Anyone who's familiar with the Uber Technologies origin storyknows that, for the past several years, the company has beengrowing at a pace that its founder has described as'unprecedented.' At the start of 2015, Uber operated in 25countries. By mid-2018, its ride business served more than 50countries, and the company had expanded into related marketsincluding food delivery, freight hauling, and bicycles andscooters. Uber provided its billionth trip at the end of 2015 andthen reached its 10 billionth trip by 2018.

The Uber treasury group supported this skyrocketing growth byallowing some functions to become decentralized. The companyhandles certain types of transactions via a collect-on-behalf-of (COBO) and pay-on-behalf-of(POBO) model, but local support entities in each region managetransactions around payroll, operating expenses, and tax payments.In building out these regional groups, Uber sometimes foundstandardization falling by the wayside.

"The challenge was making sure we had bank accountinfrastructure in place so that the businesses could launch," saysCarolyn Hansen, senior treasury manager at Uber. "We sometimeschose the quick solution, versus a more automated or scalablesolution." As a result, the company ended up with manual processesfor determining liquidity levels in business units around theworld.

"We have a monthly cost-plus process," Hansen explains. "Underthese agreements, local entities will receive a monthlyintercompany settlement from specified corporate entities, and weneed current balance and payment information to support decisionsabout whether each entity should receive that monthly funding. Inaddition, we need to be sure we have sufficient funding for partnerpayments, which include earners on our platform—drivers, couriers,restaurants, and carriers." For all these reasons, treasury staffwere spending a lot of time logging into bank portals to check onbalances, to see whether payments had gone out and collections hadbeen received.

To improve the efficiency of a number of processes, includingcash positioning, Uber undertook a major upgrade of the finance andtreasury functions' technology infrastructure. The goals werethreefold: to improve visibility into balances and control ofaccounts, to standardize and automate payment processing around theworld, and to ensure that all systems would be scalable to variousvolumes of payments.

Uber deployed a new Oracleenterprise resource planning (ERP) system and a treasury managementsystem from Kyriba. The company's technology group built aninternal payments engine to manage payments to partners. Then theyconnected Uber's treasury workstation and ERP system, and linkedboth solutions to the company's banks.

Now payment data flows back and forth between the banks and bothsystems. For Uber's handful of relationship banks, the technologygroup developed direct host-to-host connections between bankingsystems and the company's systems. "The payment rails between ourbanks and our ERP system enabled us to automate and standardizeprocessing of our major payment flows," Hansen says. All paymentfiles are transmitted in ISO 20022 format, ensuring that paymentchannels can be built quickly in each new market Uber enters.

Balance and transaction information flow back to both the ERPand treasury management systems. Banks with which the company hasfewer accounts report balance and transaction information to thetreasury management system via SWIFT reporting.

Reports from the ERP system and a dashboard in the treasuryworkstation inform Uber's central treasury function about cashflows around the world. "Now cash positioning is more automated,"Hansen says. "We have the balances flowing into the workstation,and we have a dashboard that provides a view into our operatingpayments on a global basis. We also have a team that focuses onlyon the partner piece and funding of local support entities on amore regional basis. All this means we have a much more streamlinedprocess for getting ahead of the daily and monthly fundingrequirements."

Around the same time as the software implementations, Uber'streasury team worked with their banks to deploy a global cashpooling structure and determine which countries' funds would makesense to include. Now, more than a third of Uber's accounts aroundthe world sweep into these pools. This further reduces the burdenof cash positioning on treasury staff, and it enables the companyto maximize returns on those funds.

Hansen says that one benefit of the new process is improvedworking capital management. "We have significantly improved ourworking capital, especially compared with our previous environment,where we had to log in manually and download position information,"she says. Uber estimates that the improvements in cash positioninghave reduced its operating balances by about $400 million, whichgenerates $2 million a year in incremental interest income.

See also:

• Incorporating China into a Global CashPool
• Reducing Leverage by Leveraging CashForecasts

The improved processes have also freed up more time for treasurystaff to research local payment options and work with banks tofurther improve payment processing. All in all, Hansen says, theimprovements in efficiency have generated more than $10 million ayear in transactional cost savings.

Perhaps most important, the initiative has prepared the treasuryteam at Uber to continue supporting the company's extremely rapidgrowth. Hansen says that one thing other treasury teams can learnfrom her company's experience is that it makes sense forhigh-growth businesses to standardize and automate as soon aspossible.

"Moving away from manual processes helps scale the business,"she says. "It enables a smaller number of staff to manage treasuryprocesses across a business that is getting larger. It's also lesschallenging to launch new entities when you have a standardapproach, versus an approach that changes on a case-by-case basisfor each new business."