PepsiCo couldn't buy real-time global visibility, so it joined up with Citigroup to build it
By Richard Gamble|January 02, 2006 at 07:00 PM
Thank you for sharing!
Your article was successfully shared with the contacts you provided.
Across some 100 countries, PepsiCo Inc. has been collecting close to $500 million a day from sales of its beverage and snack lines for the past few years. The PepsiCo sales force receives these payments from stores when product is delivered and, in most cases, then proceeds to deposit the money at one of PepsiCo’s thousands of bank branches worldwide. All too often, in the past, a significant chunk of that cash could become invisible to PepsiCo’s corporate treasury for a critical day or two–and given the widespread distribution, that lapse created the potential for hundreds of millions of dollars to be invested less than optimally. “We [can't] afford to lose the value of that cash for even a day,” reflects Arun Nayar, PepsiCo’s vice president and assistant treasurer. “We need to use it to borrow as little as possible and invest what’s left down to the penny.” No treasurer would hope for less, but when PepsiCo went out to seek a banking system that would provide truly global visibility, it discovered to its dismay that its global peers–the huge multinational oil companies, technology companies and consumer products companies–were also stuck with only partial or regional windows into their cash. While global liquidity optimization has been near the top of the treasury agenda at large multinationals for years, systems to facilitate it have universally fallen short. To PepsiCo, the solution was clear: If it wanted such a system, it would have to enlist the help of a bank and make sure that one got built. “Just apply Libor to that much money, and you’ll have some idea of the upside potential of this project,” observes Lionel L. Nowell III, PepsiCo’s senior vice president and treasurer. “It was an ambitious initiative, but worth it.”
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing. Once you are an ALM digital member, you’ll receive:
Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices,
case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
Exclusive discounts on ALM and Treasury & Risk events.
Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.