- Article
- Managing Cash Flow
- Enable Growth
Advanced MedTech enhances treasury visibility and self-funding with HSBC
Advanced MedTech Holdings is one of the world’s first fully integrated urology companies, committed to transforming urological care through precision, innovation, and impact. Headquartered in Singapore, the company has expanded its footprint across three continents through a variety of strategic acquisitions, unlocking new markets and driving innovation.
The company’s Group Treasury in Singapore plays a critical role in ensuring the financial health of its portfolio of companies. This centralised approach supports the group’s overarching business strategy, enabling effective management of cash balances and transactions across a variety of operating currencies worldwide.
The Challenge
In the medical technology sector, sales cycles often involve purchase orders, with customers settling payments either in instalments or upon meeting specific conditions outlined in the initial agreement. Vendors may also require upfront payments to offset potential supply chain disruptions. This process can result in long cash conversion cycles spanning several months, which significantly increases working capital requirements needed to sustain business operations.
To address these requirements, Advanced MedTech traditionally relied on short term external borrowing to support liquidity needs and bridge funding gaps, incurring additional costs through interest repayments.
While Group Treasury identified sums of surplus liquidity across various accounts, utilising these funds presented challenges. The group’s low level of automation in global liquidity management meant that consolidating and converting funds across accounts and currencies required substantial manual effort.
The Solution
Amidst a volatile interest rate environment, Advanced MedTech sought to optimise internal liquidity and reduce reliance on external loans to support its business objectives.
Partnering with HSBC, Advanced MedTech implemented a global pooling structure that automatically consolidates balances held in three currencies (SGD, USD, EUR) across more than eight legal entities and 19 accounts into a Multi-Currency Notional Pool (MCNP) based in Singapore.
This solution delivers several key operational benefits. Consolidated balances in various currencies are automatically aggregated and centrally visible in the corresponding pool header account, with balances notionally converted into a base currency, such as USD, providing Group Treasury with enhanced oversight of cash positions.
Additionally, the consolidated balances generate improved interest returns, enabling Advanced MedTech to passively enhance yield from once idle funds. The pooled funds have also reduced external debt by up to USD10M.
Once consolidated within the MCNP structure, balances can be used to fund working capital shortfalls through intercompany loans, reducing dependency on external borrowing.
HSBC’s Intercompany Solutions (ICS) suite further supports this process by streamlining the management of intercompany lending arrangements. ICS automatically tracks loans, interest, and tax settlements, while offering self-service tools for loan reporting and managing lending limits.
Managing cash efficiently across multiple geographies is a strategic imperative for any multinational. HSBC’s solution has enabled centralised oversight of our aggregate cash positions, allowing us to deploy liquidity more strategically across business units and markets.
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Key Benefits
- Increased capacity for internal self-funding: Surplus funds from cash-rich entities can be utilised to meet business needs and payment obligations.
- Scalable solution: Easily adaptable to new markets and currencies as the business grows.
- Significant time and cost savings: Reduced interest costs on external borrowings and administrative effort on paperwork and moving idle funds for fixed deposits (~1.5 FTE).
- Improved yield: Interest returns on balances have improved by 1.4%.
- Digital self-service tools: Enhanced control and transparency in cash pool administration.
- Strategic cash allocation: Treasury can borrow against their own cash in the pool and deploy funds where they are needed most, supporting business growth and resilience.
By partnering with Advanced Medtech to optimise day-to-day funding through this notional pool, we have demonstrated how medtech companies can leverage Singapore as a base for global growth.
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