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The challenge

In recent years, CST’s accelerating growth in China saw domestic transaction volumes soar, pushing the limits of the company’s legacy treasury solution. That legacy structure was characterised by manual activities, time-consuming paper documentation, and delayed visibility of the company’s cash position. With the CST China new management team on board in 2020, they immediately recognised the need for significant improvements.

Key objectives were to accelerate the transaction cycle, speeding up receivables and credits and enable paperless processing and remote control. CST introduced a series of solutions that transformed the company’s treasury management experience in China. From a largely manual process, CST’s treasury management transformed to embrace automation, accounting accuracy, timely online visibility, and the ability to initiate domestic deposits online and submit paperless cross-border transactions declarations.

The solution

The new solution has several features designed to shorten the cycle.

Host-to-host (H2H) connectivity – previously payment information was manually uploaded to CST’s ERP system twice a day. Now the system is automatically updated every 30 minutes. Invoices are closed out promptly to free-up credit limits and accelerate shipments and the sales process. The channel also supports the transmission of balances and transaction details.

An online RMB deposit solution (China online deposit) – accessed through Bank of America’s CashPro Online platform, it provides CST the ability to initiate and withdraw deposits online and enable CST to deploy different deposit alternatives per its cash flow needs. Legacy processes required the submission of email and/or paper requests for deposit placements and withdrawals. It is all online now, making the instruction and approval process efficient and tracible.

A paperless cross-border foreign currency and RMB payment solution – balance of payment (BoP) – a paperless cross-border payment solution that allows overseas payment instructions and related supporting documents to be submitted electronically through the bank’s online portal without paper, wet signatures or chops.

With these features in place, CST China workforce was able to work from home without losing effectiveness during the COVID-19 pandemic – something which would have been almost impossible with the old paper-based system.

Best practice and innovation

Every aspect of CST’s new treasury solution demonstrates best practice. The best practices below replaced previous manual work in CST’s legacy system, which had sometimes caused delays and inaccuracies.

• Use of H2H to accelerate and automate the accurate update of receivables resulting in an accelerated transaction cycle.
• Online timely visibility of balances and placement or withdrawal of deposits.
• Online initiation of outbound cross-border payments, eliminating the need for physical preparation and delivery of declaration forms and supporting documentation to SAFE.
• The establishment of a treasury solution that will facilitate CST’s continued growth and not impede it due to the limitation of manual processes, enabling treasury to focus on more strategic issues.

Key benefits

• Accelerated transaction cycle.
• Faster realisation of revenues.
• Improved positions update.
• Improved customer satisfaction.
• Enhanced control and manual errors eliminated.
• Improved yields on surplus cash.
• Cross-border payments process streamlined.

CST can now turn its focus to new opportunities and strategic initiatives. The firm is already implementing a new payroll solution with Bank of America and has plans to implement the bank’s forthcoming e-tax solution to handle local tax payments in China.

“We have totally transformed our China treasury structure into a best in class solution that can facilitate our growth without the need for a commensurate growth in treasury resources,” says Jane Zhao, Director of Finance.