposed.

Working with three each of which manages a local correspondent banks, which had dealer network. over 600 branches nationwide, smaller merchants were issued NBC has gained the visibility of its with checks that were pre-filled payments and balances through with NBC’s payment details. Citi’s two-part solution. Through The solution These were collected by NBC’s Citi’s partnership with local Citi created two integrated deliverymen. This solution gave banks, many small merchants — solutions — determined by the size NBC the payment security it previously among Nigeria’s 40 of distributors — to meet NBC’s needed because checks could million unbanked people — now requirement to eliminate cash not be issued on accounts with have the ability to make low-value made into its accounts. .

cash visibility 40 and optimization . As consumer, retail & healthcare companies expand globally, it becomes vitally important to maintain central visibility and control over cash flows. Citi’s liquidity tools and solutions can help deliver real-time visibility and actionable analytics that improve strategic decision-making and risk management. . 42 Orascom Hotels and Development (OHD) TreasuryVision® web-based service increases visibility and control Egypt-based OHD develops and operates leisure and residential facilities in Egypt, the UAE, and elsewhere in the world. . The challenge Egypt’s OHD, which operates in the real estate, hotel management, and development management markets, has relationships with six local banks and a number of foreign banks, including Citi, in its home market. The multiplicity of bank interfaces associated with these different relationships meant that it was difficult for the company to access closing positions for each account and across its banks as a whole. Moreover, even to obtain imperfect information about bank positions required considerable resources that could be better used on other treasury activities. The absence of reliable information made forecasting and liquidity management difficult. view their overall positions and onto TreasuryVision to ensure forecasts and more effectively that they reflected the correct manage liquidity and risk across balance — something that had not multiple corporate entities. always occurred in the past when Crucially for OHD, TreasuryVision OHD had sought to access account offered multibank connectivity data across different accounts. without losing the ability to offer While the majority of local banks enterprise-wide visibility of global responded efficiently to Citi’s financial information aggregated requests inevitably a handful within a single service. proved more difficult to work with. TreasuryVision offers multibank connectivity without losing the ability to offer enterprise-wide visibility of global financial information aggregated within a single service. The solution Phase one of the project is Citi was appointed by OHD to complete and targeted OHD’s implement its web-based service six local banks.

Each bank was TreasuryVision®. The service required to send a SWIFT message increases visibility and control so to Citi to enable the solution. that treasury organizations can OHD’s accounts were then moved Phase two of the project, covering international banks, is expected to be complete by the end of 2010. The result Already, as a result of phase one, OHD has sharply reduced the amount of treasury employee time spent on retrieving balance information from multiple banks through the use of the single TreasuryVision platform. The solution has consequently freed up resources to focus on higher, valueadded treasury tasks.

OHD now has clear visibility of its end-of-day positions by the following morning. . 44 InterContinental Hotels Group (IHG) Streamlining short-term investments for the global hotel group InterContinental Hotels Group’s estate exceeds 650,000 rooms in 100+ countries. . The challenge Having moved from an ownership model to managing and franchising hotels, IHG has focused on optimizing working capital, from ensuring efficient collection of revenues from franchisees to streamlining short-term investment management processes. The desire to reward participants in its financing rounds means IHG restricts its short-term investment policy to relationship lenders. But investing in these providers’ money market funds directly proved very manual clients to invest in a wide range of IHG’s dealing team now has financial institutions’ money market substantially more time to focus funds and time deposits. Citi’s on making short-term investment investment portal can automatically decisions, rather than deal with settle transactions to client accounts the administration of its choices. held in 21 different countries and Moreover, IHG has streamlined offers investments in 17 currencies its reporting processes and uses including several types of direct Citibank Online Investments to investments and over 80 money view yield information, dividend market funds in the US and offshore. accruals, and export reports on It further supports the streamlining holdings. of short-term investments by allowing clients such as IHG to add new fund managers without needing to complete additional “Partly because we were already very familiar with CitiDirect, we soon benefited from Citibank Online documentation. Investments’ ease of use.

The With an interest in accessing platform has made our investment multiple suppliers’ funds from processes significantly faster,” says a single platform, IHG’s dealing David Daniels, Assistant Treasurer, team reviewed the capabilities IHG. “Citi provides balance of Citibank Online Investments reporting to our relationship banks The solution via a Citi Online Academy session so they can see how much we are During a relationship review meeting before completing necessary investing with them each day. A with Citi in the first quarter of 2008, documentation and beginning streamlined approach to investment the client manager introduced to trade within a week. enables us to deal with multiple and time-consuming for IHG’s small dealing team.

