Transcript
Speaker: This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
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Speaker: Thank you for joining us today.
Speaker: Welcome to the new normal, adopting emerging technologies in the current pandemic and beyond webinar.
Speaker: The agenda for today's discussion moderated by David Koh, Head of Global Liquidity and Cash Management, HSBC Singapore, with our esteemed panelists today, Joseph Chua, Lenovo's Executive Director at Treasury.
Speaker: And coming to you, Joseph, perhaps some experience sharing for Lenovo,
Speaker: How have you guys adopted technology for your treasury and finance workflows?
Speaker: Well, for us, we have been trying to automate or to depend as much as possible over the internet.
Speaker: So take, for example, we have been using internet banking for a very long time and we can't
Speaker: Recently, because of the COVID situations, looked towards automating even the internet banking through APIs between, let's say, our SAP, which is the ERP system that we use to actually connect from our SAP to produce the API for the payment through our internet banking platform.
Speaker: So in addition to that, some of the experiences that we had was that in the past, we had to have wet signatures and
Speaker: You know, banks love to have wet signatures and even weakness and so on.
Speaker: With the COVID lockdown, something that we can't execute.
Speaker: So we actually push along the line to have electronic signatures being accepted.
Speaker: And today, I think within, say, Singapore, Hong Kong, or even the Asia region, it is pretty well accepted.
Speaker: And it was very surprising a couple of weeks ago that we actually had a bank in India that accepted on digital signatures.
Speaker: Of course, they still insist followed by the original, which is fine.
Speaker: At least we can get transaction going on.
Speaker: So our push has been always to go electronic.
Speaker: And one of our initiative, which coincidentally we tried to do it before COVID was to build an electronic platform to bring
Speaker: both AR and AP into a platform where the banks will come in and do, let's say, receivable purchase from the lease of assets that we lease in the platform and for them to look at payments where they want to look at supply chain financing.
Speaker: So we're going to be open up to that, to all the banks and see what they like to do.
Speaker: And with that electronic platform, it just cuts away all the manual and paperwork associated with it.
Speaker: Wow, great, Joseph.
Speaker: Sounds like you guys have made a lot of progress there.
Speaker: How are treasurers like yourself leveraging data or any sort of form of automation and AI to make better decisions around cash flow and just running a better business?
Speaker: Yeah, I mean, we gave up trying to forecast in interest rates or FX rates anyway.
Speaker: So we leave that to the professional, which are the bankers.
Speaker: So what we do is really very much to the basic, and that is to say,
Speaker: how do we forecast more accurately?
Speaker: And everybody talks about big data, data mining, you know, AI and so on.
Speaker: So the basic stuff is to say, okay, how do I get my cash flow forecast accurately?
Speaker: Because that is key.
Speaker: That is key to the liquidity and the whole working capital cycle.
Speaker: And even, you know, you identify and say that you do need longer term capital or let's say capital market debt.
Speaker: instruments like bonds and so on.
Speaker: So we started a process to look through years of data and pulling it.
Speaker: You don't need a lot of architects, but you need to have the analysts that understand, you know, this data and how do they pull them together and, you know, we build a certain logic that you are going to use it to predict or to forecast what would be, let's say, for example, for the next one, two years, what would be the cash flow?
Speaker: And of course, you need the input as to the business growth or, you know, a pessimistic view, an optimistic view and so on.
Speaker: Whatever view that we want, it will lead to that.
Speaker: And we actually mine the data to say that, you know, if you have a billion of revenue, you know, if let's say, for example, you have a net margin of 20%, what will be the cost, the expenses, the payment out and so on.
Speaker: So we are drilling this.
Speaker: And one of the things that we discovered was that
Speaker: when pulling the data out of bank statements, actually the bank statements that you receive today doesn't have sufficient information.
Speaker: You need more detailed information on, let's say for example, invoice level
Speaker: So that when you do forecast, you know this particular supply and for what type of invoices and what type of expenses, which will give you better results.
Speaker: You know, of course, today, if you have a high level, you can say, okay, you know, I'm going to pay our expenses and my payment run are weekly.
Speaker: And it gives you a certain degree of reliability.
Speaker: But we are actually trying to go into a daily cash forecast and not a monthly.
Speaker: In the past, I think most companies would go on a quarterly because that's when their quarterly results in ending balances.
Speaker: But we thought that we should be looking at
Speaker: daily forecast where we can minimize or maximize liquidity so that we can maximize interest returns, which unfortunately today is pretty much almost zero interest that you receive.
Speaker: But for borrowing, so if you are, let's say for example, using some sort of short-term borrowing,
Speaker: daily forecasting will help you predict your cash requirement and therefore minimize on interest expense.
Speaker: And that is something that, you know, we have not perfected, but we are still working on it.
Speaker: And it might take maybe at least another six months before we have our first version to test out, to see how effective that is.
Speaker: So Joseph, what are the challenges you face when you embark on your own digitalization journey?
Speaker: Well, I think first of all, you know,
Speaker: people will view that their job scope is challenged.
Speaker: So the first thing that you need to do is to convince them that this is going to improve their workflow, be more efficient, because this is very key because they help you to build the logic in an automation or into an electronic process.
Speaker: If the working level are not going to give you that kind of working logic and support, you will find that later on when you go live, you will experience a number of issues that you need to rectify.
Speaker: rather than wait until then which of course you can do it but you know you want it to go live and everything good smooth so cooperation and clear understanding of all the people involved including bringing our IT people because a lot of these we we have our IT people other than you know get our third party suppliers to get them to understand the business flow and build the logic so once everybody understands they get
Speaker: to get to the logic and the workflow, then you'll find that it does move slowly.
Speaker: And of course, the other part is to convince our top management that the money that is spent is worth it.
Speaker: So obviously you have to prove the point that with this automation, you're gonna save a lot of efficiency and work.
Speaker: I'm gonna have a challenge there, I'm sure.
Speaker: Thanks, Joseph.
Speaker: Thank you for listening today.
Speaker: This has been HSBC Global Viewpoint, Banking and Markets.
Speaker: For more information about anything you heard in this podcast or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.
