Pursuing excellence and best-in-class solutions

As an innovative and dynamic company, Flex has supported its treasury team in creating best-in-class solutions. Vivian Peng, Flex’s Asia Pacific Treasurer, explains how she has been able to set a benchmark for the industry, pursue excellence, and adapt to the challenges of the global pandemic.

Vivian Peng’s career has been defined by pursuing excellence and creating best-in-class solutions throughout her years as Asia Pacific treasurer for Flex, a global diversified manufacturer. She hasn’t always been in treasury though. In fact, she has had a couple of ‘past lives’ in her career and made a couple of switches in her choice of profession. Peng explains how, on graduating from Fudan University, one of the top universities in China, she started her career in banking – at the Bank of China – and then later moved into accounting and finance and worked in Hong Kong.

“Initially I had actually planned to be a banker, and then I ended up in finance. Then I found out that treasury is very interesting – it is on the opposite side of the banking industry – and so I started to focus my career on treasury,” explains Peng. In 2009, she started her treasury career in Flex to set up the multinational’s treasury function in China. From there she was promoted to a regional role, and she has led the Asia Pacific treasury for Flex since 2013. In this position she oversees the management of cash and liquidity, foreign exchange (FX) risk management, working capital, investment, capital and funding, credit, bank relationships, bank accounts and e-banking.

Peng has immersed herself in the challenges of this role and stayed on top of the treasury industry trends, always making sure that she is aware of the latest solutions and structures that are out there in the market. And she is glad she has made the switch from banking and finance into treasury.

“I like treasury a lot because it is interesting and has more of a direct influence and connection to the economic environment – you can see the value you are adding to the company more clearly,” says Peng.

And what she likes about Flex in particular are the opportunities it has given her to realise her career goal of being the best-in-class when it comes to regional treasury management. “When I started at Flex I realised this was a great platform for me: it is a great company and it was a good opportunity for me to realise the target I had of being a best-in-class treasury manager in the region,” she says.

China liquidity structure

One example of this pursuit of excellence is in the liquidity structure that she put in place for Flex in China. This, she also comments, has been one of her career highlights so far.

There were challenges in operating in China because of the regulations that were in place. For example, traditional cash pooling was subject to taxes for each regulation for borrowing and lending in both directions and Peng was instrumental in introducing the first tax-efficient renminbi cash pool structure in China. Flex was able to introduce a CNY cash pool that eliminated two-way borrowing and lending to overcome this issue. Also, Flex tackled US dollar cash pooling and secured approval from the State Administration of Foreign Exchange (SAFE) – a Chinese regulator to waive the need for an entrusted loan account in the USD pooling structure, which overcome the onerous documentation and reporting requirements. Once this more simplified USD pool structure was put in place, SAFE a year later allowed other firms to use this structure across the whole country, demonstrating how Flex was able to pioneer creative solutions to existing treasury problems. After several months, SAFE further relaxed certain rules which provided an opportunity for multinationals to manage their cash more effectively with centralised cross border pooling. Upon approval, Peng put the structure in place which included in-house cash-pooling, cross-border pooling and using virtual accounts, which were pioneer solutions in Europe, Middle East and Africa (EMEA) at that time.

Peng comments that she still scans the treasury industry to see if the liquidity structure she put in place in China can be improved and whether there are other solutions that would be more appropriate and up-to-date. She comments that some banks still think it is difficult to offer this kind of structure. So far, however, she has not found anything better, and she says this structure at Flex is still the benchmark for the industry. It has also received wide recognition and a number of awards, and Peng and her team have also won Treasury Today Asia’s Adam Smith Awards Asia Top Treasury Team in 2015, and Peng was awarded Treasury Today Asia Woman of the Year in 2015.

Pursuing excellence

When asked about the lessons she has learned so far in her career, Peng focuses on pursuing excellence. “You need support to drive for excellence,” she says, explaining that the people she has worked with have been vital for her in achieving career success. Peng says that the company she works for – Flex – has been instrumental and important for her in achieving her goals. “Flex is the right company, with the right culture,” she says. “I am lucky that I have the right boss and great leader – Christian Bauwens. He is very international, innovative and smart,” she says, adding that the company has created a culture whereby the treasury team is able to do more, find creative solutions, and set a high standard in the process.

“Another lesson I have learned is that having a strong team is very important,” says Peng. She adds that she is focused on the team working together and bringing the right talent into the team. That talent, she explains, should have shared common values and be willing to learn, and face challenges. Finding treasury talent can be challenging, but it is possible to recruit from other fields – as in her case from banking or finance, for example. When Peng made the move into treasury, she was motivated to learn everything she could about this new field, was willing to learn, and also to work hard. These are the qualities, she says, that are important when hiring treasury talent.

The priorities in Asia Pacific

Treasury talent has its work cut out in the Asia Pacific region, where there are numerous markets to deal with, various regulations and some particularly strictly-regulated markets. In overseeing the Asia Pacific treasury teams, the priorities for Peng are ensuring that liquidity is optimised with high efficiency and low cost, and also managing risk – including foreign exchange risk and credit risk. These have long been at the top of the treasury agenda in the region, but they are just as important now as the business environment for Flex is changing rapidly. “Our company’s business is very dynamic, so a priority is ensuring our liquidity in our key countries in the region – China, India and Malaysia – and having a better structure in place. For years this has been the case, and this is still important, as is managing risk and the foreign exchange risk and exposure that Flex has,” says Peng.