Consolidating statements from different fund managers was a further burden on resources. ® relationship banks quickly and Citibank Online Investments, a new, ® easy-to-use module of CitiDirect® Online Banking, which enables ability to book all deals on a single The result effectively supports the group’s overall management philosophy . “A streamlined approach to investment enables us to deal with multiple relationship banks quickly and effectively supports the group’s overall management philosophy of strong relationships and cost-efficient processes.” InterContinental Hotels Group . . 48 Kimberly-Clark An integrated approach to financial process outsourcing Kimberly-Clark is an American company that operates in 35 countries, and sells its products in 150 countries. As a world-leading health and wellness company, Kimberly-Clark delivers products that have become part of people’s daily lives. Kimberly-Clark has been present in Brazil since 1996, when it began operating in the country through joint ventures. . The challenge Citi has established a longstanding relationship with Kimberly-Clark in Latin America, providing local cash management solutions. In the past five years, Citi Brazil has made the cash management relationship more robust. As the relationship developed, Citi started to assist Kimberly-Clark with cash management optimization, which was challenging due to regulatory constraints on investment in Brazil. During this project, it financial flows, systems, processes, the product and operations team. and customer communications. Specific 0800 telephone lines Based on this analysis and have also been established for subsequent recommendations, Kimberly-Clark’s clients and Kimberly-Clark recognized the suppliers to enable a highly considerable benefits of Citi’s personalized, professional service. Business Center solution for outsourcing its payments, collections, and foreign exchange back-office activities.

A team of 16 professionals is now dedicated to managing Kimberly-Clark’s financial processes, supported by became apparent that the company was carrying very high staffing costs due to the significant manual effort required to conduct core financial processes such as reconciliation. Furthermore, the difficulty with decentralized cash-flow was a major impediment to optimizing liquidity and managing key working-capital metrics. The solution Citi experts spent a significant amount of time in Kimberly-Clark’s offices to understand in detail Kimberly-Clark’s business and “Outsourcing our financial processes to Citi’s Business Center has resulted in major improvements in key working-capital metrics as well as cost reductions. Suppliers and customers receive a highly professional service, and by centralizing processes, we are able to manage our cash more efficiently.” The result Kimberly-Clark has significantly reduced the cost of managing its financial activities for which it pays a fixed monthly fee. Its cash-flow cycle has accelerated considerably, with a reduction in customer overdue ratio from 6% to 4% and a similar improvement in payment efficiency. Besides making improvements to individual processes, outsourcing to Citi’s Business Center has enabled Kimberly-Clark to benefit from a fully integrated solution that included people, processes, bank systems, and integration.

In doing so, KimberlyClark has been able to achieve 80% bank centralization of its cash flow and therefore achieve high visibility and control over its cash. . 50 supplier financing . A robust and stable global supply chain is critical to the ability of consumer, retail & healthcare companies to meet customer demand and fuel growth. As sourcing capital remains challenging, clients in these sectors have been relying on Citi’s supply chain solutions to balance working capital optimization objectives with stabilization needs across their global supply chains. . 52 Benetton Facilitating the expansion of trade operations with a bespoke supplier finance solution A premier clothing retailer with a global presence and extensive distribution structure, Benetton established a manufacturing presence in Tunisia in 1994. Proximity to Europe, low labor costs, a beneficial tax regime, and political stability combined to make Tunisia an attractive base for investment, and operations continue to expand. In Tunisia alone, Benetton has in excess of 600 direct employees and 190 individual suppliers representing around 15,000 indirect employees. . The challenge Benetton’s business model is predicated on a high degree of vertical integration, with goods for manufacturing sourced locally. Key to the effectiveness of this structure is an efficient supply credit line and a single interest rate including the addition of salary for its Tunisian payments. Citi’s transfers using CitiDirect® Online service is enhanced by the provision Banking (Citi’s comprehensive web- of confirmatory SWIFT messages based banking platform). to suppliers regarding payments, thus enabling suppliers to make immediate use of these funds. chain; invoices need to be approved and the numerous individual suppliers paid within as short a The result Benetton’s contribution to the Tunisian economy was recognized by the Tunisian Prime Minister, who awarded the company the 2008 “Investor of the Year” title. Citi and The solution In the first deal of its type in Africa, Citi radically streamlined Benetton’s supply chain through implementation of a centralized financing structure. Benetton now inputs its invoices directly onto CitiConnectSM (Citi’s complete online transactions suite for buyers and sellers).

