The challenge
A bespoke trade financing solution had been implemented by leveraging the company’s strong receivables portfolio to improve Hafnia Pools’ working capital and cash conversion cycles. As a result, Hafnia Pools needed to onboard a new cash management bank to support seamless transaction flows coupled with the trade financing solution.
Hafnia’s headquarters are in Singapore with Hafnia Pools’ finance team operating out of Denmark. It was therefore important the company’s cash management needs were run efficiently. This was particularly critical given the nature of the business where vessels are trading in global markets. Efficient cash management was therefore necessary to ensure no disruptions to Hafnia Pools’ day-to-day operations.
The solution
Extended cut-off times: to cater to Hafnia Pools’ maker/authorisers based in Denmark and to provide a wider operating buffer for the team given the time zone difference between Singapore and Denmark, UOB offered extended cut-off times to support the company’s cross-border payments. This allows Hafnia Pools to submit wire payment instructions up to 8pm SGT, which translates to 2pm Denmark time.
Regional file transfer service (RFTS) with interoperability via UOB Infinity: with Hafnia Pools’ dual authorisation requirements and the need to ensure payments are transmitted to the bank in a seamless manner, eliminating call-back requirements, a secure host-to-host connectivity was established via the bank’s RFTS channel. This enables Hafnia Pools to transmit encrypted payment files directly to the bank, without human intervention, thus enhancing efficiencies of its end-to-end payments process. Payment instructions are released through the host-to-host channel from the enterprise resource planning (ERP) system, with payment authorisation performed on UOB Infinity, the bank’s online banking platform.
At around the same time, Hafnia was also implementing a new treasury management system (TMS) to handle the generation of treasury transaction payments and all payment authorisation processes (including the ERP payment files) before sending the files to banks for processing. As such, there was a need to ensure a seamless transition on the following two fronts: migrating to a new TMS and incorporating a new bank service provider. It was therefore critical to work together with a bank that was able to deliver a smooth implementation, minimising any disruption to ongoing operations.
We are honoured to receive this award and this recognition is a testament to Hafnia and the bank’s commitment to innovation and efficiency solutions in the treasury space. It is also a reflection of the hard work of Hafnia’s treasury team and motivate us to continuously strive for excellence. We extend our sincere gratitude to our partner, UOB for the collaboration in this project and look forward to greater achievements in the future.
Pay Shuzhen, General Manager, Corporate Treasury & Finance
Best practice and innovation
To enable a truly integrated working capital platform, Hafnia Pools deployed both trade finance solutions and cash management services with the same mandated bank. Throughout the structuring of the underlying trade financing solutions to Hafnia Pools, the company also worked closely with the bank’s cash management team to ensure its trade requirements are supported with the relevant digital solutions and with as little impact as possible to Hafnia Pools’ ongoing operations.
To support the company’s working capital needs across both cash management and trading processes, Hafnia Pools worked with the bank to implement an optimal account structure, which entailed the opening of two collection accounts and two operating accounts, enabling efficient deployment of funds, whilst maintaining sufficient control from the bank’s perspective.
“The collection accounts are used to house chartering proceeds which the bank will check against the list of bank-approved receivables eligible for financing. Separately, the operating accounts were linked to a secure RFTS channel to facilitate digital payments without any manual intervention,” explains Pay Shuzhen, General Manager, Corporate Treasury & Finance.
To enable this setup to work, Hafnia Pools worked in close collaboration with the bank, which coordinated internally with its internal trade and cash management operations teams to operationalise this workflow.
Key benefits
