FROM logistics to hospitality, Covid-19 will undoubtedly reshape the way companies strategize and futureproof their businesses. As economies continue their cautious walk out of lockdowns, cash-on-hand pre-Covid-19 is separating companies better equipped to ride out the economic storm from the rest.
As featured in The Asset’s April 2020 issue, cash is king, especially during this period, and treasurers and CFOs who have centralized accounts or established cash pools are reaping the benefits.
Over the past year – before Covid-19 – several of these initiatives went live. The goal was to improve and enhance the usage of internal funds, and reduce, if not eliminate, external short-term finance whenever possible.
Speaking to The Asset as part of the annual awards process, the board of editors heard from different companies on their approach to the notion of liquidity, with some companies, such as Singapore-based Banyan Tree, focusing on domestic cash centralization to obtain better visibility of cash positions.
Other companies, such as Molex LLC, opted for a different approach, setting up multi-currency notional pools to optimize cash availability. In the case of Li and Fung, having cash pools in Hong Kong and Singapore was just the first step, with the company successfully connecting the two multi-currency pools in 2019.
As in previous years, treasury hubs continue to drive the conversation toward efficiency with companies like Brandix, Sri Lanka’s largest apparel exporter, moving its treasury operations to Singapore to take advantage of the host of incentives that the city-state offers RTCs (regional treasury centres).
In China, several companies were delighted with SAFE’s (State Administration of Foreign Exchange) March 2019 Circular No. 7. The regulation increased the foreign debt quota of multinational companies’ domestic participating members, and allows for the renminbi to be the account currency for domestic master accounts. Wistron Infocomm (Chongqing), for example, was able to adhere to a tailor-made foreign currency domestic cash sweep structure with an overdraft solution under this SAFE policy.
More of the best solutions from the more than 300 submitted for The Asset Triple A Treasury, Trade, SSC, and Risk Awards 2020 will be featured in the coming weeks.
To see the Best liquidity and investment solutions, please click here.
For more details about the awards, please click here.
For more information about receiving the awards, please contact firstname.lastname@example.org
To revisit some of our previous stories on the solution trends shaping treasury departments in Asia please read more below: