ClinChoice takes treasury to next level through standardisation

ClinChoice, a leading global Contract Research Organization (CRO), is dedicated to providing full-service and functional solutions across the entire development lifecycle for pharmaceutical, biotechnology, medical device, and consumer product companies locally and globally. With operations dating back to 1995, ClinChoice today employs more than 4,000 dedicated professionals in 30 different countries across Asia, Europe and North America¹. The company has grown organically as well as through strategic acquisitions over the past 25+ years.

The challenge

China is one of ClinChoice’s most important markets, where they are not only rapidly growing to meet domestic demand for clinical research, but also establishing an operational base that serves global customers.

As a result, ClinChoice had established multiple entities across various locations in China and Hong Kong SAR, with future plans to grow their footprint further. This resulted in a multitude of banking relationships across various jurisdictions for payments, such as tax and collections, which created significant manual effort in fund consolidation, forecasting, reporting, and reconciliation due to the number of bank platforms involved.

With business fast expanding, ClinChoice also sought ways to improve its internal liquidity management for better utilisation of capital and funding to power growth.

The transformation

ClinChoice decided to standardise and centralise its banking management and operation to HSBC. The end-to-end banking solution offered by the bank covers ClinChoice’s entire operational cycle, and through the scalability of HSBC’s nationwide network, allows ClinChoice to build a strong treasury foundation to support future business growth.

Standardisation through a single platform

ClinChoice’s accounts across multiple entities in China are now managed centrally through a single platform via HSBCnet, as part of ClinChoice’s global profile that enables the company to access real-time balances across other global entities, to assist with funding decisions. The use of HSBCnet has also enabled ClinChoice to:

• Standardise payment execution for all operational payments through a batch file feature to disburse bulk payments.
• Obtain standardised payments and collections reports to expedite reconciliation.

Enhancing cross-border liquidity management

To enhance liquidity management, ClinChoice deployed HSBC’s cash sweeping solutions to improve efficiency on fund consolidation, and allow ClinChoice to draw on internal liquidity to a greater degree. This includes:

• A domestic renminbi (RMB) cash pool domiciled in Shanghai that concentrates cash across its entities, with the ability to automatically net-off short positions in one entity against surplus positions of another entity, reducing the need for overdrafts.
• A cross-border cash pool between the Shanghai Free Trade Zone (FTZ) and Hong Kong SAR, allowing ClinChoice to draw on liquidity from offshore entities to fund business needs in China and vice versa, at a higher quota of funds than a traditional cross-border cash pooling arrangement.

Altogether, the centralised account management, automatic concentration of intra-group funds within China, and the more efficient dispatch of onshore and overseas funds through the cross-border cash pool, have provided ClinChoice with stronger logistical support for the rapid expansion of business across China.

Benefits

• Improved operational efficiency through centralisation of the payments, settlements, and treasury management through HSBC.
• Through HSBCnet, approximately 90% of cash across ClinChoice’s Chinese entities is now visible in real-time on one platform.
• Accordingly to ClinChoice, approximately eight manhours a month saved by utilising one standard process for payments and collections as well as with standardised reporting to expedite reconciliation
• ClinChoice estimated five manhours saved each month as a result of automating fund consolidation, while freeing up hundreds of millions of dollars’ worth of funds to support business operations.
• Improved working capital by leveraging a heightened quota from the Shanghai FTZ cross-border cash pool, thereby reducing reliance on external financing.
• Sufficient nationwide coverage to support future ClinChoice entities that will be established as part of their growth plans in China.