by John Laurens, Head of Global Transaction Services, DBS Bank
The strong emergence of Asian countries on the world stage is creating new competitive dynamics, technology innovation and trade patterns, such as the growth of south – south trade routes. This is impacting business models, growth strategies, trading practices and cash management amongst all businesses operating in Asia and beyond. At the same time, the level and speed of change in financial market infrastructure in many Asian countries, from new clearing systems to currency, tax and trade regulations, is creating complexity but also opportunity for treasurers and finance managers doing business in Asia. For example, the journey towards RMB internationalisation is continuing apace despite the current market correction, and developments such as two-way cross-border sweeping are increasingly driving discussions with corporates.
Addressing treasury objectives
In this environment when preserving margins and targeting investments is more important than ever, the core fundamentals of treasury management remain the same: to manage risk and liquidity, and optimise financial and operational efficiency and control. However, the way in which treasurers go about achieving these objectives is changing. For example, as their role and influence has extended more widely across the enterprise, treasurers are in a better position to shape the working capital agenda, which has a significant knock-on impact on liquidity and risk objectives.
Consequently, working capital discussions with customers have become more focused. No longer does working capital management involve simply reporting on working capital metrics e.g.,days payable outstanding (DPO), days sales outstanding (DSO) and days inventory outstanding (DIO). Instead, customers are increasingly taking advantage of DBS’ industry benchmarking services to understand their relative performance across a range of cash and trade-related activities. In addition, our in-depth diagnostics enable customers to identify inefficiencies and opportunities for enhancing performance against key working capital metrics. This is the result of considerable investment in sophisticated technology, rich data and expertise: for example, we have invested in training over 2,000 of our customer facing executives trained in working capital advisory to support customers and inform our solution offerings.