Liquidity is still a top question in the region, but an issue now is also how well managed you are in terms of the various technology tools that are available.

The second priority, says Peng, is to focus on automation. In the last two to three years, she notes, there have been a number of technology companies – fintech and treasury management systems – that have transformed this space with more solutions of how to automate treasury management. With such solutions available, treasurers can now automate their daily operations and move away from using Excel spreadsheets. In this regard, Peng’s treasury team has achieved good results with its ‘smart treasury management system’. This was developed in 2021, within five months, and automates cash management, for example, and can provide real-time cash visibility, accurate cash forecasting and automated cash planning, and can also automate full cycles of FX management from exposure capturing, hedging to FX impact evaluation. The effect of greater automation has been to respond faster to Flex’s business needs, reduce costs, and be more effective in solving liquidity issues. It also provides data visualisation, which means that the treasury team can show their business counterparts the intelligence that is available, which in turn helps make better decisions.

This leads onto another priority for Peng, which is in supporting the business leaders at Flex. “Another priority is to become a closer strategic business partner,” she explains. She says that her treasury team has been working closer with their business partners at Flex, and they are finding that the business is engaged with treasury and increasingly coming to them with questions about cash flow, foreign exchange and how to improve their working capital, for example. “They come to us with questions and discuss suggestions and solutions with us – as a trusted business partner,” says Peng.

Treasury in a dynamic business

The nature of the industry that Flex is in, explains Peng, is very dynamic and the challenge for the treasury is to move very fast. She adds that they have shared a lot of information about this with their peers, which has been helpful for others to learn how to adapt to a dynamic and changing environment, especially in light of the COVID-19 pandemic.

The specific issues for the treasury team during the pandemic have been on effective liquidity planning in China, where the production schedule could be subject to change and could impact the liquidity needs – with a surplus, for example, if production decreases there. Or if business ramped up quickly and the specific issues have been in ensuring the company has sufficient funds there. The need for fast action, and being able to respond quickly, with changing payment needs means that accurate cash forecasting and real-time cash visibility is particularly important during a pandemic.

The liquidity structure that has been built in the region has so far served the company well and has proved to be resilient. Being resilient has been one of the major lessons that Flex has learned from the pandemic, and the company has published an e-book on the topic. In the foreword, Flex CEO Revathi Advaithi writes how more than 145,000 team members continued to show up every day at its factories, “masked up and physically distanced, ready to build and ship products that keep the world running and functional. Meanwhile, we continue to grapple with the commercial aftershocks of COVID-19, including a disruptive, global logistical logjam and shortages in all kinds of critical inputs from semiconductors to lumber.”

In this environment, Flex’s CEO writes, ‘resilience’ became the watchword, topping the corporate agenda and becoming an integral part of every business. “Beyond business continuity plans, we must develop the capacity to address fast-moving and unpredictable events, spring back from major disruptions, and emerge stronger to drive greater success.”

Peng comments that the treasury team was able to respond quickly to the changes in the market that COVID-19 brought. “We have been very well prepared for a long time,” she says, adding that they have built good forecasting for their liquidity structure. Also, there was a well-structured liquidity programme, enough funding was in place, and they avoided having trapped cash in certain countries.

Working for a company that has a culture of being dynamic and moving fast, explains Peng, means that there has been a spirit of trust in the treasury team. In fact, treasury has been encouraged to build innovative and creative solutions in the region. In implementing such best-in-class and industry-leading structures, Peng explains that it is important to keep the lines of communication open, and also have a good dialogue with the various central banks in the region, “That is so important,” she adds. Throughout her time in treasury management, Peng has maintained an active dialogue with regulators and has stayed on top of the latest trends and developments.

Looking back at treasury trends

Peng comments on these trends that have occurred throughout her career in treasury: “If you look back about ten years ago, the hot topic was liquidity and the challenges of trapped cash. Treasury has now expanded and moved on beyond that. Liquidity is still a top question in the region, but an issue now is also how well managed you are in terms of the various technology tools that are available,” she says.

“Technology – this is a very hot topic. It is very important for the treasury industry and how we automate treasury processes and manage the data,” she says. Also, these days there is a lot of discussion about blockchain and the role of distributed ledger technology and how they can be applied to the treasury management process.

The other major trend that Peng has witnessed over the last five to ten years is how treasury can be a business partner, and how treasury can be more active in building ecosystems, such as with supporting their customers and supply chain, Peng explains. Flex has been deploying different types of supply chain finance programmes to its suppliers for years.

Treasury in an ideal world

Looking to the future and what else will be possible, Peng says she would like to be able to manage liquidity even more efficiently and at a lower cost. And in an ideal world Peng would like to be able to automate and fully digitise the entire treasury management process, with real-time data and accurate analysis and forecasts. She believes this is achievable, as is another one of the goals she has in managing the Asia Pacific treasury at Flex: “To continue to have a strong team and work together happily,” she says.