As growth and scale accelerated, it was no longer feasible to rely on spreadsheets to support tracking, accounting and payment obligations for these multi-million dollar transactions. HKAC required a robust controls environment to replace spreadsheets for loan assets and liabilities, derivatives and management fees.
The solution:
Treasury needed a robust, scalable and globally accessible system capable of handling inherent complexity. Its first priority was to deliver timely and accurate reporting for its debt instruments, in compliance with the Chinese Basic Standard for Enterprise Internal Control (C‐Sox). ‘Four-eyes’ controls, segregation of duties and audit trails over this critical data were essential. Thereafter, it needed to remove the inefficiencies and risk from its manual processes and improve cash visibility, hedge accounting and debt management.
The selection of the cloud-based platform from Reval proved to be a prudent one in many ways. As Paul Weerappah explains: “Many of our financial instruments are bespoke so we needed to be confident all the varieties within our portfolio could be accommodated, but we also needed to consider how easy it would be to live with the vendor solution if the regional focus of our business were to shift. The system also need to produce monthly accounting journals (more than 20,000 per month) for reporting to our parent six days after month end due to strict Chinese parent reporting deadlines (best practice tends to be eight plus business days), so accuracy and reliability are also important.” Aside from system capabilities, it was important to HKAC that the chosen supplier had skilled personnel and a culture of partnership with its customers in order to be confident the deployment would be a success.
Best practice and innovation:
Although a ‘standard’ project for the most part, the final stages of the HKAC implementation threw up a potential disaster. The project coincided with the final stages of an office move which saw the treasury function relocate from Sydney to Hong Kong. From an operational point of view, Reval’s geographically neutral cloud technology saved the day. It was possible for some of the final, more labour-intensive aspects of the implementation to seamlessly continue with the vendor in Australia, whilst people were physically moving to Hong Kong.
A cloud system was instrumental in achieving this as a large portion of HKAC’s business activity is stored in the system (almost 4,000 trades) which produces around 20,000 to 30,000 individual monthly journals that feed into the accounting system. The team from HKAC needed its new platform to be sufficiently robust and scalable to handle the growth of a particularly complex business because once the move had taken place, it would be the single source of treasury truth upon which many would rely. Globally distributed personnel do not have to wait until the Hong Kong-based treasury team comes online to gain access to vital data.
The new system is instrumental as HKAC grows. More than 15 aircraft will be added to the portfolio this year, with each additional typically requiring the creation of one or two new companies. Every aircraft deal tends to involve five to six group companies, and potentially two or more external financing parties: complexity is the order of the day. Having the new system in place allows HKAC to expand rapidly and safely, without adding headcount.
