1. Sony Global Treasury Services Plc
Cash Management Operation

2. SGTS History
Sony Global Treasury Services (Plc) was incorporated in SGTS branches in London (HQ), Tokyo, Singapore and New York branch.
Prior to this each region had an independent financial centre with little co-ordination and offsetting of cash positions.
Central aim was to consolidate Sony Group’s cash position. This was achieved via setting up a cash management service to the Sony group companies throughout our regions (“C3 operation”).
To record transactions between group companies and SGTS, an internal web-based global system was set up (“e-cube”).

3. Objectives & Expected Effects of GTS Services
Subject of Each Effect
Objective
Expected Effect
All of the SONY group
Group
Companies
Finance Dept.
of SONY
Accounting Dept.of SONY
Global Cash Management
Reduction of Interest Cost
Introduction of Inter-company Cashless Settlement
Saving of Interest/
Commission to Banks
Reduction of Settlement Risk
Operational Efficiency on Sony Group Treasury Functions and Upgraded Customer Service
Operational Efficiency in
Payment / Settlement / FX deal
Minimizing FX exposures
Improvement of A/P & A/R Reconciliation Workload
Facilitating Accounting Consolidation Work
Workload Reduction of
AP/AR Reconciliation

4. hold collection accounts.
SGTS Cash Management
Sony Group companies,
hold collection accounts.
Zero balanced each day
Funds received in
SGTS Header A/C
SGTS provides this service for all major currencies
Zero Balance sweep
Sony Group companies are provided with a RAS account (Running Account service) enabling “cashless settlement” with SGTS. RAS Account records:
-Zero balance sweeps credited to the RAS account.
-RAS customer enters payments in SAP system, and this interfaces to E-Cube. These payments (“proxy payments”) are made by SGTS. Each proxy payment debited from customer’s RAS account.
-inter-company cashless payments/receipts
-all FX transactions transacted on behalf of group companies are settled across the RAS account.
- SGTS will credit/debit interest to RAS account depending upon whether credit/debit balance.

5. Overview of Automatic Sweeping Service and RAS
Customers’ Bank Account
GTS Bank Account
Customer’s Sub Account (JPY)
GTS Head Account (JPY)
Payment to
each Customer
Customer’s Sub Account (USD)
GTS Head Account (USD)
Zero-balancing
Customer’s Sub Account (EUR)
GTS Head Account (EUR) … …
I//F via MT940 Msg
As well as 3 currencies above, operate sweeps for AUD,GBP,HKD,MXN,NZD, SGD and THB.
Customer’s
Account
In GTS(=RAS)
Account Monitoring
Customer A
Customer B
Customer C

6. Overview of Proxy Payment Service and RAS
GTS Bank Account
JPY Account
Proxy payment
to third parties
Proxy payment
to third parties
USD Account
EUR Account
As well as main 3 currencies proxy payments for AUD,GBP,HKD,MXN,NZD, SGD and THB …
I/F
Proxy Payment Request
Customer’s
Account
In GTS(=RAS)
I/F
Account Monitoring
Customer A
Customer B
Customer C

7. Cash Management Treasury system
C3 RAS customer keys in daily forecast ZBA flow into Golfer Cashflow forecast summary
FX / MM deals
Proxy payments entered by C3 customers, approved by SGTS , and uploaded into Treasury system as actual cashflows.
File exported from Golfer to internal drive, is then uploaded into Treasury system as Projected Cashflows
Treasury
system
MT940 statements received from Banks uploaded into Treasury system. A/c bank balances are reconciled using system’s Bank Rec function.
Based on Cash positions in Cash Xplorer the Cash Management team will make their funding/investment decisions
Surplus cash invest in Money Market Funds. Deficit funded by ECP or USCP market
Cash Xplorer is run to determine current positions by currency. The projected cashflows are incorporated into current balances

8. Internal Sony G.Co. Account

9. Entries for RAS Account

10. Deciding on Partner Bank for Cash Management
Likely to already have a relationship (credit facilities)- ongoing commitment to Sony.
Global presence, wide branch network to provide consistent cash management services.
Dependency on one bank Vs additional work if cash management is tendered on a regional basis.
Cost-proxy payments vol. 23,000 payments/mth
Reputation/customer service levels.
IT support to develop interfaces with RAS.
Advisory role-regulations/solutions relating to cash management (Tax/banking regulations etc.)

11. SGTS Experience of Partner Bank
Reputation of SGTS within Sony Group is on the line:
-Sony group companies want to view accurate RAS accounts, relying on efficient banking operation as well as reliable IT interface.
Quality of service diluted if cash management provider uses a partner bank.
Fine to have a solutions/queries centre but one main point of contact important.
Effort/cost of set-up means only poor client service would lead to termination.

12. Ancillary Benefits for Partner Bank
Cash Management Bank is termed “relationship bank” internally
Regular contact with SGTS could lead to new opportunities.
Same day FX transactions will be dealt with the partner bank so that settlement can go across the accounts.
SGTS is funding USA West coast payments based on a forecast. Therefore, we leave a minimum cash balance with the partner bank.

13. Investment/Funding of Cash Position
Lack of technology!!

14. Surplus cash investment
Current procedure for investment
++$$$
++EUR
++££
SGTS holds target balance of USD 500 mil.
Treasury
system
Settlement diary for maturing MMFs
Monitor yield/outstandings daily
via and excel
Overnight investment with good liquidity/generally AAA credit rating
Money Market
Funds
Contact MMFs via telephone/
Bank website for subscription/
Redemption to the fund
Treasury
system
Input MMF investment
Treasury
system
Back office settles MMF and makes payment

15. System constraints of current procedure for investment
Time consuming
Redeeming/subscribing to all funds that have an outstanding balance/day
Monitoring fund performance/outstandings via and updating excel sheet (human work)
Settlement risk
Receiving/paying to a number of different funds
Reconciliation problem
Interest, including rebate, paid monthly. Reconciliation issue as to interest received, and impact on both Accounting and other issues such as SOX

16. Money Market Fund Portals
SGTS is currently considering using an electronic Money Market Fund’s portal. Advantages:
Reporting
Centralises transaction data for immediate access.
Monthly statement provides information as to fund balances and accrued interest
Internal compliance
Enables internal guidelines to be met, for example fund concentration/fund ownership
Reduced settlement risk-one payment
Straight through processing
Downside……………Loss of rebate????????

17. Consider electronic dealing such as Bloomberg
ECP/USCP Issuance
SGTS uses ECP/USCP for short-term funding needs.
All contact/dealing done via the telephone
Time-consuming from issuance decision to finalising funding.
Consider electronic dealing such as Bloomberg

18. General Conclusions
Cash Management is a key focus for Corporate Treasury department. Accounting regulations/internal compliance making FX hedging less of a priority.
Cash management services viewed as a partnership with the bank to provide Sony group companies a high level of service.
Bank derives additional revenue streams from having cash management platform.
Opportunities exist for developing a dealing platform for widely-used money market products.