Smart treasurers save cash

The internet has changed the way treasurers do their jobs. Here three executives from Korea, the Philippines and Singapore discuss the internet revolution.

Byung-Chool Min, vice president of finance, Korean Air

The web has given Korean Air's finance department more control over its bank accounts around the region. It's also saving the company hundreds of thousands of dollars in reduced funding expenses and enhanced yields on pooled funds, says Byung-Chool Min, vice president of finance. "We were able to realise the benefits of centralizing our surplus funds in Seoul more quickly than we expected," he says.

Korean Air is using HSBC's online cash management platform for its account management and the bank's online foreign exchange trading platform for currency transfers. The finance department chose these products after asking several banks to demonstrate their web-based platforms and then settling on the one that would help it to achieve its goals.

These goals, says Min, were many. "First we wanted to concentrate funds from local offices to head office in a more efficient manner, which would allow us to enhance yields on surplus funds," he says. "But it was also important we gained better control over our accounts and the planning of our cash flows across the region."

Lastly Korean Air wanted to reduce bank charges by achieving economies of scale and saving on forex costs.

The web solution has been implemented since October 2004 and already it is a far cry from how the company used to manage its regional cash.

"Previously, we had no real time account information at head office which meant no control over the local bank accounts," says Min. "There was always a time lag in collecting account statements from local offices for monitoring purposes."

He says forex rates used to be booked over the phone via a broker or by "visiting a bank branch". The process was inefficient. "The HSBC platform gives us assess to consolidated and user-friendly reports showing exchange rates and repatriation amounts."

Min says the most difficult part of the transition process was convincing staff at headquarters and in the satellite offices to use the new systems. "At the country-level, the branches had maintained long relationships with their local banks so we had to convince them of the need and benefits of implementing HSBC's cash management programme," he comments.

He says this job was made easier because the switch to online was an initiative formulated at the top level of the company.

The next project on the airline's agenda is to implement an ERP system and then link this with HSBCnet and [email protected] This should achieve "a total automation of our back office operations", he concludes.

Emily Triunfo, finance manager, Jollibee Foods Corporation, Philippines

Jollibee Foods did not hesitate to make the switch from dial-up communication with its bank to web access. In fact, the Philippines fast food company has been using Citigroup's web banking platform for nearly five years, making it one of the first adopters in the country.

"As soon as we were offered the online banking system we enrolled in it," says Emily Triunfo, Jollibee's treasury manager, referring to CitiDirect. She says the system's biggest selling points were its multi-level security and the dependable technical support offered by the bank. Jollibee uses the system for cash management, payments and trade transactions.

"By going online we were hoping to reduce the time spent on processing payment instructions for local transfers and cross border transactions, opening of Letters of Credit and the settling of our trade transactions," she says.

She adds that the platform is saving time in two critical functions. "By assigning an authorizer to handle on-line approvals we have done away with routing documents to signatories and manually filling up forms," she explains. "On the cash management front, we can now view or download our cash balances and bank statements through the web rather than waiting for the mail to arrive. We are saving a lot of time in account reconciliation."

And Jollibee is not just saving time, it is saving money - on phone bills, on communicating with bank personnel to obtain balances and on man-hours spent doing the paperwork that was required to order a payment or open a Letter of Credit. The company is also saving money on bank charges and fees for cross border payments.

Triunfo says Jollibee trailed several bank systems and still uses the e-banking platforms offered by some local and foreign banks. "Ultimately though, we wanted something that was easy to navigate, had global reach and offered multiple functions," she concludes.

Other companies would benefit from making the switch to web-based services, says Triunfo. "They should look for something that has multi-level security and is dependable. Having reliable support from a team of technical people is very important. When we would encounter problems, the Citigroup people would guide us through the problem over the phone or they would visit our offices."

Jollibee is now centralizing some of its global treasury functions at head office in Manila, and Triunfo is hopeful that the web platform will be robust enough to power the shared services centre. "We're in the process of centralizing functions for our international operation like the approval of e-banking payments and the funding of investments. CitiDirect has the global reach to handle these functions."

Catherine Lau, finance controller shared services, National Healthcare Group, Singapore

Hospital operator, National Healthcare Group (NHG), uses two different web banking platforms - one for payments and another for receipts. Having two systems in operation gives the Singapore company a fall back and peace of mind, says Catherine Lau, the group's finance controller of shared services.

NHG uses Deutsche Bank's db-direct for payments and Citigroup's CitiDirect for collections. Db-direct was chosen because of its ability to interface with the company's SAP back office system.

"For us, the integration with our ERP was critical in our bank choice," says Lau. "We started using Deutsche Bank's Windows-based system back in 1999 when we moved to making GIRO payments. And we made the switch to the web in mid-2005, starting first with our payroll, and so far things are going well."

The next phase in NHG's transition will be to bring supplier payments online. "The accounts payable department handles supplier payments for all of the company's divisions," she says. "That means making about 600 to 700 payments per month to over 1,000 suppliers per company."

Lau implemented CitiDirect about a year ago and uses the platform to collect receipts from NHG's endowment and charity funds. She also uses the system for inter-company payments and receipts from patients and corporate clients. "We liked the double-layered security on CitiDirect," she adds. "Once we were able to map out which staff would have authorization on the system and then set up user IDs, it all fell into place. Now I don't have to remember so many passwords and I don't have to be at my desk to authorize transactions."

Online banking is saving NHG money. "Mostly in postage, but in other areas too," explains Lau, estimating that the company saves about S$15,000 annually for each of the six NHG entities that are handled in the shared services centre. "Now that my staff aren't putting cheques into envelopes they can spend more time doing financial analysis, and reconciling payments."

Lau says the switch to online has been worthwhile, but admits that the benefits of internet banking are not always obvious at first, particularly when a treasury is already automated to some extent. She says staff need to start thinking in real-time.

"Through Windows we used to get our reconciliation reports every 24 hours. Now they are available on the web in real time. You have to be diligent about pulling off the reports each day and matching up the payments." Lau agrees that the quality of reporting and the ability to slice and dice information is greater on the web.

In Singapore, the shift to online banking is a directive supported by the government. Companies in the country have been encouraged to reduce spending on cheque processing by opting for e-payments. Lau says this strategy makes sense, particularly for large companies. "I can see the benefits in online banking for larger companies because of the economies of scale that can be achieved, but for smaller companies the numbers might not add up."