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The Bottom-Line Benefit Of Strategic Treasury

December 19, 2014
Originally published on GFMag.com

AFP Exclusive

Global Finance sat down during the annual AFP conference in Washington in early November  with Diane Reyes, global head of payments and cash management, HSBC.

Global Finance: What did you hear at this year’s conference that is new and interesting?

Diane Reyes: While it’s not necessarily a new discussion, the ongoing trend to move towards shared service centers for corporations to consolidate their payables and receivables is something I’m hearing a lot about. Similarly, customers are increasingly talking to us about efficiencies and working capital, how treasuries can standardize their transmissions. And there is a focus on how customers can make the best use of their liquidity through truly efficient cash management.

GF: Why is this theme so prominent today?

Reyes: Since 2008, customers have recognized the value that effective cash management delivers to their organizations. The effect of greater efficiency has been twofold:

Firstly, as companies realize the earnings per share benefits of effective cash management, they want to continue to deliver this value.  In essence, why would a customer revert to the old, less efficient model for managing their cash?

Secondly, with the ability to influence the earnings per share, the treasurer has become more strategic. One very tangible way a treasury can contribute is to take full advantage of its funds before the company draws down on a bank line or borrows on the capital markets. For example, by putting all accounts in a liquidity structure so that the money is consolidated. Liquidity is so central also because banks offer a global capability that allows companies to look at cash in corners of the world that they didn’t have access to before. This sort of change can make the treasurer into a strategic adviser to the CFO, really adding value to the role.

In terms of liquidity, we are working on deploying technology that we can bring to the clients quickly… We’re developing a consistent platform called Global Liquidity Engine so that clients that use it in the UK can also use it in Hong Kong, the US or Latin America.

GF: How is technological innovation impacting your business?

Reyes: Technology allows customers to do things they haven’t done before. Banks committed for the long run have invested in technology because clients want to do business with banks that are easy to do business with, that use the latest commercial innovation to improve their day-to-day business. This is not the future, it’s the present… We see corporate customers embracing mobile technology in just the same way as retail consumers do.

GF: What areas are the most dynamic?

Reyes: The use of our mobile application, HSBC Net Mobile, has increased tremendously, in both the number and size of payments. Corporates are becoming comfortable with mobile because they know that we employ the same security systems that work online. Additionally, a younger generation of professionals has become more advanced in treasury positions. These people never go to banks to make deposits, they do it all through the phone.

We are also working on mobile collection: if you think of branded consumer companies in countries like Mexico or Indonesia, they have drivers dropping off their products to smaller stores and collecting cash, maybe some checks, which they keep in their trucks. Now the storekeeper has a phone, the driver has a phone and we set them up with mobile collection. There are two big savings: drivers don’t get robbed and, instead of waiting for them to go to the bank every third day, it’s now the same day.

GF: What is the outlook for HSBC?

Reyes: Our management board committed earlier this year to new investment in Payments and Cash Management, one of four areas targeted for growth by HSBC. To grow HSBC’s transaction banking business revenue over the next five years we are investing in people, products and innovation. We will invest in products to make it as easy as possible for customers to accomplish what they need to support their business. And finally we want to keep innovating around digitalization on mobile platforms.

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