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HSBC Helps Jacobs Engineering Build a Regional Payment Platform

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Over a nine-month period starting in mid-2022, HSBC worked with US-headquartered technical professional services firm Jacobs Engineering Group on an digital solution to improve the company’s working capital management and payments activities in the Middle East.

Jacobs Engineering provides engineering, technical, professional and construction services, as well as scientific and specialty consulting, for a broad range of clients around the world. Established in 1947, the group is a publicly traded, Fortune 500 company with over 50,000 employees and operating across more than 400 offices globally.

One of its key group companies operating in the Middle East is CH2M, a professional services industrial engineering company providing world-class consulting, design, construction, and operations services for corporations and governments.

Jacobs was looking for ways to improve its working capital management, especially payments, in the Middle East. Specifically, over 1,700 Jacobs employees work in the field on client projects across the region, paying their own travel and entertainment expenses and being reimbursed later. This was sub-optimal both for the employees and for the company.

The company needed better visibility of staff expenditure, a way to centralise the payment of those expenses, and then connect the travel and entertainment expenses to its expense reporting tool. The objective was to find an effective digital solution that would be easy to use, and which would avoid recurrent foreign exchange and cross-border charges and expenses.

At the same time, Jacobs also needed to find an alternative payment option to the UAE government’s e-Dirham card for government-related payments as this had been discontinued by the government.

Furthermore, with UAE Dirham (AED) and US Dollar (USD) interest rates going up, the costs of its corporate debt in the US were growing. Therefore, Jacobs also needed a solution that would partially offset these increased financial costs with additional returns on its balances in these currencies.

In short, Jacobs was facing challenges at multiple levels. Its engineers and managers were spending $14 million a year on travel, entertainment and corporate expenses across the Middle East using their personal credit cards or cash. The company was then manually reimbursing them.

At the same time, the UAE government demised the e-Dirham card, which was used for government-related payments. The only alternative suggested by the government was for companies to open an account with a local bank competitor to HSBC. However, this would mean adding an additional banking partner, which did not meet Jacobs’ overall treasury objectives of account rationalization. Therefore a replacement digital payment solution was needed.

Lastly, the company also needed a liquidity solution that would allow the company to earn additional interest to offset the increased costs of the corporate debt at its head office.

The mandate was awarded to HSBC in June 2022 and was completed after nine months – comprising three elements of an innovative multi-pronged digital solution designed to meet all of Jacobs’ requirements and challenges.

Corporate T&E cards:

HSBC’s solution was to generate local currency travel and expense cards for each employee working on respective projects in Saudi Arabia, Qatar, Oman, UAE, and Egypt. This would give Jacobs increased central control of staff T&E activities and would include a corporate system for easier, more efficient, digital recharging and reconciliation.

Expenses are mapped to an account in Jacobs’ expense report system and through the MiVision card platform, as well as to each card holder and the regional program administrator. This gives a real-time overview of what was spent, where, when, and by whom.

This solution reduces potential fraud and security issues, as well as other risks arising from the manual process that was used in the previous system. It also delivers significant reduction of FX and cross-border payment fees, as cards are issued locally and in the currency required for the cardholder. In addition there is a 53-day credit free window, for better working capital optimization.

Debit card to replace the e-Dirham card:

A new, centralized debit card was created to replace the e-Dirham cards that had been used for government payments. A dedicated bank account is linked to the debit card, which is only loaded with the estimated amount needed to be paid to the government. This effectively converts the debit card into a pre-paid solution, but with additional controls.

Amongst these additional controls and benefits, MiVision provides fully-controlled, digitized program administration. Restrictions per merchant category help to reduce fraud and misuse, And the new debit card alleviates the need to open new accounts with a new relationship bank.

Interest Enhancement Facility (IEF):

To maximize the return on AED and USD balances and reduce the cost of Jacobs’ overall group corporate debt, an IEF solution was used. The Facility allows Jacobs to obtain dynamic remuneration for its balances in USD and AED, with this remuneration becoming more attractive every time further balances are added. The attractive tier remuneration on the IEF allows Jacobs to partially compensate the cost of its debt at head-office level.

This multi-tier solution has brought multiple benefits to Jacobs. Corporate T&E cards provide consolidated web-based reporting, meaning that account managers benefit from greater visibility when reviewing transaction details. They also help reduce the time and effort spent on reconciliation, while streamlined and safer payments improve Jacobs’ working capital management.

In addition there was a seamless transition to using the digital transactional activities of a debit card for payments, previously processed with the e-Dirham card, with the added advantage of maintaining a single banking relationship. And the IEF liquidity solution improves remuneration of balances in an effective manner.

By centralising access and controls through online tools, the company was able to address a major control and reporting challenge associated with having multiple project sites and a decentralised workforce – whilst also reducing fraud and misuse.

Additionally, the IEF solution provided Jacobs with enhanced remuneration and significant flexibility in terms of obtaining return on its balances to offset the corporate debt. In total it cuts the cost of this debt by more than 50 basis points on average.

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