the perfect treasurer

8/8/2019 The Perfect Treasurer

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THE PERFECT TREASURER



INTRODUCTION

Cyrill Scholer : VP of ABB Treasury Center Asia

Pacific, Singapore

Responsibilities are huge, not only in the cash

front. Importance of treasurers role

Create shareholders value and maintaing good

corporate governance



Companies humbled in 1997 Financial Crisis due

to poor Financial Risk Management

Tarek Anwar, Director, BoA Singapore says

´While most treasurers would say their job is stillto protect the assets of the company, the assets

themselves have changed µ

Assets are no longer only short term like cash but

anything which creates value for shareholders.



TOOLS AND TRADE

Treasurer remains the CEO of cashflow.

Company's financial position and risk exposures at any

given time.

The ability to know more, to do more, and decide more

independently.

ERP systems- information about a company's

operations, supply chain and accounting are easily

accessible.



Managing liquidity is getting easier.

Banks enable automatic investing of balances overnightinvestments instruments.

According to David Blair, director of Nokia Treasury Services

Asia in Singapore, which serves the Finnish mobile phonegiant: "We add value by effectively reducing the financial risk and applying a very broad view of risk, [envisioning]enterprise-wide risk, so that management and the people inoperations can focus on designing great phones and sellingthem."



ALL IN THE FAMILY

Global treasury services offers in house bankingservices to ABB companies in 12 countries in the region.

Transactions are done through an electronic trading platform at the treasury intranet page of the ABBwebsite.

The intranet application serves as an automated tradingand reporting platform and also gives a real time view of its foreign exchange risk exposure.

ABB keeps a low foreign exchange risk tolerance interms of hedging and there forward contracts range from3 to 6 months.

Treasury centre conducts active risk management with banks either for its own trading gain or for hedging.



These treasury centre has cash concentration

arrangements for Australia , Singapore and US dollars

but it is more active in using loans and deposits for inter

company funding.

This treasury model serves ABB well.

ABB financial services under which the 5 ABB treasury

centers belong contributed US $ 2.1 billion to group

revenues from US $ 1.9 billion in 2000.

Due to change in accounting and increased provisions

against expected claims related to the September 11

attack ABB financial services posted a loss of US $ 32

billion from a profit of US $ 349 billion in 2000.



Even so the treasury centers value because transaction

fees stag within the company.

ABB treasury centers can afford to charge commercial

rates for all their services. There are no transfer pricing issues - and consequently,

complex tax issues - involved.



R INGING TONES

Nokia Treasury Asia: responsible for risk, cash

and liquidity management.

Generates monthly reporting cycle to collect

foreign exchange exposure data. Hedging of net position through forward & option

contract.

The company uses the value-at-risk (VAR)

methodology to assess the foreign exchange risk. Nokia implemented Rosettanet for the purpose

forecasting.



CONTI«.

RosettaNet specifies the format for all kinds of

business transactions.

It is a standard for XML communication betweentrading partners and service providers .

Aims to automatically settle payments between

vendors and clients.

Nokia BankLink, act as a gateway between the

invoices in SAP and the payment systems run by

the banks.



TAX PLANNING

Objectives

Consolidation

R ationalizing legal structure of all AT&T unitsin Asia

Make regional cash and treasury managementmore tax-efficient



PROBLEMS

Tax issues spoil Timothy Lo's efficient cash

management operation in Asia

AT &T has operations in about 13 countries withtwo legal entities in each countries

Subsidiaries comes under either of two legal

structures governing US multinationals

Each has different tax treatment and implications



lending between CFC and check-the-box entities

is not tax efficient

In a CFC, any cash that moves away, or that isconstrued as an active investment into another

entity, will be a deemed dividend back to

headquarters

That amount practically negates whatever cost

benefits a pooling structure offers



SOLUTION

Converts all entities in the region into a CTB

structure

Check-the-box seems to have a better way tomove funds across the region

Lending from CFC to CFC can be done but in

each instance a tax analysis has to be done



MOVING MONEY ON THE NET -

POWER TO THE PEOPLE

The vigilance of treasurers in local Asian companies is

growing

For efficient TM S/W and H/W up gradation is most

notable trend in TM. Now the focus of the companies is invest in IT and ERP.

Not onlyM NCs but also local companies are spending

largely.

Implementation of SAP in Treasury, HR, assetmanagement, customer relations made it efficient.

Now banks also adopting the software system. Earlier

they follow cash management through proprietary work

stations.



To reduce the delay in delivery banks adopted internet

based system.

E- enable process includes management of accounts of

receivables and payments. Customer education towards internet banking.

the perfect treasurer

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