Asian companies leading the technology race

Asia’s new breed of multinationals are demanding the same capabilities as their Western peers.

Amazing as it may sound, some Asian companies still rely on paper-based systems for managing payment. But the good news is that a lack of technology usage among Asian companies is now allowing them to leapfrog their Western counterparts. By not being burdened with outdated technology, they are less constrained when it comes to upgrading their platforms. And they are able to implement the most up-to-date systems available on the market. This is especially true for internet and mobile technology.

“For Western companies it is a case of deciding whether it is worth upgrading legacy systems to enable services to be delivered via mobile or web,” said Richard Davies, Asia-Pacific director of the global products business at Logica, a UK-based business and technology services company. “In Asia-Pacific, on the other hand, many are implementing new back-office systems anyway, and it is just a matter of deciding whether to include cutting edge technologies as part of that.”

Mobile banking and solutions are particularly popular for businesses in rural or less developed regions in emerging countries, which are unable to access branch-based banking but can take advantage of a relatively advanced mobile network. Although most if not all of these entities tend to be small businesses, the fundamentals of cash management remain the same.

“Asian companies are typically very open to bringing in new technologies. We have seen this in play during the last decade in telecommunications, for instance, where the growth in mobile and internet adoption has surpassed Western counterparts,” said Blaik Wilson, Asia-Pacific solution consultant at Reval, a corporate financial risk management software-as-a-service (SaaS) provider. “Beyond the tremendous economic growth experienced in Asia, the cost of entry into new technologies tends to be lower than the older, infrastructure-heavy platforms, and this has made new technologies more affordable to Asian companies.”

Raising the profile
Technology typically plays three key roles within treasury, explained Wilson. These are process automation, workflow controls and duty segregation, and advanced analytics enablement. “Treasurers who have implemented technological solutions find they have more time to invest in strategic analysis of the business, such as liquidity analysis, refinancing and hedging policies,” said Wilson.

Put simply, treasury technology helps to drive improvements to the bottom line and essentially extract more from existing revenue streams and working capital.

All things being equal, rather than raising the profile of treasury, technology protects its reputation within a company. “No one notices when all payments are made on time, but one major slip up, such as payroll not being delivered on time, can hit the organisation hard,” said Davies. “Developing excellence in payments can have a strong reputational impact, especially by avoiding these types of negative issues.”

Seeking transparency
The number one priority of these next-generation MNCs from Asia is to improve visibility of their cash flows and balances across their operations. According to Wes Bernard, Asia-Pacific executive vice president of SunGard’s AvantGard, transparency is “making sure you have the right information at the right time”. As corporations have to deal with an increasing number of banking partners in multiple countries, there is a need for more efficient and less costly connections. At these times, the drive towards automation can come down to establishing shared service centres or payments hubs.

“Treasurers of large or growing organisations can look to consolidate their payments processes into a single unified payments factory,” said Davies. By bringing multiple processes together into a single service, essentially centralising the treasury function of a company and its subsidiaries, treasurers can achieve greater visibility and control over cash flow and reduce risk.

Bernard said one of the challenges of implementing treasury technology is the resource constraint. This gives rise to cloud and web-based SaaS financial applications that give Asian companies the flexibility, through the internet, to utilise and benefit from technology for processes on a pay-per-use basis. “Asian companies are definitely well positioned to implement new technologies such as cloud computing solutions without the overhead of massive third-party system integration and process overhaul,” said Wilson.

There is also the cultural barrier of implementing new technology. For companies that have senior management who are accustomed to paper-based and less sophisticated processes, making the move to an automated system may not be the easiest task. In this situation, education becomes a crucial step in the implementation process. “The rollout of a complex new treasury solution may be hampered by those controlling organisational ‘local fiefdoms’ fearing a loss of control and treasury departments need to ensure that they have free reign to implement systems in a way that benefits the company as a whole,” said Davies.

While relying on manual processes and spreadsheets is still common in Asia-Pacific even today, one of the things they can’t do is replace the need for a modern treasury management system. “The reason for that is because they lack many controls and functions and most importantly reliability that you can acquire from those types of solutions,” said Bernard. Manual processes must be left behind as Asia’s largest companies move onto the next stage of their expansion journeys and become the MNCs of tomorrow.


This story was first published in the Corporate Treasury Yearbook 2011 supplement to the June 2011 issue of FinanceAsia magazine.

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