by Mario Pizzolongo, Vice President – Finance and Treasurer, Future Electronics
Before 2013, Future Electronics’ Corporate Treasury department managed highly fragmented pools of liquidity in Asia-Pacific through a decentralised model, which caused significant cash management challenges for the company. Mario Pizzolongo, Vice President – Finance and Treasurer, explains how the introduction of a new centralised notional pooling liquidity management structure optimised efficiencies throughout the region.
Future Electronics was founded in Montreal, Canada in 1968. Since then, the company has grown into a global leader in the distribution of electronic components, earning an impressive reputation for providing outstanding service and developing efficient, comprehensive global supply chain solutions. Today, it operates in 43 countries around the world. In Asia-Pacific, Future Electronics has a geographical footprint that spans across the entire region, operating through entities in 13 key markets, including a regional head office in Singapore. Given that a significant percentage of the company’s global revenue comes from within the region, Asia-Pacific is a very important market for the company.
Future Electronics’ success has largely been built on its commitment to maintaining close business partnerships with suppliers and customers, coupled with the strength of its commercial and technical competencies through all stages of the design-production cycle. However, the industry features a highly diversified product base, cyclical business patterns and higher-than-average volatility in terms of business flows, all of which can create challenges in terms of liquidity management. Further complicating the situation, Corporate Treasury oversaw cash that was extremely fragmented in Asia-Pacific due to the fact the organisation has legal entities operating in several countries throughout the region.
Historically, Future Electronics did not benefit from a centralised structure of funds in Asia-Pacific. There were isolated pockets of cash held across different banks and the domestic funding process was not optimal. The lack of visibility over cash positions was so acute that Corporate Treasury was not able to prepare the global cash position without the assistance of the regional office in Singapore. Reporting cash positions and the funding of domestic businesses was managed through manual processes.