As multinational corporations scale and enter new markets, they should review their operational efficiencies to make sure they can match the needs of their new corporate footprint.
Firms working with multiple banks could incur higher costs, as each bank may levy individual fees and charges that may not be as preferential. The treasury team may also need to invest in additional technology or staffing to manage their various banking relationships.
Then there is also the possibility of being exposed to the risk of errors and fraud, if proper precautions are not taken.
“Treasury management is a key enabler for businesses to expand internationally,” said Winnie Yap, managing director and head of global payments solutions at HSBC Singapore.
“Scaling and streamlining the working capital process is a vital component, and our partnership with Blackmores in Singapore is testament to how HSBC can support their growth ambition.”
By consolidating its accounts in Asia-Pacific to one primary banking partner, Blackmores has achieved “greater operational efficiency as well as improved visibility and control of their treasury function, ultimately delivering an optimised liquidity management structure”, said Yap.
Still, a lack of visibility into global operations and exposure to risk remain the biggest pain points for corporates in the areas of liquidity and cash management today, Yap noted.
“Many organisations are looking to enhance their liquidity management, with a focus on building capabilities to enhance their visibility to cash and financial exposures, and to optimise working capital,” she said.
It is therefore no surprise that digital transformation and technology are higher on the agenda of corporate treasurers more than ever before – an observation consistent with what HSBC has been hearing from its clients.
“By remaining status quo, companies would not be able to gain economies of scale with their banking partners and manage their risk effectively,” said Yap. Continued poor liquidity management will also lead to a higher cost of borrowing and lower interest return on surplus cash if it is not consolidated, she added.
Corporate treasurers, therefore, play a critical role in helping their companies to optimise their cash position and maintain healthy financials in a rapidly changing business environment.
“Treasurers should look to optimise the allocation of liquidity within their organisation, and adopt tools to automate the transfer of funds between accounts or to offset balances,” said Yap.