The Quest for the Perfect Platform

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.”

PepsiCo decided to partner with Citigroup, which also set a high priority on global liquidity management. And so the seed was planted for the next evolution in banking platforms–one that promises to allow companies to view accurate, real-time balances and cash positions worldwide and give them the ability to drill down into those accounts.