Following its recent Blue Finance deal, Thai Union continues to innovate its financial dealings in-house
Thai Union Group Public Company Limited recently unveiled the latest example of its innovative finance in the form of its new In-house Banking, Automation, and Global Treasury Center.
The company’s corporate treasury has introduced the new in-house banking model to optimise its assets & liability management, cash flow processes, and financial risk management.
Founded in 1977, Thai Union Group PCL is the world’s seafood leader, bringing high quality, healthy, tasty and innovative seafood products to customers across the world.
Today, Thai Union is regarded as one of the world’s leading seafood producers and is one of the largest producers of shelf-stable tuna products with annual sales exceeding THB 141.0 billion (US$ 4.5 billion). Its global workforce of more than 44,000 people is dedicated to pioneering sustainable, innovative seafood products.
Listed as a public company on The Stock Exchange of Thailand, the company has facilities in 14 locations and 11 countries. Some 90% of its sales are generated abroad, mainly in the US and Europe.
As a company committed to innovation and globally responsible behaviour, Thai Union is proud to be a member of the United Nations Global Compact, and a founding participating company of the International Seafood Sustainability Foundation (ISSF). In 2015, Thai Union introduced its SeaChange® sustainability strategy. Thai Union’s on-going work on sustainability issues was recognised when the company was listed on the Dow Jones Sustainability Indices (DJSI) for the eighth consecutive year in 2021 and ranked number two in the world on the Food Products Industry Index.
Corporate treasury innovation
As a global company, Thai Union realises the importance of centralising its treasury function. The process of achieving this was kicked off in 2015 by setting up Thai Union Global Treasury Center. The newly-established center works closely with the company’s regional treasury centers, in Luxembourg responsible for handling related operations in European countries, and in Los Angeles on the US operations.
The setting up of the Global Treasury Center in Thailand came with the acquisition of the necessary licences. A Treasury Centre Licence was obtained from the Bank of Thailand in June 2015. This was followed by an International Headquarters (IHQ) licence obtained from the Thai Revenue Department in August 2015. This form of licencing was subsequently abolished, so the company replaced it with International Business Center (IBC) licencing granted on 1 June 2019.
Thai Union started implementing global cash pooling for its offices and facilities in Europe in 2015. The following year, in 2016, Thai Union started to refinance its long-term loans to European and US subsidiaries using financing from the Global Treasury Center. In 2017, it extended global cash pooling to US subsidiaries. In-house banking in Thailand began in 2020. An in-house banking structure was already in place for EU operations.
The truly global and vertically integrated treasury model takes different forms in the EU, the US and at home in Thailand.
EU and US treasury activities centralise funding and local cash management regionally and then pool liquidity back to Thai Union Global Treasury Center. Financial risk management execution is made regionally following the policy from the center.
The Thai treasury is the main source of financing to all subsidiaries. Few banks are required as cash management and liquidity are pooled. At the same time, the Thai treasury sets the group policy for financial risk management and monitors everything.
Advent of Robotic Process Automation (RPA) in-house banking transactions
Thai Union continued its financing innovations by implementing Robotic Process Automation (RPA) for treasury and finance transactions and processes in 2021. This gives the company the advantage of clear visibility and up-to-date information on outstanding collections, payments and cash balances. Previously these processes took between three-to-seven days for the firm’s accounting teams to update.
RPA helps in many routine processes such as retrieving information from different sources, creating fund transfer transactions, recording transactions in the system, generating reports, and automatically sending the reports/information to relevant parties.
The benefits of the treasury transformation can be summarised in terms of cost and efficiency and break out into three key areas. In terms of efficiency and automation, the treasury transformation utilises the team’s expertise to increase operational efficiency and standardise and streamline processes. In terms of governance and control, the transformation enables visibility of cash positions and use of money. The company is thus better able to manage and minimise risks and adjust with agility to changes in circumstances. Above all, financial benefits accrue in terms of increased efficiency in the use of cash, reduced idle cash in hand, and better access to the best sources of funding.
“Thai Union is regarded as one of the world’s leading seafood producers and is one of the largest producers of shelf-stable tuna products with annual sales exceeding THB 141.0 billion (US$ 4.5 billion). Its global workforce of more than 44,000 people is dedicated to pioneering sustainable, innovative seafood products.”