There is no universal approach to treasury policies or set-ups, industry executives share at a gathering organized by Standard Chartered and facilitated by The Asset on the topic: Unlocking Liquidity. Successful treasury operations are not dictated by a single playbook but require adaptable strategies tailored to specific company needs and market conditions.

This diversity was evident in the varied insights shared across key themes, including organizational structures, liquidity management, foreign exchange and funding, and the impact of emerging technology such as artificial intelligence ( AI ). As one participant notes, “everything's different. No one-size-fits-all. But you know everyone's looking at what the next opportunity might be as well”.

With the participants operating cross-border businesses, the approach to developing their treasury model often involves several steps. “In fact, I have had this conversation with several banks. It has to be a phased approach. In the first phase, for security reasons, we need to have visibility of whatever cash we have. Then we move on to centralize certain functions like FX, cash management, to achieve economies of scale and manage risk,” relates Jacob Li, regional treasury director, Chint Global International, the offshore arm of the Wenzhou-headquartered provider of smart energy solutions.

It has to be a phased approach. In the first phase, for security reasons, we need to have visibility of whatever cash we have. Then we move on to centralize certain functions like FX, cash management, to achieve economies of scale and manage risk.

Implementing standardized treasury processes across markets, while accommodating necessary local nuances, is crucial for achieving centralization and harmonization, another treasury goal shared among the treasury professionals. Control mechanisms, such as requiring treasury approval for opening new bank accounts, were cited as vital for maintaining process standardization.

It is sometimes easier said than done. “You will have multiple banks located in one country not because you want but it's legally or statutorily required by the local authorities,” adds Phek Leng Hwang, senior director, treasury, at DHL, the global logistics and courier company.

MooMoo Financial Singapore, a subsidiary of Nasdaq-listed fintech Futu Holdings, faces the unique challenge of managing its own in-house treasury funds versus client funds, which means additional work to ensure segregation of funds.

Unlocking trapped cash

A ubiquitous challenge discussed was the management of trapped cash. “When you go to Europe, payments are simple. You can just transfer from one place to another. You don't need paper,” shares Arijit Deshmukh, regional treasurer, APMEA, at Kerry Group.  “When you go to China, it's all about documentation. The regional treasurer will be very important to bring standardization as well as to understand the local nuances.”

While traditional cash pooling methods remain common, participants shared strategies that work for them. “For me, it will be more about how do I transfer my funds to HQ if possible. For countries like Singapore, Australia, and New Zealand, there are no issues,” points out Ching Eei Khoo, head of treasury APS at Evonik ( SEA ), the German publicly-listed specialty chemicals company. “We have cash pooling for certain currencies and then we have an in-house bank. I am managing more the ones with restrictions.”

FX and funding practices also vary significantly. Effective FX management often necessitates a lot of communication from the regional down to the local level to inform on hedging decisions, such as should it be a local hedge or should it be a notional hedge. Overcommunication was identified as really key in managing this well.

Companies tend to be flexible as well in their approach to funding. “Two to three years ago, predominantly, most of our working capital funding was captured out from Singapore because the US dollar was very cheap then. Even in China, some of the related companies in China depended on us to get their funding offshore,” says Mylene Tay, head of treasury at Rongsheng Petrochemical, the largest private petrochemical company in China. “We could use either cash pooling or trade finance to fund the group. But since November 2023, the whole climate changed. We were one of the first few corporates to identify this, work as a team, to switch funding. Now, 100% of the working capital funding is from China in RMB. We prepaid all our US dollar loans.” 

Two to three years ago, most of our working capital funding was captured out from Singapore because the US dollar was very cheap then... But since November 2023, the whole climate changed. We were one of the first few corporates to identify this, work as a team, to switch funding. Now, 100% of the working capital funding is from China in RMB. We prepaid all our US dollar loans.

Tech techniques

The potential of emerging digital assets as alternative solutions for trapped cash, specifically stablecoins and CBDCs, was also of interest. Some companies are already collecting funds in crypto in certain markets, though these balances are typically converted to fiat money on the balance sheet. Further extending this, tokenization and NFTs were mentioned, with some companies even paying their suppliers in NFTs, a trend that one participant feels is going to pick up.