Within 48 hours, suppliers receive payment directly from Citi — a significant improvement on traditional payment timelines. This solution provides suppliers with essential funding while also facilitating Benetton’s use of a single Benetton’s relationship continues maximizes the synergy between to prosper and deepen, providing Citi and Benetton’s network and time frame as possible. This supply chain solution a successful partnership model for capabilities, allowing Benetton to the Tunisian business community. capitalize on the business, cost and performance efficiencies A representative from Benetton of the structure. The success says: “Benetton is committed to of the arrangement is clearly its role as a significant business demonstrated by the exponential investor in Tunisia. In Citi, we have increase in supplier/transaction found a valued partner bank, whose numbers and the strengthening of flexible, innovative, and reliable supplier relationships.

At inception financing solutions have facilitated in November 2006, there were 18 the successful establishment and transactions. Within two years, expansion of our manufacturing supplier numbers increased to base. We look forward to the 116.

This is expected to reach 193 continued consolidation and by the end of 2009. The success success of this key relationship has led to further consolidation as we meet the challenges of the Citi/Benetton relationship, presented by the ever-changing . . “In Citi, we have found a valued partner bank, whose flexible, innovative, and reliable financing solutions have facilitated the successful establishment and expansion of our manufacturing base.” . 56 Bosch-Siemens Hausgeraete (BSH) Turkey Web-based supplier finance supports working capital goals Germany’s BSH is a leading white goods manufacturer in Turkey with annual turnover of more than USD1.4 billion. . The challenge A benchmarking study in the global white goods market showed that payment terms had lengthened to an average of 60 days. BSH Turkey’s standard suppliers. In addition, it gave those the payment and Citi then makes suppliers the opportunity a book-to-book transfer in favor to access cheaper finance than of the supplier or initiates an would ordinarily be available, electronic funds transfer to a by allowing their invoices to third-party bank. BSH Turkey to be discounted in electronic and automated platform The program has strengthened the operational capital of BSH Turkey. It has also deepened its commercial relationship with its suppliers. to improve efficiency and reduce advance of the revised payment costs.

Specifically, BSH Turkey terms. 30-day payment terms compared unfavorably to this average. The company decided to amend its payment procedures and sought a new banking partner to help it achieve this goal. The principal criterion for selection was that the solution should be based around an wanted to simplify its procedures and reduce paper-based practices. A further requirement was that the solution be simple for staff to use. The solution The result Implementation required detailed work to meet the accounting treatments required by BSH Turkey’s auditors. At the same time, it was essential to keep documentation for suppliers to a minimum.

Following meetings with stakeholders at BSH Turkey, suppliers, and Citi, the program was initially rolled out to 10 key suppliers. Following a successful launch it has CitiDirect Online Banking, ® the bank’s electronic banking platform, was used as the webbased platform for invoice information for BSH Turkey and its suppliers. Once an invoice to BSH Turkey is uploaded onto CitiDirect, The solution structured by Citi the supplier can make an online enabled the company to extend its application for finance.

BSH payment terms to key strategic Turkey uses CitiDirect to approve subsequently been extended. The program has strengthened the operational capital of BSH Turkey. It has also deepened its commercial relationship with its suppliers, which now have access to a discounting system that is easy to use and offers low-cost financing and additional credit . 58 cards programs . Innovative consumer, retail & healthcare companies have been utilizing commercial and prepaid card solutions to respond to increased competitive pressure. Citi’s commercial card solutions enable companies to enhance workflow efficiencies, reduce costs and leverage purchasing power. Citi’s prepaid cards offer businesses customized programs that engage and reward customers, increase brand loyalty, and enhance the customer experience. . 60 AstraZeneca Close collaboration delivers best-in-class T&E program AstraZeneca is a global, innovation-driven, integrated biopharmaceutical company with over 62,000 employees and sales of USD32.8 billion in 2009. . The challenge In 2004, AstraZeneca was working with multiple card providers and had no standard expense management system. Consequently, the company required a high number of full-time equivalent resources to manage travel and entertainment (T&E) and suffered from a lack of visibility. In addition, AstraZeneca’s compliance tracking was weak and its supplier usage tracking limited. The company decided it needed a single T&E card program across the benefits. Full implementation occurred in four phases. Firstly, Citi became the sole card provider, significantly lowering costs. Secondly, AstraZeneca migrated from individually-billed program to a centrally billed program.

