Citi Client Casebook Middle East and Africa 2022

Liquidity and Working Capital 15 The Challenge Working capital enhancement and stability of the supply chain has always been key to BRFs’ overall objectives. 2020, with the onset of the global pandemic, only acted to amplify the nuances that come with the complexities of global operations with widespread disruptions to supply chains, with the impact being profound in the Middle East region. BRF sought to have a working capital solution, which will not only improve their Days Payable Outstanding (DPO), but also do so without affecting their suppliers. BRF’s own clients pushing for payment terms extension, several from the food retail industry, owing to market pressures, exacerbated the need for such a solution. The Solution With precedence of running a Supply Chain Finance (SCF) program in the HQ country Brazil, BRF worked closely with its main banking provider, Citi to set-up a program in the Middle East — managed centrally out of the UAE. The program sought was to be scalable and streamlined from a documentation and technology perspective, to allow it to realize the maximum benefit to both BRF and its suppliers. After various discussions between BRF and Citi, the solution was structured in a way to allow additional BRF entities to be added to the Middle East program with minimal documentation and technical modification (single file format). Citi was able to provide a consistent solution with its SCF platform able to accept a standardized file format for multiple jurisdictions, thereby significantly reducing the set-up time and resources required from both BRF and Citi. As a result of the implementation a single SCF platform emerged which offered centralized control and group limits management on a consolidated level, whilst achieving an end-to-end SAP-Citibank throughput process utilizing SWIFT. The Results 2020 was an exceptional year of challenges, and for BRF, given the perishable nature of products, no challenge was more profound than ensuring a stable liquidity position in the Supply Chain. While COVID resulted in delays of funds receipts from BRF’s clients and requests for payment terms extension, BRF wanted to make sure that Citi not only were able to accommodate this requirement, but also to facilitate BRF’s own suppliers with a relevant working capital solution. By choosing SCF as the solution of choice, BRF was not only able to get payment terms extension from suppliers to finance working capital needs, but also to support these suppliers via easy and early access to liquidity by joining the SCF program. Brazil Foods in the Middle East Improving Working Capital with Supply Chain Finance Brazil Foods (BRF) is one of the premier companies in the global poultry production and manufacturing landscape, with a complex and diverse supply chain consisting of more than 30,000 vendors. These vendors range from providers of raw materials, to logistics, packing, marketing etc.