Chinese companies need to streamline treasury activities

As companies in China and Asia look to technology to support their expansion, treasurers and CFOs are demanding clearer visibility of cash and risk. Ken Dummit, president of SunGard’s AvantGard, speaks to FinanceAsia about what trends are driving corporate treasuries in 2010 and how SunGard is partnering with the industry.

At the start of the year, SunGard identified three key drivers that will reshape finance in 2010; delivering transparency, increasing efficiency and leveraging networks. What has SunGard been doing with regards to these three drivers so far?

Across the whole of SunGard you will find a number of innovations, from our software-as-a-service delivery framework called Infinity for improved efficiency, to the expanded SunGard global network that provides access to 110 markets worldwide, to our risk and compliance solutions for improved transparency, to the release of Echos (the AvantGard Ecosystem Communication Service) which is a platform for corporate-to-bank and corporate-corporate connectivity, to the availability of market data via a portal called Market Map. Each of these innovations is an example of how we are helping our customers to streamline interactions with their trading partners – helping to drive transparency, efficiency and networking.

What trends are occurring in Asia-Pacific corporate treasuries in 2010?

Corporate treasury in Asia continues to evolve at a rapid pace. A few months ago we held a roundtable forum in the Philippines where we were able to conduct a brief study on the market. We are finding that there is an emphasis on risk management and centralised treasury. Companies are looking to gain greater visibility and control – especially as they are expanding out of their core markets and growing on an international front. Key topics that are emerging as a result include foreign exchange management and a stronger requirement for corporate bank communications.

Michael Fullmer spoke to FinanceAsia earlier this year and indicated that SunGard had plans to expand throughout Asia in 2010, particularly into China. SunGard has already completed the second level localisation of products for the Chinese market. What objectives are you currently working on in this region?

Specific to China, we continue to look at the market and our products in order to deliver the most value to our customers in the region. In addition, we have made significant investments in our resources for the region, including a 30% increase in our research and development group in China.

Recent survey findings, prepared by EuroFinance Research Services in collaboration with SunGard, have found that Chinese companies are looking to technology to support the expanded role of the treasury in an effort to support overall company growth, preserve capital and manage risk. Our report, Treasury’s future in China: Time to act?, illustrates the need for treasury departments in China to centralise and streamline treasury activities in order to improve visibility, lower operating costs and extend resources further.

Swift has recently acquired SunGard’s AMH. What is the significance of this partnership for the industry and for CFOs in Asia?

SunGard’s corporations business, AvantGard is focused on delivering solutions to help corporations optimise liquidity and mitigate risk. As part of this vision, we offer a platform for corporate-bank connectivity called Echos. Echos is a communications hub with an embedded Swift service bureau. It is built on the same underlying technology as AMH – which is a financial messaging platform recently acquired by Swift. By leveraging the same technology that Swift will be using for financial messaging, we now offer corporations the ability to more easily communicate with their banking partners via the Swift network.

What can companies do to ensure they have more visibility of their financial positions? How can this impact efficiency and business outcomes?

The biggest trend we see in corporate treasury is a move towards centralisation; by consolidating the function across the enterprise companies can gain greater visibility to cash and risk. Further, we are seeing companies take a much more proactive approach to receivables management. Credit risk reviews and automated collection practices are very much becoming a topic for the corporate treasurer.

Can you comment on the findings of SunGard’s global study on connectivity across the corporate commercial network, specifically in Asia-Pacific?

The study was a global study and the primary finding was that companies in the 5B+ range on average are working with 21 or more cash management banks. Many were working with hundreds. As a result, there is an even greater requirement today for corporate-bank connectivity. Further, we are seeing greater demand for value added services that can help corporations and banks work together. Examples include bank account management, bank statement aggregation and bank fee analysis.

What can we expect from SunGard in Asia in the remainder of 2010?

We continue to expand our resources in the region and look to localise our solutions to the market. We are also very focused on bringing our Echos solution with Swift connectivity to the market as we see a greater demand from our customers in the region to work more efficiently with their banking partners.