Getting ship-shape with cash management

About TCC Group

Founded in 1917, TCC Group has been a key player in Asia’s shipping and logistics industry for 100 years. Headquartered in Hong Kong, and with operations in Singapore, Japan, and China, the Group is engaged in ship owning and fleet management of dry bulkers and oil tankers. Their blue-chip customers include BP, Shell, Chevron and Cargill.

 

Challenges on the horizon

As TCC Group heads into their next century, they faced two key challenges when it came to cash management.

The first was the fast pace of regulatory change. In the past, many shipping groups used a separate legal entity (in the role of fund manager) to receive charter hire incomes from customers. Due to more stringent anti-money laundering laws, more customers now tend to pay ship-owner companies directly. This has resulted in cash being more widely dispersed within the company reducing control over liquidity and returns.

The second challenge is efficiency. With approximately 80% of payments made with cheques, unnecessary manpower has to be allocated to reconcile these payments.

 

Pooling for a solution

In order to address these issues, TCC Group partnered with DBS to implement a cross-border cash pool solution that offers a multi-tier net group structure. The solution pools funds from Hong Kong and Singapore and centralises them at the end of the day. The centralised funds can then be pushed to parts of the business that require cash most. The concern with efficiency was also addressed digitally through the use of DBS’s award-winning digital banking solution, which allows for local payments to be made digitally.

Furthermore, the innovative tailored solution offers the following benefits:

  • A 'safety net' capability for automated overdraft (OD) coverage maintained at the second level pool header, thus assuring that all operational payments will be fulfilled.
  • Same-day wire transfers in most currencies that the Group transacts in, including RMB, SGD and HKD payments
  • Best-in-class cut-off times for cross-border pooling. 

  • Intelligent bank documentation and implementation support. This includes prefilling bank documentation based on provided company information, allowing documentation to be signed off at the group level instead of company-by-company level. This significantly reduced the time required to open bank accounts for the 19 entities involved in the cash pool.

 

Challenges met, expectations exceeded

With the implementation of this solution, TCC Group's key challenges were fully met. Funds were now better managed, and overall efficiency was improved.

In addition, the partnership with DBS showed that a close working relationship, results in solutions that addressed ongoing needs, such as more recently extending later end-of-day sweeping cut-off times to guarantee late incoming and outgoing transactions.

"Efficient cash management has become much more important than in the past to shipping groups like TCC Group. Always shop around the major partner banks to find out the best and value-added solution, and go to the very fine details for product comparison."

Tony Lam, Group Treasurer, TCC Group

 

Discover a spectrum of opportunities

Explore DBS Treasury Prism to discover how you can create a similar cash management solution for your business. If you'd like to read more case studies, simply click on Case Studies on the left.