Citi Treasury and Trade Solutions
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Cost control for travel and entertainment
spend:
Since discretionary spending is an
obvious area for cost cutting, it is surprising
that some organizations have not yet
deployed regional or global solutions to
capture, manage and monitor travel and
entertainment spend. Implementing such
a solution to capture consolidated spend
data on a globally consistent platform will
ensure companies’ spend policy is adhered to.
Redirecting spend to strategic partners can
also generate volume discounts and working
capital benefits.
•
Utilize procurement cards:
The order-to-pay
process can be significantly enhanced by
redirecting spend from traditional channels to
procurement cards, which are also known as
virtual or ghost cards.
By driving spend to strategic partners willing
to take card-based payments, companies
can reduce the inherent cost of traditional
order-to-pay processes: cost reductions can
be generated as companies’ working capital
benefits from a significantly longer
settlement period.
For merchants accepting card-based
payments for procurement, it enhances the
commercial relationship, which in turn may
direct more spend towards them as they
become strategic partners.
•
Evaluate counterparty risks:
Treasurers
should assess the risks of counterparties
embedded in their supply chain to minimize
the impact on their company’s financial
health.
Depending on the strength of these
relationships, collaborative action such as
redeploying key assets following project
postponement may help ensure utilization
rates and associated cash flows are
maintained.
Greater oversight of account receivables
processes ensuring credit limits and
commercial terms are not breached are
critical to reduce and eliminate the incidence
of bad debts and fraud. Preemptive action is
essential and an important part of ensuring
the health of key suppliers does not move to
impairments.
Sustained oil price weakness will continue to
challenge the industry. Whilst history suggests
that this episode will pass, opportunities abound
for treasurers who take swift action to
implement a more robust treasury operating
platform so that their organizations are better
placed when the upswing takes hold. Doing so is
not an option, but an imperative.
Industry Best Practice in Action: China National Petroleum Corporation (CNPC)
For Asia’s emerging market champions with global operations, once cash transparency is achieved, the difference can
be stark.
Through installing an integrated treasury system for CNPC, we assisted in transforming its decentralized treasury model
into one integrating its finance functions, in-house bank and internal settlement center.
With the set-up of corporate-to-bank and host-to-host connection, the energy giant has gained full visibility of real-time,
intraday domestic cash position and daily cash positions of all its accounts overseas. At the group level, CNPC can now
manage its subsidiaries’ account information, payments and collections, liquidity, financing and investment plans and
FX transactions.
Whilst history suggests that this episode will pass, opportunities abound
for treasurers who take swift action to implement a more robust treasury
operating platform so their organizations are better placed when the
upswing takes hold. Doing so is not an option, but an imperative.