This reduced the time that its highly skilled workforce spent on expenses, ensured timely payment, maximized rebates, and increased control over reconciliation of credit card spend versus approved expenses. 15 European countries, financed In 2009, the third phase was out of its regional hub plus the UK implemented, integrating a and Switzerland. standard expense management system and weekly transaction files The solution Citi was appointed to implement a T&E card program in 2005 to meet AstraZeneca’s goals of reducing costs through increased transactional efficiency, eliminating local resource requirements, improving rebates, and enhancing compliance and the tracking of from Citi. These were mapped onto a single standard file, allowing the automated population of expenses into expense and finance systems, with a consequent increase in The fourth and most important phase of the program was optimization. AstraZeneca switched to direct debit payments to remove the need for manual payment processing each month and reduce the risk of late payment charges.

Previously handled by program administrators in each country, the administration of the program was centralized and standardized in Manchester in the UK. At the same time, key controls were implemented. In addition, an analysis of each country’s spending and expenses was undertaken and problems in individual countries revealed by key performance indicators were addressed (such as a lack of compliance highlighted by high levels of out-of-pocket spending). spending visibility through global The result reporting. These phases were AstraZeneca now has a best-in- implemented in three years and class T&E card program that spans delivered the expected results. multiple countries and continues .

to grow with plans to implement additional countries, such as 62 improved employee satisfaction and productivity. Greece, the Czech Republic, Slovakia and Hungary. It is fully integrated into the company’s travel management company and expense management system, and is sufficiently streamlined to a lowcost provider. The solution provides improved, consistent management information to help identify category management value opportunities and deliver a line of sight of T&E expenses back to budgets. It has resulted in substantially reduced T&E card operating costs and has also improved the level of rebates received. The visibility and control afforded by the T&E program has given AstraZeneca improved financial transactional efficiency and management and enhanced compliance and tracking of benefits relating to preferred suppliers. Moreover, it has .

AstraZeneca now has a best-in-class T&E card program that spans multiple countries and continues to grow with plans to implement additional countries. . 64 KitchenAid The perfect blend of consumer incentives A division of Whirlpool Corporation, KitchenAid has been a leading manufacturer of cooking and cleaning products for over 90 years with a focus on quality craftsmanship, versatile technology, and timeless style. With a strong focus on its customers, KitchenAid turned to Citi Prepaid Services to cook up the perfect solution for distributing consumer rebates. . The challenge As a leader in cooking and cleaning products, KitchenAid is focused on the experience of its customers. The company was looking for a more convenient, effective and ultimately economical solution for the disbursement of its consumer product rebates. The traditional method of paper checks proved to be a challenging process to manage for the organization and cumbersome for customers. The cost and effort to produce, distribute, and reconcile these rebate checks was unreasonable and the delivery delays and inconvenience of having to go to the bank to get the rebate funds was not aligned with the overall focus KitchenAid places on its customers. looking for a program that would allow it to streamline its rebate payment processes with fewer administrative resources and ultimately reduce the costs required to manage and distribute paper rebate checks. Citi® Prepaid Services rapidly implemented a comprehensive, custom solution that quickly eliminated paper rebate checks and transitioned 100% of the company’s rebate payments to electronic delivery loaded directly onto KitchenAid Visa® Rebate Cards. This automated solution facilitated easier and faster rebate delivery through a single, streamlined file process and created a better overall customer rebate experience. Even greater, the customized program packaging delivered a The solution strong brand extension. The fully KitchenAid wanted a rebate delivery branded KitchenAid Rebate Card solution designed to provide a created a more positive and lasting strong customer experience with impression on its consumer base faster payment delivery, greater than paper checks did, and provided convenience, and immediate rebate a compelling marketing tool for its fund access. KitchenAid was also retail distribution partners. The result The Citi Prepaid Services’ enhanced rebate program for KitchenAid, launched in August 2008, quickly eliminated the need to produce, distribute, reconcile, and reissue paper rebate checks, making KitchenAid’s internal operations more streamlined and efficient, while outsourcing program management and customer service to Citi Prepaid Services. More importantly, the rebate solution aligns with KitchenAid’s strong focus on its customer experience, providing rebate payments that are delivered three times faster than traditional paper rebate checks. To date, KitchenAid has issued over USD3 million in rebates to over 80,000 consumer cards. These consumers enjoy instant fund access and purchasing power everywhere in the world where Visa debit cards are accepted immediately upon arrival. .

