Asia’s complex and competitive landscape means that corporate treasurers have to cope with a range of issues such as market, counterparty and price risk along with running efficient liquidity management across different asset classes and currencies. As a result, they need an integrated treasury workflow that streamlines processes effectively and provides them timely access to financial information across their enterprise. This is known to many as straight-through processing (STP). The ability to see all this business critical information in one place might be viewed by some as the ‘holy grail’ of treasury; however, many choose to turn a blind eye to the benefits of STP. Perhaps some don’t truly understand how it can help release time pressure within overworked treasury departments; worse still, others may dismiss STP as being essential only for complex global treasuries. But growing treasuries can and do benefit from STP, made possible with a Software-as-a-Service, or SaaS, Treasury and Risk Management (TRM) solution.
So what are the key benefits to treasuries in Asia implementing STP using a SaaS TRM solution?
1. Holistic view of cash & risk
Operating a large scale organisation in North America or EMEA often results in running the business in one functional currency, across one or two key banking relationships. On the far side of the scale, running a similar sized organisation across Asia will ensure operating across numerous countries and currencies, thus providing many challenges in terms of bank connectivity. Often in Asia corporates can have hundreds of banking relationships and thousands of bank accounts, frequently managed manually on spreadsheets. A treasury and risk management solution, delivered through a single-version SaaS platform, ensures end-to-end streamlined bank connectivity and visibility of cash across all countries and currencies.
2. Cash optimisation
Poor bank connectivity can be an obstacle to cash optimisation. Having all bank statements available in a single screen allows Asian treasurers to clearly see daily cash balances and expected cash flows at the touch of a button. More importantly, it also allows them to easily slice and dice information by currency, country or entity, helping to minimise hidden and idle cash, and identify trapped cash. Furthermore, SaaS TRM solutions can provide connectivity to market data across different asset classes such as FX, interest and commodity rates. Connecting with accurate market data makes possible automated reset of floating cash flows for settlement as well as better management of the bank portfolio.
3. Reduced operational risks
In a recent PwC survey of Asian corporate treasurers, 39% of companies rely on Excel spreadsheets as their main treasury management tool. That said, 52% of those companies surveyed are not confident of their cash flow forecasting processes. An increase in cross-border activity in Asia, through expansions into new markets as well as mergers and acquisitions, has resulted in ongoing change in treasury workflows and increased complexity of transactional banking operations. Operating through manual and disparate processes ensures delays in information and increases inefficiency. Managing high volumes of bank accounts across spreadsheets is extremely manual and all too often leads to operational risks associated with key person dependency and manual entry errors. In fact, a recent FP&A Technology survey reveals that the main challenge companies face in monthly reporting cycles is time spent identifying and correcting spreadsheet errors. Ensuring standard transaction workflows and processes through a streamlined end-to-end treasury solution not only guarantees a reduction in operational errors but ensures compliance from an audit controls perspective.
4. Faster, more strategic decision making
Information is power! Flipping the 80:20 rule is front of mind for leading Asian treasury departments with a focus now on spending 80% of time doing essential value adding analysis and 20% of time gathering information, resulting in improved and more strategic decision making. In Asia, where many companies are still using spreadsheets to manage their core treasury across a number of entities and locations, one could argue that by the time information is gathered, sorted and verified, figures are well out of date for effective decision-making. As mentioned above, using a streamlined end-to-end treasury process enables almost immediate transparency across the organisations’ global cash balances. This accurate and timely information allows for better decision making and enhanced risk management conclusions.
5. Global collaboration
According to a recent Management Today article, leading CFO’s are striving for ‘a bigger slice of the action’; not only effectively managing companywide cash and risk, but also becoming significantly involved in the organisation’s future growth strategy. In order to do so it is vital that they have transparency over their global transactional activities and optimise their cash to support these growth strategies. Limiting the scope of their STP initiative to the treasury function only may lead to missed opportunities for improvements in companywide efficiency. Having an all-encompassing approach to STP can ensure enhanced automation and global collaboration amongst treasury, risk, procurement and accounting groups.
Leading Asian companies are continually evolving their treasury departments, embracing straight-through processing initiatives and working towards a more connected and streamlined organisation in an effort to overcome the challenges often presented when working with multifaceted Asian banking structures. Has your organisation embraced the move to STP? Find out how other Asian treasury departments have implemented STP. Contact us on firstname.lastname@example.org.