A Digital Transformation Journey: How the Government of Sharjah transformed their treasury function

Sharjah’s government has embarked on a massive transformation of its treasury operations, moving from a manual set-up to the latest digital technologies in order to manage its finances in a more efficient and transparent manner.

In another instalment of HSBC’s specialised webinar series, Sean De Silva, Cash Management Expert at the Emirate’s Finance Department, shared lessons from the journey.

Massive consolidation task

“Our primary objective was to eliminate manual instructions, and to have better visibility throughout all our accounts within the government of Sharjah –transparency, efficiency and also better control,” says De Silva.

“The idea was to structure it in a way that all cash and funds available in all our accounts would be reflected on a single treasury account. And then also to have a robust audit trail, so that we wouldn't have to go back and forth in manual instructions looking for transactions,” he says.

In 2014, the department faced the mammoth task of centralising, automating and digitising cash management and treasury for about 70 government entities using multiple banks and bank accounts.

HSBC’s cutting-edge expertise

The Finance Department selected HSBC to implement its transformation project, benefitting from the bank’s cutting-edge technology and expertise. The culmination of the project is a single treasury account that provides maximum visibility and control over daily operations.

“HSBC has been at the forefront when it comes to innovation and digitisation, and it continues to be one of our top strategic pillars,” says Mohammed Al Marzouqi, HSBC’s Head of Global Banking, UAE.

“The digital journey covers many areas such as payment automation, cash management and central treasury,” he says.

HSBC has been working with clients to streamline and optimise treasury transformation. Having spent U.S.$2.3 billion on enhancing its digital solutions over the past 10 years, it is the right partner for firms looking to transform treasury operations.

Treasury overhaul

Sharjah’s transformation project, which was implemented in several phases, required selecting a provider for its Treasury Management System (TMS), where location and support availability were key considerations.

Meanwhile, HSBC began linking e-channels to the TMS to ensure that all banks and balances were visible on one platform. Moving to electronic receivable management was the next step.

With the visibility and receivable phases completed, the department moved on to liquidity management to take maximum advantage of its digital transformation drive, which led to setting up a single treasury account hosted by HSBC.

“I would like to give credit to the HSBC team that helped us out and really made my job as a project manager for single treasury account so much easier at the time,” De Silva says.

Single treasury account

With all the information in one system, the Finance Department now has an overview of all its accounts on one dashboard. This maximises the movement of cash and significantly reduces payments on overdrawn accounts as well as funds lying idle.

“Ideally the main objective of the single treasury account is to have visibility of your cash on a daily basis,” says De Silva, adding that coordination with different banks was the biggest challenge on the department’s transformation journey.

At the end of each day, each bank generates an MT940 SWIFT network message with a closing balance, which is sent to HSBC and then to the TMS, showing all balances available on the department’s accounts.

The department’s treasurers can also check intraday balances by logging into HSBCnet, the bank’s intuitive online tool.

“Waiting for banks to come back with a confirmation to make sure that MT940 gets integrated into HSBC and then on to the TMS was one of the big challenges,” De Silva says.

While the department is currently using the TMS purely for local or dirham payments within the UAE, it is considering the automation of its cross-border foreign currency payments.

Innovative treasury solutions

For companies that cannot afford to invest in a TMS, a cash flow forecasting tool is available on the HSBCnet platform, which also allows streamlining of the receivables process, among other functions.

At the same time, HSBC’s Treasury APIs (Application Programming Interface) provide simplified, real-time access to the bank’s innovative cash management services, making it easier to manage cash and make informed decisions.

“We are seeing a very big increase in demand for the APIs at the moment from a number of partners. The API gives agility to make your payments control and integration a bit easier,” says Philippe Robert, HSBC’s Regional Head of Global Liquidity and Cash Management, MENAT.

HSBC plays a key role in partnering businesses to select and provide the best digital innovative solutions, including moving to real-time payments and mobile collections.

The pandemic has highlighted the need for efficient cash flow management, ushering in an unprecedented digital transformation. Merging different balances into a single treasury account is a powerful way of maximising efficiency and control over daily treasury operations.