66 Men’s Wearhouse Tailored paperless payroll A leading provider of quality menswear, Men’s Wearhouse has been honored multiple times as one of the Fortune 100 Best Companies to Work For. . The challenge Men’s Wearhouse places a strong focus on its employees, one that has earned the company the honor of Best Company to Work For by Fortune 100. As part of this approach, Men’s Wearhouse continually looks to enhance its employee experience. As Gulya Belchuk, Treasury Manager for Men’s Wearhouse explains: “Our company is extremely employee focused, and we are constantly on the lookout for new benefits and innovations to improve our employees’ experience with us.” Men’s Wearhouse was in need of a solution that would helped resolve payroll delivery delays and consistently provided on-time payments to their employees. The company was also looking to decrease costs related to the production, distribution, and time, and immediate access to their our employees are not on location pay was one we couldn’t pass up. on payday — this can cause a huge We wanted to help our employees strain for our employee base as well without bank accounts. Those using as distribution headaches in-store. check-cashing services and paying This gives our employees peace of up to 5% of their pay to cash their mind.” checks would then gain easy, free, access to their pay.

The Citi® Prepaid Services Payroll Choices Program enables us to do that.” This solution delivered the tools to easily and quickly convert the company’s employee base to a completely paperless and electronic payroll. The cornerstone of this program was Citi’s Prepaid Payroll Card, a prepaid Visa card that allowed Men’s Wearhouse to easily deliver electronic payments to its entire workforce, eliminating hassles associated with traditional paper checks for its Payroll Department and its employees. The result With the Citi Prepaid electronic Payroll Choices solution, Men’s Wearhouse quickly eliminated paper checks and the high cost and hassles associated with them. This solution also provided electronic paystubs, compliance tools, and easy technology integration (with no technology investment), together with a strategy and team of consultative experts to help the business achieve its corporate objectives. “We have significantly reduced our costs with the Citi Prepaid Payroll Choices Program “With Citi Prepaid, we are able to get — we went from delivering 15,000 our employees their pay, guaranteed documents, mostly via express on payday morning, regardless delivery, on a weekly basis,” stated of whether they are in-store on Renea Levine, Payroll Manager, “The opportunity to provide all of payday,” said Belchuk.

“Because of Men’s Wearhouse. “Now with Citi our employees with guaranteed, on- the nature of our business, many of Prepaid, we have eliminated 80% management of paper paychecks. The solution . 68 Tractor Supply Company Pulling together a paperless payroll Founded in Minot, North Dakota, in 1938, Tractor Supply Company is today the largest retail farm and ranch store chain in the United States. Publicly traded with over 900 retail stores in 44 states across America, Tractor Supply employs nearly 14,000 team members. . The challenge As a leader in providing farm and ranch equipment across the United States, Tractor Supply was looking for a way to deliver payroll payments to its team members around the country — on-time and without the frustrations of bank trips to deposit cash checks and regular fees so team members to access their funds. The company was also looking to cut down its own corporate costs related to the production and distribution of paper payroll checks. According to Johnson West, Tractor Supply Payroll Supervisor, “We have a payroll processing vendor that a fully customized Payroll Choices Supply’s environmental initiatives. Program, which featured a variety of As West explains, “We’re doing our convenient access points for Tractor part in staying green. We want to Supply team members, including be as paperless as possible and paper checks and a personalized this Citi Prepaid program helps a Tractor Supply Visa® Payroll Card. lot.” With this program, Citi Prepaid would also provide comprehensive support to the Tractor Supply payroll department and cardholders, giving the organization a full, dedicated client support team to assist with file processing, reporting, and the strategic structure of the program. Tractor Supply Payroll Cardholders also received 24/7 toll-free, multilingual support to answer questions on accessing payroll funds. charges us [a variety] of fees for live checks. We’re trying to eliminate all of these costs.” Tractor Supply was also focused on “staying green” with a paperless payroll solution to help preserve the environment its customers work with everyday. Citi Prepaid rapidly implemented the program now provides convenience, security, and speed of payroll delivery with no more reliance on the mail and no need for team members to return to Tractor Supply stores on payday to pick up their checks.

Plus, the program eliminates the need for a personal bank account. The program also allows Tractor Supply to deliver its payroll on-time The result The Citi Prepaid Services’ Payroll Choices Program for Tractor Supply immediately eliminated the need for paper payroll checks and the costs associated with producing and distributing them. “This program cuts our costs,” The solution For Tractor Supply team members, according to West. The solution was also aligned with Tractor with immediate fee-free accessibility for every team member, eliminating any check-cashing fees they may have had to pay previously. According to Tractor Supply Team Member Catarina Kitzmiller, “I haven’t had any fees on the card whatsoever. It’s just straight money coming from your account, money you’ve worked for, and you get all of .

