To get full visibility into the cash of its businesses—1,500 ad agencies worldwide—$12.5 billion Omnicom Group was bumping into limits. As recently as 2009, it had 3,600 accounts in 150 banks on six continents. Then treasury took steps to concentrate and mobilize more than 90% of non-restricted cash daily by using pools and sweeps. The company also centralized much of its cash management activity in a regional in-house banking structure that provided real-time visibility into all the included accounts. But balances in accounts outside that structure were revealed only at month-end.
"Without knowing those balances, we could not fully optimize our allocation of liquidity or quantify all our risk," says Conor Leyden, project lead and managing director in Omnicom's Dublin treasury center.
So Omnicom, based in New York, came up with its Global Cash Control System. To get the missing information, it signed up Citigroup's Global Transaction Services, which uses SWIFT MT950s to get daily balance reports from Omnicom's outlier banks. Computer SI built the database, with an online portal and custom workflows, powered by Hyland OnBase.
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The project took less than 18 months, and Omnicom now has perfect daily visibility into all cash, which means more informed cash and risk management and an annual savings of $5.7 million, reports John Voorhis, director of treasury operations. With that visibility, Omnicom identified more than 500 accounts that could be consolidated or closed. It reduced cash in outlying banks by $50 million and cut borrowing costs by $5 million.
By the time the cleanup is finished, Leyden predicts the annual savings from bank account rationalization alone will hit $1 million. "This has been a real game changer for Omnicom," says Dennis Hewitt, Omnicom's treasurer. "We can now manage our cash as well as the best of the highly centralized companies."
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