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Treasury leading the charge

to unlock cash

DBS offers a game-changing Working Capital Advisory programme

Asias growth story will move into a new phase over the next
10 years, and CFOs will increasingly leverage on data analytics
to optimize working capital management to free up incremental
cash flow and drive value creation

(China). While Hong Kong and Singapore are the smallest

by size, these markets are the most popular regional treasury centres for corporates.
Within the region, there is a wide mix of emerging and
advanced economies, with GDP per capita ranging from
The changing dynamics of Asia
US$2,500 in India to US$64,500 in Singapore, based on
As shareholders and investors look beyond the bottom
data from the International Monetary Fund.
line into the quality of earnings, internal efficiencies, and
Beyond the dynamics of each individual country, there
sustainability of a companys business model, the quality
are intra-regional dynamics to consider. For example, the
of cash flow and management of working capital is highly
Asean (Association of Southeast Asian Nations) has set itcorrelated to enterprise value. Particularly in Asia, the
self a target of forming the AEC (Asean Economic Commulti-country supply and distribution
munity) by 2015. The AEC aims to form
chains carry a high degree of complexity
a single regional market and production
and also the opportunity for well-manbase and have this fully integrated into
CFOs and treasurers
aged companies to build a competitive
the global economy. If Asean were a
need to develop a
advantage.
single entity, it would be the 7th largest
deep understanding of
To navigate this new paradigm,
economy in the world (See chart 1).
the countries and regions
CFOs and treasurers need to develop a
Beyond Asean, several Asian counwithin Asia
deep understanding of the countries and
tries are also involved in on-going negoregions within Asia. Growth in Asia has
tiations for a seminal regional free trade
and will continue to be heterogeneous;
agreement with the US and across Asiathis multi-faceted neighbourhood inPacific: the Trans-Pacific Partnership
cludes the worlds largest democracy (India), the worlds
(TPP). To succeed in the region, companies need to recmost populous Muslim country (Indonesia), and the worlds
ognize the differences and cultural nuances of each market
second largest economy and the biggest population globally
within Asia. Western multinational corporations, as well as
existing Asian companies looking to expand behind their
home base, need to develop specific and discretionary views
Chart 1: 2013 Gross domestic product rankings
of each market for their business.

Active management of working capital is critical

Today, CFOs and treasurers are focusing on a broader set
of decisions which are emerging around the convergence
of their physical and financial supply chains. Active management of a companys cash conversion cycle, and its underlying drivers accounts receivable days, inventory days,
accounts payable days have proven to be a key source of
competitive advantage when approached correctly and this
is often on the top of the CFO and treasurers agenda as it
generates tremendous upside.
CFOs/treasurers who are able to generate incremental
free cash flow can lower funding cost to support further expansion and business development. They will also be well
prepared ahead of the anticipated slowdown in quantitative easing and expected rise of interest rates over the next
few years. As credit tightens, internally-generated free cash

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flow will become increasingly critical.

Recent studies around
working capital have indicated there is over US$1 trillion
of cash trapped in existing
sub-optimal working capital practices in Asia. There
is a wide range of working
capital performance across
Asian countries. An average
late payment gap can range
from 14 days in Taiwan to
44 days in India (See chart 2).
Hence, there exists a large
opportunity for companies
to optimize working capital
and improve its internal efficiency, regardless of industry
and size.

Leveraging on the era of Big Data

Chart 2: Business-to-business collections gap

Today, CFOs and

treasurers are focusing
on a broader set of
decisions which are
emerging around the
convergence of their
physical and financial
supply chains

We are in the era of data-driven analytics

and insights. CFOs and treasurers are the
natural guardians of large amounts of data
and can leverage on data to identify opportunities to build holistic insights across the
business. Finance teams that are the most
efficent in creating value-added insights
will also create a competitive advantage for
their entire company.
CFOs and treasurers can also scrutinize their existing cash conversion cycle to pick out areas
to look for cash trapped in sub-optimal working capital
practices. With effective utilization of big data, companies
can also benefit from mitigation of counter party risk, foreign exchange risk, and drive effective customer and vendor relationships.
Given the complexity and variance across Asia, CFOs
and treasurers require an in-depth level of analysis, a suite
of sophisticated tools, as well as rigorous risk mitigation
and data-management policies to identify and capture the
opportunity from cash trapped in sub-optimal working
capital practices.

capital diagnostics aimed at producing bespoke actionable reports driven by proprietary analytics. This value-added approach
identifies and advises clients on opportunities across both their physical and financial
supply chains.
Regardless of ambitions to reduce banking costs, minimize counterparty risk, or
generate incremental free cash flow, DBS
Working Capital Advisory programme can
provide ideas that create value for your
business.

DBS Working Capital Advisory

View our video to discover how your
company can benefit

For more information, please contact:

Discover the depth of difference DBS can make

In March 2014, DBS launched a comprehensive Working
Capital Advisory programme to help corporate clients navigate and capture the aforementioned opportunities.
We have built a proprietary database with information
on over 65,000 companies, and are able to provide a complete set of benchmarking tools. In addition, we partner
with select clients to undergo a powerful set of working

Tom McCabe
Managing Director, Global Head of Transaction Services
DBS Bank Ltd
tommccabe@dbs.com