. “We’re doing our part in staying green. We want to be as paperless as possible and this Citi Prepaid program helps a lot.” . centralization 72 and integration . With companies in the consumer, retail & healthcare sectors focused on reducing costs and maximizing cash for investment in innovation, research & development and market expansion, it has become crucial for them to transform their operations to enhance efficiency, mitigate risk and unlock liquidity. Citi’s global network, robust technology and seamless connectivity help companies automate, standardize, centralize and integrate information flows. . 74 Minor Group Overcoming organizational complexity to deliver best-in-class processing efficiency Thailand-based Minor Group operates over 80 food, hospitality, apparel, and cosmetics entities. Minor International Pcl. and Minor Corporation Pcl. in aggregate had a turnover of USD540 million in 2009. . The challenge The solution Minor Group’s complex structure Citi won an RFP with a solution comprises over 80 companies in using PayLink for supplier Thailand, Singapore, China, the payments and CitiConnectSM Maldives, and the United Arab for tax and utilities payments Emirates, among others. Having — effectively outsourcing the grown rapidly by acquisition, the end-to-end payments process. company wanted to rationalize its In order to streamline Minor internal processes and payments Group’s processes, Citi devised (which included checks, RTGS, ACH, an innovative solution involving and e-payments) and improve its digital capture and management of liquidity management. paper-based invoice data. Minor Group’s goal was to create “Minor Group has reduced risks, lowered costs, and improved operational efficiency — without large-scale investment in new resources.” a best-in-class standardization, automation, and outsourcing solution, while minimizing changes to its existing legal and account structure. In addition, the company wanted to complete the project within the shortest possible time without substantially increasing the burden on its resources. The Thai payments system provided a further challenge as it was (and For liquidity management, a still is) paper-based and had (and cross-bank pooling structure was still has) complex withholding-tax created to physically sweep funds arrangements that required precise from local bank accounts to Citi reconciliation. at day-end where a zero balance structure managed liquidity.

The solution was integrated with Minor Group’s ERP system and CitiDirect® Online Banking, through which a Shared Service Center functionality was achieved. This allows the company to investigate payments and receive comprehensive reporting and reconciliation, without any associated cost. The result The solution — which included the first payment outsourcing in Thailand — went live in a record five months. Citi now processes over 20,000 payment transactions a month from Minor Group. “The solution is not commoditized but an innovative answer to Minor Group’s payments and liquidity needs.

As a result, Minor Group has reduced risks, lowered costs, and improved operational efficiency — without large-scale investment in new resources,” said Kajondej Lenavat, Group Finance Director, Minor Group. . 76 Roche Regional in-house bank solution Roche is one of the world’s leading healthcare companies. Globally, its turnover in 2009 was over CHF49 billion. . The challenge Roche sought to implement one of the largest and most comprehensive cash management solutions ever undertaken in Asia Pacific. The solution had to cover 17 of the 18 countries in which Roche operates. The solution had to recognize the scope and complexity of the Asian regulatory environment. It had to embrace liquidity management.

It desired a regional pricing scheme for all payment, collection liquidity management, and account services fees. It wanted improved payments and collections, foreign exchange services, and overdraft/ credit/guarantee facilities. Finally, Roche required working capital facilities in a variety of countries. payables, receivables, and liquidity management.

Finally, the solution had to accommodate Roche’s own corporate structure: the company had two operating divisions — Pharmaceuticals and Diagnostics — which, in most countries, operated as separate legal entities, each with its own organizations and regional IT infrastructure. The size and scope of the project was such that the potential gains in efficiency — and savings — were substantial. Roche wanted to reduce the number of banks with which it worked across the region to one or two. It aimed to improve The solution Roche engaged Citi to support its In-House Bank (IHB) in 17 countries across Asia Pacific.

Citi’s solution provided local currency Zero Balance Account (ZBA) structures in six countries. Where possible, the IHB itself was the header account and held the balances. Citi maintained USD domestic ZBAs in Singapore and Hong Kong. There were several Cross-Border Sweeps. Cash was moved from the Hong Kong header account to Singapore.

Another cross-regional sweep linked the Singapore header account with a global USD header account with Citi in New York. Citi® File Xchange was used to send payment files from Roche to Citi and for reports in the opposite direction. Citi can accept SAP iDoc payment files in each country, providing Roche the opportunity to use a single file format for the entire region. Citi can also send daily SWIFT MT940 bank statement reports to Roche’s outsourced aggregation service. Regionally standardized SWIFT transaction codes ensured that debits and credits to the accounts could be automatically reconciled. Roche selected Citi as its IHB support partner because of a number of key strengths.

