Improving Returns from Cross-Border Cash Balances
by Matthew Post, Treasury Operations Manager, Qualcomm Incorporated
Based in the US, Qualcomm Incorporated is one of the world’s leading providers of wireless communication technology and services. With global operations and an expanding international presence, the company was eager to find solutions to improve the efficiency of its centralised treasury. Of particular concern was how to enhance the management and interest result on their growing portfolio of local currency accounts.
Qualcomm is headquartered in San Diego, California, but our innovative chipset technology is used to power wireless networks and handsets all over the world. As a result, we have a number of subsidiaries throughout the Europe, Middle East and Africa (EMEA) region, to which RBS provide a range of services. One of these subsidiaries is Qualcomm Europe: a business unit with operations in the UK, Germany, the Netherlands, France, Poland, Spain, South Africa, Sweden and, most recently, Russia. For our treasury team, which is based in the United States, the easiest, quickest and most cost-effective way to fund these operations has been to transfer funds from our head office accounts to the local operating accounts with RBS in each country.
As the business has expanded, the number of local operating accounts that we have to maintain has grown. Each account typically maintains a positive cash balance, so we began looking for ways to manage group liquidity more strategically and increase short-term investment income, without losing the convenience of local accounts or entering into complex pooling structures. Consequently, a primary goal was to improve interest earnings within a decentralised account structure.
Working with a single regional banking partner
Qualcomm has worked with RBS as a banking partner for payments and collections in EMEA for a number of years. The bank had already helped our Enterprise Services Europe fleet management business (QES Europe) to establish an automated cross-border pooling solution for euro accounts in six countries. In Qualcomm Europe, however, we needed to manage a range of currencies. One option was to sweep balances into notional pools by region and currency. However, we have a relatively small treasury team and we were looking for time and cost-saving tools to reduce the need for active management and funding. With this in mind, we approached RBS, on the basis that the bank already provides Qualcomm Europe’s local accounts, for a solution. RBS suggested its Cross-Border Cash Optimisation (CBCO) solution as a far less labour-intensive and more cost-effective alternative.