Building on receivables reconciliation
About Chinachem Group
Chinachem Group is Hong Kong’s largest privately held property developer. Founded in 1960, the Group has about 250 residential/office/industrial properties in Hong Kong that are developed and managed by various property companies either wholly or partially owned by the Group. Chinachem Group has consistently maintained its position as a forward-thinking pioneer in the industry, active in the development of new towns and districts in Hong Kong. Tsuen Wan, Kwai Chung and Shatin were all developed in large part due to their dedication and foresight. Through consistent improvement efforts, Chinachem Group continues to create private residences for elegant living for a growing number of Hong Kong’s residents and families.
A cheque-list of challenges
Chinachem Goup receives rental and management fee payments across over 200 property companies every month. As most of these are cheque payments, this amounts to more than a thousand payments that must be manually reconciled, with each cheque deposited into the respective bank accounts of each company. Chinachem Group found themselves in a dire situation – with their accounts and funds managed in such a decentralised manner, they could neither deploy human resource in an optimal way, nor enjoy yield enhancements on the entire operating balance.
A virtual solution for a real problem
After several rounds of discussions with DBS, an innovative receivables solution was customised for Chinachem Group, based on the concept of the virtual account (VA). This allowed for each of Chinachem Group’s property companies to be assigned their own VA name and number, but which would link to only one physical account maintained with DBS.
Key features of the solution are:
- Instead of requiring different bank accounts, only one physical account is opened and all VA accounts are linked to it;
- Payments received in each VA are directly credited to the physical account on a real-time basis;
- The payee and payment channels could be easily identified via a daily Internet banking report;
- Even if the payee on the cheque does not exactly match, the VA solution allows the incoming remittances to be immediately credited to earn interest while the 'Payee Name Differs' issue is being handled;
- Higher yield on operating balances, benefiting from the real-time cash concentration.
In addition, DBS arranged a "Collect All" service to pick up cheques from Chinachem Group’s offices for further processing for enhanced bulk cheque deposit handling.
Laying the foundation with great results
The solution was implemented in a very short timeframe and offered exactly what Chinachem Group needed in terms of a payee identification solution to power receivables reconciliation. Furthermore, the simplified reconciliation process freed up manpower so Chinachem Group could allocate their human resources more efficiently. The real-time crediting and cash concentrating arrangement also helped to achieve a higher yield on operating balances. With such impressive results, it’s no wonder that Chinachem Group has since adopted the solution for all their group companies.
"We are pleased not just with the exceptional proposition but also the smooth implementation of this VA solution. DBS really understood our requirements. We have now adopted it for all of our group companies which has helped to enhance our cash management efficiency."
Derek Leung, Executive Director, Group Chief Treasury Officer and Head of Lands/Valuation, Chinachem Group
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