Citi has a strong presence across the region, in countries which Roche operates. Citi has the widest network of clearing memberships of any bank in Asia Pacific. Services from Citi are standardized across countries, to the extent that local regulations permit. Similarly, liquidity management platforms .

and ZBA documentation are standardized across the region. 78 Martin Schlageter, Head of Treasury Operations with Roche’s Group Treasury, says: “Citi has a most experienced implementation and operational support structure. Citi’s senior management gives us very strong assurances in relation to support.” The result Roche now has the benefits of a sophisticated IHB solution across the region. Roche is utilizing Citi’s strong and consistent technology backbone and Citi’s standardized SAP integration and pooling capabilities. “To us, what really stood out in the implementation was Citi’s strength in supporting a technologically complex project like SAP integration. We were also impressed by the proactive communication of the Citi people involved, and by the knowledge and experience of the Citi staff,” says Mr Schlageter. .

Citi has the widest network of clearing memberships of any bank in Asia Pacific. . 80 Amgen A new treasury structure for Amgen Amgen is a human therapeutics company based in California, providing medicines to fight many different illnesses around the world. It has operations in more than 30 countries and, in 2008, generated global revenues of USD15 billion. . The challenge The company’s treasury operations outside the US are run by Amgen Global Finance BV, its in-house bank in The Netherlands. Citi To cap it all off, there was a scarcity The benefits now include a of qualified treasury professionals reduction in the number of in the local labor market. The bank accounts; converting company decided to restructure its cross-border payments to ACH treasury management function and payments; executing internal cash enlisted Citi’s support. settlements using accounting entries rather than external cash has been Amgen Global Finance’s main international banking partner since 2003. In 2007, the company’s treasury department began to face several The solution Amgen, Citi and software company SAP collaborated to develop and implement a solution that flows; aligning netting timelines and hedging timelines; and cost savings of USD1 million a year. centered on the creation of a The sub-ledger solution is called sub-ledger in Amgen’s core ERP In-House Cash (IHC), provided by system that would allow Amgen to SAP as part of its ERP software. maintain all aspects of in-house In January 2009, Amgen banking, such as cash pooling, and conducted an internal audit that the building found IHC had been working of an interface with Citi to perfectly since its implementation with the ERP system. facilitate the creation of a in April 2008. IHC is a perfect payments factory.

The number example of how a banking partner Another problem was a complex of interfaces was reduced to just like Citi can help a corporate client and inefficient reconciliation one, namely Amgen’s core ERP harness the power of technology structure that required the application, which its treasury to improve the efficiency of its creation of extra bank accounts department treasury function. for cash pooling administration, used for all processes. problems, chief of which was a fragmented treasury model. Cash pooling, global netting, intercompany lending and the payments factory were all on standalone systems that required separate interfaces the payments factory and global netting. The result . In January 2009, Amgen conducted an internal audit that found In-House Cash had been working perfectly since its implementation in April 2008. Amgen Case Study . . 84 Newell Rubbermaid Centralized payments and collections improves visibility and efficiency S&P 500-constituent Newell Rubbermaid is a global marketer of leading consumer and commercial products with sales of around USD5.6 billion in 2009. . The challenge Following a series of mergers and acquisitions, Newell Rubbermaid maintained 190 accounts with 22 different banks, resulting in a large number of manual processes, few Newell Rubbermaid can determine how it pays its suppliers, customers inevitably determine local collection methods,” explains Jérôme Miara, European Treasurer at Newell Rubbermaid. economies of scale, and limited control. The company decided to centralize its accounts payable, accounts receivable, and general ledger functions into a Shared Service Center (SSC) in The Netherlands. In order to benefit from economies The solution Citi’s proposal envisaged that starting in 2007 and finishing in mid2009, 126 Citi accounts would be opened for Newell Rubbermaid’s 54 different legal entities across EMEA. Payments would be made using to rationalize its bank structure. Citi’s state-of-the-art platform for Rubbermaid issued a Request For Proposal with the objective to find a single banking partner for payments and collections across 22 countries in EMEA (excluding the UK). One of the company’s most important criteria for selecting a partner was the bank’s capability to manage local collections, especially domestic instruments, and payments in each market. “Accounts receivables were a key consideration because while Citi was selected to become Newell Rubbermaid’s partner in the second quarter of 2007.

