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The project is developed by Bank of China (Hong Kong) (BOCHK), aimed to serve the global treasury function for SF Holding’s subsidiaries in over 78 countries and regions. With a global logistic network around the world, SF Holding has many subsidiaries and bank accounts with different banks globally. This has created a heavy burden for its headquarters and global treasurers to get a clear global cash position and manage the business operation. The project aimed to minimise SF Holding’s workload in managing too many banking systems and processes for daily settlements.
Decentralised management in overseas offices leaves the group headquarters with no direct and effective control in overseas settlement.
“This project aims to provide full visibility and control on global accounts at group level and minimise the risk of fraud and misappropriation,” explains Lv Chaoyue, Treasury Centre Manager. “We also want to enhance automation by implementing host-to-host (H2H) connectivity and save time and manual costs in reconciliation.”
With cash scattered around the company’s global locations, SF Holding needed to save funding costs, lower exchange risk and increase investment yield.
Further, SF Holding receives a lot of cash from retail customers and was looking for more electronic collection channels.
The company’s ERP system is directly connected with BOCHK through H2H connectivity, with global account information gathered onto the ERP directly. SF Holding has set up authorisation and access rights on the ERP such that the teams in different regions can view and monitor their own accounts with the right authority. The Hong Kong treasury centre performs centralised enquiry, control, and payment functions for all accounts under the same platform.
SF Holding has established a Corporate Treasury Centre (CTC) in Hong Kong with local and cross-border cash pools.
For local collections, alternative payment methods are to be implemented for Hong Kong and Southeast Asian countries to reduce cash collection for local offices, eg Faster Payment System QR code in Hong Kong and POS machines in Indonesia.
A phased implementation approach was used:
Phase 1 – to build four local cash pools in different currencies (USD, HKD, RMB, EUR) with six entities and 24 accounts. Every cash pool has different settings tailored to their requirements.
Phase 2 – to build a cross-border cash pool by adding overseas accounts to the existing cash pool, including 46 accounts in 12 entities in countries like Germany and Italy. The final plan is to include all 78 countries of SF Holding’s footprint.
Best practice and innovation
With the worldwide business network and large cash flows in various currencies from the global market, SF Holding has set up a CTC in Hong Kong to centralise and digitise its treasury management. A total solution was implemented to cover the whole process from retail customer fund collection to cash pool concentration of funds to treasury centre in Hong Kong.
The implementation process was challenging given the complicated foreign exchange policies of SF Holding’s global locations, SF Holding’s various comments on agreement terms and COVID-19’s impact on SF Holding office operations. To overcome these challenges, BOCHK and SF Holding have worked together diligently with the same goal to achieve successful implementation, including successful development of tailored technical functions to achieve SF Holding’s objectives.