Quarter Two 2007
Trade in China has been growing at a phenomenal rate. Following China’s entry to the WTO in 2001, China became the third largest trader of merchandise in 2004, a position it has since maintained. As the role of the corporate treasurer has evolved to encompass a wider range of activities, the scope for treasurers to become involved in the processes surrounding trade has correspondingly expanded. The processes involved in selling and procuring goods can often be inefficient and paper-intensive, resulting in cash being tied up rather than being used more effectively elsewhere in the business. These areas are often managed by different departments within the organisation, limiting the potential for streamlining the processes. By adopting a more holistic approach to these processes, the treasurer may be well placed to increase their efficiency and improve the company’s working capital position. In this quarter’s Cash Management article we take a look at working capital management, its key components and the metrics used to measure it.
Meanwhile, cash management is a topic that remains central to the treasurer’s role. In recent issues of Treasury Today China Quarterly we have discussed cash pooling and the techniques that can be used to accomplish this in China. This quarter, we focus on the new regulations and their implications for corporates in a special feature on foreign currency cash pooling.
In terms of the operations of the treasury itself, internal controls remain essential as a means of managing risk effectively while ensuring compliance with internal and external regulations. One of the tools which treasurers use to ensure that controls are operating as they should is the treasury policy. While the content of the treasury policy will vary from company to company, there are a number of areas that should always be addressed. In this quarter’s Treasury Management article we provide an overview of the different types of risk to which the treasury may be exposed and discuss how the treasury policy should address these.