Citi Treasury and Trade Solutions
8
regulatory barriers are lifted and the AEC
passport is ready, Citi has already been
working with leading companies in the
fast-moving consumer goods, healthcare
and insurance sectors to optimize their
treasury structures as they grow in ASEAN.
The AEC is expected to bring unprecedented
levels of competition as companies tap on
opportunities to enter new markets in the
region, and find new ways of coordinating
their supply chains. The agile treasurer does
not wait till all business, regulatory and
technology frameworks to be in place to
capitalize on the region’s growth potential. In
fact, companies that continue doing business
as usual may find themselves falling behind.
The overall trend is heading towards
liberalization in Asia, but a few exceptions
continue to exist. In 2012, Vietnam
introduced tighter monetary and fiscal
controls to promote economic stability,
albeit such measures have been relaxed
somewhat since then, and so the path to
liberalization continues for Asia.
2 Optimize subsidiary funding and liquidity
for group companies
For example, many companies leverage
Singapore as a regional treasury center
location to centralize accessible Asia
liquidity. Within the Industrials sector,
companies with multiple domestic entities
and billing currencies are pooling cash
domestically, and where possible, delivering
excess USD and liberal currency working
capital to regional and global liquidity
structures.
3 Create self-funded structures to
enhance yields
Many companies operating in Asia have trapped
cash that cannot be easily moved across
borders due to regulatory, tax or business
process constraints, or they have huge cash
reserves which can become a cost burden.
Further, returns on this cash can often be
very low. As noted above, along with cross-
border pooling is the efficiency of domestic
liquidity structures to ensure subsidiary
funding of working capital gaps, versus that
of traditional short-term bank borrowing.
4 Centralize payables and receivables
Centralizing the management of cash flow
enables treasurers to analyze payables
and receivables data, and translate this
intelligence real-time into actionable
outcome. Generally speaking, this helps
fuel liquidity optimization and investment
performance, as well as strategic and daily
working capital operations.
5 Leverage centralization with advanced
analytical tools to benchmark working
capital metrics
With increasing availability of powerful and
specialized treasury analytical tools from
banks and enterprise resource planning
(ERP) providers, the agile treasurer is
well-positioned to enhance visibility,
control and efficiency and seeks greater
depth and detailed data across all relevant
markets. Asia as a highly diverse region is
challenging, as companies may have multiple
banking relationships and varying levels of
technology sophistication. Citi addresses
this by providing consolidated data services
to bring together balance information
from multiple sources. In addition, Citi’s
TreasuryVision, a web-based centralized
tool, supports cash flow forecasting
and intercompany lending capabilities,
which are particularly useful for treasury
centers lacking access to ERP or treasury
management systems.
Similarly, Citi’s Treasury Diagnostics
and advisory function enable treasurers
to benchmark their working capital
performance very precisely against peer
organizations, and identify opportunities
to improve working capital metrics and
monetize financial flows. While a number of
banks have established advisory capabilities,
Citi has expanded this further to include
technical capabilities, thus supporting a
more practical approach to policy definition
and implementation.
Staying Agile
The treasurer’s role continues to expand, playing
an increasingly influential and direct role in the
working capital cycle through facilitating
collaboration across the financial supply
chain, and aligning working capital efficiency
more closely with the company’s real-time
liquidity needs.
Now, more than ever, to stay agile, treasurers
need to continuously contribute their expertise
into understanding the business ecosystem, the
regulatory environment in which business takes
place, and make quick, informed decisions to
support connecting financial efficiency of their
companies to that of their supply chain ecosystem.
Now, more
than ever,
to stay agile,
treasurers need
to continuously
contribute their
expertise into
understanding
the business
ecosystem,
the regulatory
environment in
which business
takes place,
and make
quick informed
decisions
to support
connecting
financial
efficiency of
their companies
to that of their
supply chain
ecosystem.