Distributed ledger or blockchain technology was highlighted for its potential to facilitate liquidity management techniques, such as moving money on a real-time basis. “From a corporate perspective regarding the blockchain technology and the bank moving it between countries, that is the one that we want to move fiat from here and have fiat appear on the other side,” opines Lucas Wong, zone treasurer at L’Oreal, the French cosmetics company. “It’s best that we do not need to be too much involved in the details and in the additional setup. For example, in the case of Straight2Bank, if it’s integrated within the same portal and we do the transfer and instead of going through Swift, it would be on the stablecoin. On Swift it will take three days, but with stablecoin, it will be three seconds.”

Technology, and specifically AI, was a major focal point, though perceptions varied. It was acknowledged that AI means different things to different people. Simple, yet impactful, applications of AI were discussed, such as using AI to translate Chinese documents into English so that subsidiaries can read through documents very quickly.

Another example involved employing technology to even do things such as checking the beneficiary details in the payment file before it actually gets processed. These examples underscore that AI's role in treasury isn't limited to complex, high-tech applications but includes solutions that basically allow the treasury professionals to spend less time doing things that are very menial, allowing them to reallocate saved time to more high-value transactions or high-value work.

Data integrity is paramount for AI in treasury. “In treasury what I feel is that AI is coming into play. But data integrity is a must. Banks’ websites can give you the cash flows very quickly. But the problem is that if your flows are not into the same bank, then you need to consolidate it. If your data is not good, then your answer is also going to be a bad one,” believes Deshmukh of Kerry Group.

Data integrity is a must. Banks’ websites can give you the cash flows very quickly. But the problem is that if your flows are not into the same bank, then you need to consolidate it. If your data is not good, then your answer is also going to be a bad one.

Steve Lam, finance director at Moomoo Singapore, shares another use case. “We leverage AI to enhance operational efficiency and scale support across our growing client base of over one million users. By integrating AI-powered tools into our customer service ecosystem, we are able to respond to client enquiries swiftly and accurately, ensuring a seamless experience.”

Beyond client engagement, Lam continues, AI within its treasury management system is to oversee and optimize fund allocation across multiple banking partners. “This allows us to maintain real-time visibility and control over liquidity, improving both risk management and operational agility.”

And Moomoo’s approach reflects what he cites as the company’s “broader commitment to embedding intelligent automation across the business, driving smarter, faster, and more scalable solutions for the future of investing”.

Angel Pua, regional treasurer at KLN Logistics S&SEA, clarifies that the company is leveraging business intelligence tools for data analytics rather than AI now. “With our harmonized accounting system, we can generate dashboards and extract valuable insights.”

We leverage AI to enhance operational efficiency and scale support across our growing client base of over one million users. By integrating AI-powered tools into our customer service ecosystem, we are able to respond to client enquiries swiftly and accurately, ensuring a seamless experience.

Nevertheless, there is an increasing openness to embracing AI in the future, a shift from the hesitation observed four to five years ago due to concerns around risk, compliance, etc.

Potential future applications for AI in treasury identified, in addition to helping with cash flow forecasting, include providing tailored impact analyses of market or regulatory updates relevant to treasury, essentially deciphering what these market updates mean for treasury.

While the belief is strong that AI is definitely here to stay, participants emphasized the indispensable need for a human element to it. A suggested balance was an 80% AI, 20% human factor ratio to maintain the essential human touch to any conversation or any decision.

Discussions also touched upon the ambitious vision of a utopian world where everyone is connected to one single platform. Corporates, banks, shipping companies, and port authorities can monitor not just fund movements but also the goods themselves. However, significant challenges are noted, particularly concerning responsibility for such a platform – is it the government? is it banks? is it corporates?

Overall, the emphasis on policy control, robust systems, and effective risk management provided a sense of confidence among the participants at the discussion forum, suggesting preparedness to navigate external challenges and explore opportunities, including the strategic use of technology.

Photo: Standard Chartered's client roundtable on "Unlocking Liquidity" held recently in Singapore.