In being intimately linked with the corporate function, the DHL regional treasury is also reinforced by a well-equipped support team in Europe. “I like to see us as gatekeepers into the corporate function for our business units in APAC,” says Hogan. “They come to us and we can help them or send them to the team who can. Having this single point of contact dramatically removes the friction points which can often be found when trying to navigate through such a vast corporate structure.”
The power of networks
Of course, when a new central function is established, it can be a challenge at first to sell its worth and objectives to the on-the-ground financial managers. Given the wide remit of the DHL regional treasury function, earning this buy-in was critical from day one and something that thankfully Hogan and his team were able to achieve quickly.
“When I first moved to Singapore it was actually at the request of the regional management who noticed the need to have somebody experienced to focus on cash management and treasury – allowing them to focus on their core business responsibilities,” explains Hogan. “We therefore had a strong working relationship established from day one – plus we were taking work from them and people always like that happening,” he jokes. He also cited unity and togetherness across the group as being something else that helped.
Hogan is acutely aware however, that relationships cannot be taken for granted and the regional treasury team are constantly seeking ways to add more value to the regional management and the local business units. As such he makes an effort to visit the various businesses regularly to not only understand their work more intimately, but also to understand the cultural nuances across the region and how business is done. “Asia is very varied in this regard and whilst it can be a challenge it also makes it an exciting region to operate in.”
In addition to these visits, Hogan has also utilised the power of modern communication channels, running regular training webinars. “This is in reaction to a major internal study where one of the key findings was that there is a real desire from employees to learn and understand what the various functions do and how,” explains Hogan. “We don’t force people to attend but if it is on a topic of interest then they can join the webinar and learn. It is just another aspect of our continuous outreach.”
New channels of collection
It is not just through relationship building and training that Hogan looks to add value to the wider business. Treasury is also constantly looking at new and innovative ways to ensure they collect cash quicker, something that he feels is particularly important given the rise of e and m-commerce.
As part of the group’s overall 2020 strategy there is a strong focus on e-commerce particularly across Asia and the emerging markets. “Many of these markets we operate in across Asia have a high percentage of customers paying cash on delivery and there is a portion that may not have access to traditional bank accounts. This is proving a challenge not only in regard to working capital, but also because we live in an age when banks do not want to handle cash because it is too expensive.”
A large portion of Hogan’s time today is therefore spent analysing the various digital collection mechanisms available, such as mobile and digital wallets. “Currently, we are in the early stages of this project, working with our banking partners and the business to define our core needs from the solution. What I have noticed during these initial stages is that the landscape is very fragmented and there is no market leader. Moreover, some banks have a clear strategy and others do not. There are then those that believe that banks can be disintermediated from the processes.” For the industry to really move forward in this space, it is Hogan’s belief that standardisation and consolidation is required.
Away from collections, Hogan and the wider DHL treasury function have worked endlessly in recent years to take advantage of the wealth of technology that is now available. For instance, the DHL treasury team have a global in-house bank and are currently implementing a global payments factory. “These projects are largely driven from the head office, but because of the complexity of the regulatory environment in Asia we play an important role in ensuring that these operate effectively in the region.”
Not ones to stand still, Hogan and his team are now working on further cash management projects including implementing a regional solution for Bank Guarantee issuance that seeks to improve bottom line costs as well as providing a standardised e-enabled process for applications. With currency volatility firmly on the agenda, the team is also working hard to optimise transparency on spot FX transactions through the use of e-FX solutions. What’s more, there is a continued a continued focus on supplier financing solutions across accounts payables.
In order to implement these solutions and achieve his role as the key financial support to the DHL’s regional business units, Hogan requires a quality stable of banking partners. “Whilst we have a group of global and regional banks that are linked to our overall financing structure, what is key for me is that these can provide us with the solutions we require,” explains Hogan. “Second to this is the relationship aspect. Of course, price is important, and we use TWIST reporting to monitor this, but when we enter into a banking relationship I always take the position that the bank has to make money out of it.”