Recently, I had the pleasure of learning more about corporate treasury in Asia during visits to our local offices; meetings with clients in Hong Kong, Malaysia, and Singapore; and by attending several treasury conferences. It should be no surprise that corporate treasury is becoming more sophisticated across Asia as firms continue to demand “best of the best” best practices and scalable, easy to use technology.
What I found most interesting about treasury in Asia was:
- Chinese firms are poised to expand internationally – From a treasury perspective, this interest in growing beyond China has heightened interest in treasury technology that delivers onshore/offshore visibility into cash and currency exposures alongside the need to establish more complex treasury structures such as cash pooling to support onshore/offshore sweeps. Chinese firms are continuing to explore establishing regional treasury centers in Hong Kong or Singapore to align with RMB clearing locations. This is an opportunity where treasury best practices are seen as a significant asset by hiring firms.
- Automation is not the only goal of treasury technology – Asian-based companies are embracing financial and treasury technology, yet are building ROI models and business justification on variables other than just automation and productivity. With costs of FTEs often much lower than we see in Europe or North America, automation is not the solution to increased workloads. As a result, the driver for technology is implementation of best practices, decision optimization (e.g. improved hedging), and support for treasury transformation.
- Regional treasury centers are becoming more involved in strategic decision making – Organizations that embrace the opportunity to allow Asian treasury teams to manage key functions (e.g. developing pooling structures or designing hedging programs) are able to deliver more strategic value and drive greater bottom line value than those that try to manage all treasury functions from afar. The knowledge and experience being hired into regional treasury centers, especially in Singapore and Hong Kong, rivals and even exceeds treasury talent in other parts of the world. This expertise is obviously in addition to local knowledge and the ability to work face to face with offshore internal and external partners to treasury.
Additional reading: Overcoming Cash Forecastng Challenges: Best Practice Tips for Treasurers
Treasury organizations that are already well established in the region already know where the right locations are; how to secure experienced staff; and the importance of adopting world-class treasury technology to ensure global visibility over cash, exposures and financial controls. For organizations considering a greater investment in Asia, it is important to:
- Choose locations that can offer support in English and local languages, with workable time zones that can also overlap with the head office at some point during the day. Locations that have financial proximity to China (e.g. Hong Kong, Singapore, Macau) are critical so your offshore treasury center is a financial gateway into China itself.
- Secure experienced staff who not only have global treasury experience, but know how to balance this with local expertise. The right people need to be motivated and trained well, earning new opportunities to leverage their growing treasury knowledge
- Have the right treasury technology in place that supports global requirements, but also local needs (which could be preferred language, local regulations, specific payment or bank account controls, or dashboards that highlight local treasury KPIs). The reduced footprint offered by the cloud helps, as does the ability for a cloud TMS to enable all treasury offices to support each other to deliver a complete business continuity plan.
Asia is an opportunity and those treasury teams that embrace it will be on the road to global treasury success.