MALAYSIAN companies have been expanding their business footprint overseas, and not only is this prevalent among large corporates but also small and medium-scale enterprises (SMEs).
This trend of companies expanding abroad is happening in other parts of Asia too, as many companies seek to broaden their revenue base and expand market reach regionally and globally.
With Malaysian multinationals, including the public listed ones, and the SMEs exploring new markets, it has made the demand for payments and cash management (PCM) services even stronger.
This incidence of corporates and SMEs moving into regional and global markets for business opportunities are expected to increase further, moving forward.
With greater adoption of the PCM type of services, companies are now not only interested in outsourcing their payments to third parties but, at the same, are also looking for those who can manage their collections more efficiently.
Accountants and treasurers are on the lookout for financial services providers that can offer effective solutions to help maximise their working capital and improve their day sales and day payable outstanding.
Day sales outstanding measures how soon sales will become cash, and day payable outstanding measures how quickly a company is paying its suppliers.
Why is cash management becoming so important among companies at all levels? And what is cash management all about? Cash management basically is the handling of daily working capital to provide visibility, predictability and control to facilitate optimum use of liquidity.
Surveys and business analyst reports globally have shown that poor management was the main reason for business failure.
Poor cash management was probably the most frequent stumbling block for entrepreneurs. Under-standing the basic concepts of cash flow would help a business concern plan for the unforeseen eventualities that nearly every business faces.
Cash management services essentially provide businesses with a better control of their accounting, finance and treasury functions.
An integrated cash management service would help a company enhance the visibility of local, regional and global cash positions, introduce stronger risk management and security, and have more efficient cash utilisation.
HSBC Bank Malaysia Bhd director for global payments and cash management Jason Tan said that as a business entity became bigger and more complex, the demand for PCM services would also tend to grow.
This was partly because they had larger market and customer base and hence would need to ensure there was visibility and control of funds as well as efficient internal processes in place across their supply chain, he added.
As they expand their operations locally and regionally, and as the business environment becomes more complex and competitive, companies would need their banks to take them to the next level in terms of PCM services.
Besides having visibility and control of funds, companies will make investments in accounting or enterprise resource planning software to ensure that there is centralised management of payments and collections as well as increased focus on investments and structural liquidity management.
Those venturing offshore will need their banks to provide solutions and systems to facilitate their global payments and collections the tools to facilitate not only the fund flows, but more importantly, the information relating to the fund flows,'' he noted.
Tan said HSBC had the breadth of PCM services covering the entire customer spectrum from an SME to a multinational corporation. Moreover, these services are available at all the bank's key markets worldwide.
He said the bank's PCM services were based on listening to and understanding customer needs, as cash management solutions needed to be customised to ensure efficiencies were realised.
It also has multiple Internet banking platforms to facilitate the bank's cash management services.
For SMEs, it has the business Internet banking channel that facilitates check balances, bill payments and other transactions.
For the more sophisticated and larger companies, it has HSBCnet (corporate Internet banking platform which also provides an intuitive online search function) and HSBC Connect (HSBC's host-to-host connection between the bank and client's systems).
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