“The bank’s geographic footprint is unique and is made up of fully owned branches — we didn’t want to introduce of scale, it recognized that it needed In the first quarter of 2007, Newell The result file transmission and translation, Citi® File Xchange, and the bank’s web-based banking platform, CitiDirect® Online Banking. Domestic solutions would be implemented in each country to support the local entities’ requirements, including the use of instruments such as LCRs, RIBAs and Pagares. A pan-European lockbox for checks would be established. complexity arising from additional local partners,” says Miara. Timing for implementation was driven by migration to the SSC. The first phase — the opening of Citi accounts in Italy, Spain, and Portugal — took place in the fourth quarter of 2007. The fifth and last phase of account opening, in the Czech Republic, Hungary, Poland, Slovakia, and Russia, finished in the second quarter of 2009.

Those entities that were created (for example, Turkey and Romania) or acquired over the period (Teutonia, Aprica, and Technical Concepts) also opened Citi accounts, integrating into Newell Rubbermaid’s standard model. In parallel, Newell Rubbermaid closed 148 legacy bank accounts and exited 17 nonstrategic bank relationships. . The simplification of Newell Rubbermaid’s bank structure in 86 processes have been reduced and treasury staff redeployed to value- EMEA has delivered a wide range added tasks. of benefits. “We have gained control and visibility through the use of a single, centrally controlled Internet banking platform,” says Miara. Increased visibility of its order-to-cash cycle processes has helped the company to improve decision-making, reduce credit risk, and enhance working capital management. Problem-solving was also made easier: Newell Rubbermaid now has only one relationship team for the escalation and timely resolution of banking queries. Newell Rubbermaid has gained numerous benefits from increased automation: a single interface was set-up with the company’s Movex ERP, from which payment and collection files could be submitted directly.

Now it uses one inbound file for the upload and automated cash application of its accounts receivable balances, using GetPaid software. Consequently, manual Newell Rubbermaid has saved from a single negotiated pricing structure (based on its European transactions volume), making it possible to monitor and reconcile bank fees on a monthly basis. It also now manages a single cash position per currency, following the implementation of regional (EUR, USD and JPY) and domestic (DKK, NOK and SEK) cash-pools — resulting in a USD10 million reduction in idle cash balances. At the same time, the rationalized bank structure has helped Newell Rubbermaid gain efficiencies in the order-to-cash cycle, which have contributed to an improvement in Days Sales Outstanding. The company has used the project as an opportunity to harmonize its banking processes, enabling the migration of accounts payable and receivable and general ledger processes to its European SSC — .

The bank’s geographic footprint is unique and is made up of fully owned branches — we didn’t want to introduce complexity arising from additional local partners. . 88 Arcos Dorados “One-bank” strategy centralizes banking activities across Latin America for vast restaurant operations The largest McDonald´s franchisee in the world in terms of sales and number of restaurants, Arcos Dorados is also the largest restaurant chain in Latin America. . The challenge Arcos Dorados started operating in August 2007 with the purchase of McDonald´s operation in most of Latin America´s countries. Before this, McDonald´s maintained a decentralized model, with cash management, borrowing, and investment conducted locally in each country. In 2009, Arcos Dorados made the decision to centralize its transaction banking activities to reduce internal and external costs, achieve greater process efficiency, and establish synergies across payables, receivables, and liquidity management. To support this treasury strategy, Arcos Dorados currently operates a Shared Service Center for the region in Argentina for all back-office processes. The solution Arcos Dorados issued a Request For Proposal (RFP) to over 10 banks. Following an extensive review, the company appointed Citi as its primary regional bank for transaction banking, which also included payroll, foreign will be using Citi’s TreasuryVisionSM exchange, and short-term lending. as its cash management platform for This decision was based on the scope the region, including reporting and and strength of Citi’s geographic cash forecasting, providing a high footprint, the bank’s ability to deliver level of visibility and control over cash consistent solutions and service flow, and enabling borrowing and levels across the region, and the “We appointed Citi as part of our “one-bank” strategy in recognition of the bank’s ability to understand and respond to our wish to enhance our financial efficiency and reduce our transaction costs.

We are rapidly achieving our objective to demonstrate bestin-class processes, with visibility and control over cash flow across the region using TreasuryVision.” quality of support at an in-country and regional level. Citi was already a banking partner for Arcos Dorados in many countries, but moved from an in-country to a regional relationship with a standardized approach to pricing, products and service delivery. Citi is also extending its services to Arcos Dorados in countries such as Brazil and Mexico, and adding new countries to the relationship, including Costa Rica, Ecuador, Panama, and Peru. The result Arcos Dorados and Citi are currently mid-way through the implementation of the ”one-bank” model in Latin America, and have progressed substantially towards achieving the company’s objectives. Arcos Dorados .

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