Cash & Liquidity Management

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Thinking Global Cash Management Centralisation at Pepe Jeans Pepe Jeans has diverse and complex treasury needs, requiring a mix of retail and wholesale operations. Its decision to centralise the group’s cash and treasury management activities at the Barcelona HQ required not only a new cash pool but also new group-wide procedures, transparency of information and a change in mindset. The author describes how the company’s banking needs were assessed, before the decision was taken to work with a carefully-selected group of three banks. A pan-European cash pool in EUR was established with Deutsche Bank, with a header account in Barcelona supported by a debt facility. This has brought significant benefits including greater visibility and improved interaction between subsidiaries and Group Treasury.

Thinking Global:

Cash Management Centralisation at Pepe Jeans

by Ricard Mas, Group Treasurer, Pepe Jeans

When I joined Pepe Jeans in 2006, I found a vibrant and exciting company. It was facing many of the challenges associated with rapid corporate growth, such as the need to formalise financial policies and procedures and reorganise certain back office operations, such as cash management at a group rather than local level. A priority early on was establishing a clearer distinction between Treasury and Accounting to satisfy corporate governance and compliance requirements. There was also a need to centralise the group’s cash and treasury management activities at our headquarters in Barcelona. There were a variety of issues to address in order to achieve this, both internal and external. One of the elements we needed to consider was our external banking model, including how to centralise our cashflow in order to have quick and direct single channel access to company funds in a fast paced industry requiring continuous investment.

Diverse cash management requirements

Pepe Jeans operates using two distinct models. In some countries, we have a retail network, while in others where the scale of business does not, for example, warrant direct investment in infrastructure, we sell our products on a wholesale basis through licensees or distributors. This results in two distinct sets of needs from a treasury point of view: the retail business requires processing of cash and credit cards, for example, whereas working with licensees and distributors is closer to wholesale banking. We produce most of our goods in Asia, which are purchased in USD and shipped mostly to ports in Spain and the Netherlands, with the bulk of our goods then sold in EUR and GBP.

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