As Beijing tightens its monetary policy, restricting bank loans and raising interest rates, many companies are searching for new ways to maximize their returns through cash and treasury management. Yet even in more stable times, optimizing capital inflows is no small task.
There was plenty of financial advice on offer at “Corporate Treasury China 2008,” an event organized by CHINA ECONOMIC REVIEW and sponsored by Kingdee Software, which took place in Shanghai in late April. In the conference’s first session, Wu Xuedong, vice president of Beijing Capital Corporation, said the first step of mastering capital management is hiring the right people for the job. He noted that effective CFOs may not fit into a standard managerial mold.
“Good capital managers are not usually good business managers,” he said.
Capital managers must have an excellent understanding of the company’s nature and operating activities, and also demonstrate expertise regarding foreign exchange, the regulatory climate and financing options. The efficiency of a company’s treasury management is vastly improved if the decision-making process is streamlined.
“Treasurers must be fully entrusted to make capital management decisions,” said Quek Chaw Ming, Standard Chartered’s head of supply chain finance. “The whole company has to be moving in the same direction.”
William Yang, treasury manager at Schaeffler Group laid out ways that companies can increase their bottom lines by centralizing cash management. In addition to restructuring bank accounts, Yang said firms should explore implementing regional cash pools to better manage liquidity.
Later on, Janet Ming, Asia treasury director at Anheuser-Busch (A-B), gave a real-life example of effective cash pool management. When A-B was setting up its joint venture with Harbin Brewery, Ming said, money pooled from the company’s other joint ventures was a vital source of capital. But she stressed that A-B ensured each subsidiary remained accountable for its own finances.
“We did not want to become an ATM for our subsidiaries,” Ming said.
