Q&A: Treasury Challenges in Asia
Q (gtnews): Could you outline your organisation’s global cash management structure in terms of cash management techniques, treasury headquarters and banking relationships, etc?
A (Craig Busch, group treasurer, WorleyParsons): WorleyParsons is an Australian listed company with 27,700 personnel operating in 105 offices and 34 countries. We are the leading professional services provider to the energy, resource and complex process industries. All the cash management, treasury and bank relationships are centralised in Sydney. We operate a number of cash concentration and sweeping facilities.
A (Sue Lee, regional treasury manager, Danfoss): Treasury operations are centralised at the headquarters in Denmark, of which I am part of the team. There are several cash pools in Europe and the US with several banks, and the treasury HQ has direct access to them. In the Asia Pacific, there is a Chinese yuan (CNY) cash pool for China and I am looking into setting up a US dollar cash pool for the same group of entities in China. In addition, a separate multi-currency notional pool is under-studied to manage the liquidity in some of the Asian entities and the treasury headquarters. The currencies that we consider difficult to centralise are left to the local finance teams to manage and operate.
In terms of banking relationships, we aim to have as few banks as possible and all global relationships start with the headquarters in Denmark. In the Asia Pacific region, we choose to have one core bank supplemented by one or two local banks if needed, especially for larger countries such as China and India.
Q (gtnews): What does your typical day as a treasurer involve? Could you describe some of your key responsibilities?
A (Busch): A typical day involves ensuring working capital and cash levels are appropriate, monitoring financial markets and ensuring day-to-day treasury activities are being performed effectively and efficiently. WorleyParsons operates in countries with varied financial market and currency regulations so it is important to stay up to speed with changing market conditions. Key responsibilities involve debt negotiation and management, financial market structuring and effective management of cash and debt levels.
A (Lee): If I am not travelling, I start work at 7am with plenty of reading (usually research sent to me by banks). I don’t have a daily routine but I do have a monthly routine of compiling the cash flow and FX risk of the entities in Asia Pacific. As the role of the treasurer in Asia Pacific is new, to be treasury focused we also concentrate on strategic planning supported by a roadmap to achieve the following goals:
Q (gtnews): What are your main challenges? For example, what’s on your treasury wishlist?
A (Busch): The main challenge is keeping our offshore centres informed and ensuring our systems can achieve straight-through processing where possible.
A (Lee): Internally, to promote the treasury function as an active business partner within the organisation. It is far from just a cost centre and has much value to add to the organisation. Externally, to ensure that our global or regional organisation structure is understood by our banking partners, especially the local ones.
Q (gtnews): Are there any tax, legal or regulatory issues that you need to be particularly mindful of when it comes to the company’s cash management?
A (Busch): As we deal in over 30 countries, we see a variety of legal and tax regimes as well as various FX restrictions. Treasury works closely with the international tax and legal teams to ensure we achieve the appropriate outcome.
A (Lee): Plenty. They exist everywhere, be it managing cash flow, foreign exchange payment or funding, which ultimately links to cash management. The worst challenge is ‘unpredictable’ change or a new rule introduced overnight – this is a nightmare for us corporates.
Q (gtnews): What steps are you taking in 2008 to make your treasury more efficient?
A (Busch): To ensure our treasury team is more efficient, we have appointed a new recruit to specifically increase the productivity and efficiency of our treasury systems.
A (Lee): Leading a good team (though not reporting to me) to achieve a better cash flow forecast; execute an undisturbed funding plan (supporting business is our top aim); ensure two (CNY and USD) well-run cash pools in China; completion of multi-currency notional pool for Asia Pacific linked to Europe; and to develop a good banking partner relationship.
Q (gtnews): If you weren’t a treasurer, what would you be?
A (Busch): I was a banker for 20 years so I guess I would say I would be a banker.
A (Lee): I would go back to being a banker or full-time student or entrepreneur – any job that stimulates me.