Cash Management and Global Recession
The global recession changed the thinking of corporates and
individuals and today unlike before cash management plays a key role in
any company as companies as well as individuals are feeling the pinch of
Head of Global payments and Cash Management HSBC Palan Rajanathan
spoke on cash management and its benefits to the Bank as well as the
customers. Here are the excerpts of the interview
What is Payments and cash management
HSBC's Global Payments and Cash Management team is committed to
helping companies realise working capital efficiencies management and
improve visibility and control over their cashflow.
As cash is the lifeblood of any company, optimising internal
processes is key to the long-term success of any business.
HSBC works alongside Fortune 500 multinational companies, top-tier
local corporates, middle market companies, SMEs, financial institutions
and government bodies to provide customised integrated payments,
receivables, and liquidity solutions.
In addition to offering customers access to on the ground expertise
in 86 countries, as one of the largest transaction banks HSBC has
various systems that can match with the different technology platforms
of our customers.
What does it mean for the bank?
Cash Management continues to be a core component of HSBC's global
transaction banking business.
The financial markets turmoil has enabled us to deepen our
relationships with our clients as we have worked together to review and
improve cash and risk management policies to take advantage of current
Our commitment to partnering with clients to streamline business
processes and realise efficiencies has never been more evident.
In Sri Lanka and across other markets, companies are paying greater
attention to cash management and treasury services and we expect this
How does it benefit the customer?
The long term success of any business depends on efficient management
of cashflow and working capital. Partnership with a trusted banking
partner that has the range of cash management solutions required to
manage collections, payments and liquidity is therefore proving to be
For example, HSBCs Payables Financing is a unique proposition that
addresses customer needs in relation to their payment cycle, namely
their order to cash requirements.
HSBC understands that maintaining strategic relationships, managing
risk and developing a competitive edge are key to cash management.
What is a consultative approach to cash management?
HSBC believes engaging clients and understanding their needs is where
the differentiator lies.
HSBC has pioneered a consultative approach to cash management,
ensuring a more collaborative process in which the customer needs are
the main focus in delivering tailor made cash management solutions.
In addition, HSBC Global Payments and Cash Management is not focused
on selling a particular product or service.
HSBC offers an integrated approach to ensure all aspects of clients'
"receivables", "payments" and "liquidity" processes are addressed,
rather than just attaching individual products to each area.
By adopting an end to end focus, we are able to nurture a holistic
understanding of clients receivables and/or payments requirements,
thereby offering a full service solution, rather than merely a virtual
account product or a branch collection product.
In terms of payments how is HSBC assisting companies Under the
current environment, customers will need to put additional focus into
improving their working capital management to remain competitive.
As it stands, optimisation in working capital management is becoming
particularly tough with the recent credit crunch.
Most companies are still doing their local payments via manual
When we show companies the time and effort spent on reconciliation
and in manual cheque handling they have been inclined to move towards
bank to bank electronic transfers (SLIPS). The process efficiency
achieved releases capacity for finance staff to work on core functions.
An alternative option would be for companies to take the cheque
Outsourcing facility where the bank prints and delivers the cheques.
This takes out The administrative workload in cheque handling at a
Tools that could be used to generate further efficiency include sms
advising and e-mail advising to suppliers which minimises incoming
payment queries from suppliers.
There is also an increasing importance put into the condition of
strategic suppliers. HSBC Payables Financing demonstrates our intention
to support the strategic intentions of our customers. Payables Financing
enables buyers to provide early payment to key suppliers, thus helping
them to convert their outstanding payables into cash more quickly.
Payables financing enables these companies to benefit from
preferential interest rates whilst enabling them to convert their
outstanding payables into cash more quickly. What are the emerging
trends Companies are demanding a greater amount and higher level of
information from their banks.
The challenge is to be able to effectively and efficiently convert
the sea of data into a useful and well structured stream of information
that supports the payments process and provides information to
facilitate reconciliation. ERP integration has been a significant
feature of the cash management industry. HSBC has integrated with a
number of different ERP systems and companies are increasingly looking
for integrations with even basic accounting systems.
The payment files are extracted from these ERP systems to be uploaded
to the bank and reconciliation reports are integrated back to the ERP to
Shared Services centres enables the streamlining of an organization
functions to ensure that they deliver to the organisation the services
required effectively and efficiently.
Shared services means the centralisation of similar activities in one
location and running these service like a business unit, delivering
services to internal customers at a cost, quality and timeliness that is
better than other alternatives. HSBC is highly experienced in working
with Shared Services Centres and can add significant value.