Mon, May 04, 2009 page11

• INTERVIEW: HSBC says cash still king, in spite of revenue drop

  In a downturn, companies look to cash and treasury management to optimize their operations, which has, in return, brought in business for banks. John Laurens, head of HSBC’s (匯豐銀行) global payments and cash management for the Asia-Pacific region, talked to ‘Taipei Times’ reporter Joyce Huang on Wednesday about how effective cash management in a downturn requires closer contact with customers

  • By Joyce Huang / STAFF REPORTER
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  Taipei Times (TT): Is cash management still a big part of doing business for companies, even in the face of declining revenues?

  John Laurens: Cash is the lifeline of our customers’ businesses. That means cash is king. That’s never been truer than today with focuses on working capital management, cash and treasury management. Clearly, all the important aspects of cash management are around giving the feasibility of cash, managing it and making sure it’s secure. There’s also how one manages its operation efficiently, [whether its business is a big multinational or small-and medium-sized.]

  TT: What challenges face businesses, small or large, in terms of cash management?

  Laurens: In times of rapid economic growth, concerns or focuses are around how you manage growth in terms of sales or extending credit lines to customers and so on and so forth. In times of more economic challenges, the focus is around optimization of operations, cost efficiency, reducing cost and resources per transaction. The same applies regardless, in times of growth or economic challenges. It’s just the focus may vary. The beauty of cash and treasury management is that it clearly applies in both instances. A very important aspect of what was happening to the financial industry globally in the last six or seven months was that more companies paid more attention to cash and treasury management, [which is] no longer taken for granted. The crisis in the last few months has really elevated cash management in the minds of customers ... The importance of cash management, working capital management and all the linkages that we provide to our customers, suppliers making payments and our customers’ customers in terms of collecting money on their behalf.

  So that’s actually been quite a stimulus for the business as companies looked more focused on strategic manners. The business has never been stronger. The current economic situation is actually proving to be quite beneficial in terms of getting customers’ attention on the importance of cash management.

  TT: Can you give us an example or two of how companies have begun to appreciate cash management in the way you have mentioned?

  Laurens: An interesting example [in Taiwan] would be Yuen Foong Yu Paper MFG Co Ltd (永豐餘造紙), which is looking specifically into data operation efficiency. One of the things they view from HSBC is liquidity management, which is helping them better manage their internal cash flow and using HSBC Net, our internet banking platform, to manage that more effectively. We’ve [also] got a lot in retails [including several] large highly recognized US branded consumer goods companies. Nestle in Asia Pacific was looking for help to re-engineer their treasury cash management processes. One of the things they were looking to do was to use SWIFTNet infrastructure, which actually delivers data to and from the bank.

  But the important thing is they want to use a new standard in the marketplace. And the beauty of that is it is an open standard which means that corporate systems can talk to one other, corporate systems to bank systems and vice versa. We were able to — with our technology — connect products and handle those formats for them, which enabled them to centralize treasury and financial management processes.
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