The Perfect Treasury

Backed by the latest IT advances, treasurers of multinationals in Asia leave nothing to chance.

On any given day, Cyrill Scholer does a balancing act that would make a circus performer proud. As vice president at ABB Treasury Center Asia Pacific in Singapore, Scholer juggles as much as $3 billion a month between the various Asian operations of the Swedish-Swiss power and industrial equipment giant. On one day, he may be insuring that cash-short subsidiaries are internally funded from the surplus of subsidiaries elsewhere in the region. On another, he’ll be checking the foreign exchange commitments of his Asian units, working with them to hedge their risk with forward and options contracts.

Scholer knows his responsibilities are enormous, and he’s not just referring to the volume of cash he handles everyday. “We consider our operation as a profit center, and from a group profit contribution point of view, we consider that to be extremely important to ABB’s investors,” he says. As Scholer knows, the importance of the treasurer’s role goes beyond number crunching for day-to-day cash needs. Like CFOs, treasurers nowadays are increasingly aware of the implications of their work in creating shareholder value and maintaining good corporate governance.

And why not? Take any company in the region that was humbled since the 1997 financial crisis, such as Asia Pulp & Paper or Philippine Airlines. One of the root causes of their troubles was poor financial risk management, either seeking short-term funding for long-term projects or overexposure to foreign exchange or both. And then there’s Enron’s disastrous off-balance-sheet transactions. In the wake of that scandal, every treasurer on the planet now knows how much is riding on her or his ability to manage risk.

In sum, today’s treasurer sits in the hot seat. “While most treasurers would say their job is still to protect the assets of the company, the assets themselves have changed,” says Tarek Anwar, director at Bank of America in Singapore, in an article called “The Evolving Role of Treasurers.” “Assets are no longer short-term tangibles such as cash,” says Anwar. “They could well be construed as anything that relates to creating value for shareholders — accounts receivables, inventory, production cycles, intellectual property,” he says. Add to that off-balance-sheet obligations such as forward contracts, commitments to purchase assets in the future, and even debt guarantees.

Tools of the Trade

The treasurer remains the CEO of cash flow, the most prized metric of any company’s financial health. And the key to managing that metric is information: knowing a company’s financial position and risk exposures at any given time. Today, backed by fast-evolving technology, a treasurer has the ability to know more, to do more, and decide more independently. Through enterprise resource planning (ERP) systems, information about a company’s operations, supply chain and accounting are easily accessible.

Even better, automated cash management processes are already commoditized. ERP modules that power shared service centers are pervasive and getting cheaper. Oracle, for example, just cut the price of its business management software by 75 percent due to fierce competition. Those who do not want to be bothered with running their own shared services can outsource the process to banks, and even accounting firms.


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