Introduction
The Acme Company has many branches in South America as well as in Asia. It can choose services from three different banks to manage its working capital. The bank that will be selected by the company will be the best provider of different services which may benefit the company (Acme Company. 2012). The selected international bank will be able to provide different services like centralize cash management, bills to pay in local and other currencies, and foreign exchange. There are three alternatives for the company to select one bank. Bank of America, Citibank and HSBC bank are the selected banks. One of these international banks will be chosen to benefit ACME in all and provide services needed. Among all three our best Business assignment help experts selected the HSBC bank to offer its services to Acme Company.
Profile of HSBC Bank
HSBC is known as the second largest financial service provider in the world. As per the assets of the company, it is the fourth leading bank in the world that is worth $2,348.98 billion. It is also ranked the second largest in terms of sales which is approximated to be $146.50 billion. Apart from this, HSBC is measured the most profitable bank in the world with a net income of $19.13 billion (HSBC. 2012). In addition to this Case Study Assignment Help, HSBC has global financial presence in especially in Asia and Latin America. Along with this, it also provides the facilities of automated transactions and international wire transfer online in approximate 35 currencies. In addition, HSBC has a great collection of services that enable clients to receive all payments in a timely matter.
Services Offered by Bank
Cash management is an imperative part of working capital management for Acme Company, because with the help of this, company can manage sufficient cash for its business operations and transaction (Liaw, 2011). In addition, the company can also avoid the problem of cash shortage through the cash management. In this way, excess cash should be invested in a more profitable manner, so that it is available for the company when it is needed. HSBC bank is selected for Acme Company, as it provides different specific financial services as compared to bank of America and City bank such as: management of liquidity for international corporations, management of payables and receivables (Green, 2010).
For instance, the most recent cash management facilities provided by HSBC bank can influence the effective working capital management and improve the company’s order-to-cash cycle (Hayler & Nichols, 2006). In contrast, cash management services provided by both bank of America and City bank can not improve order-to-cash cycle effectively (Bank of America. 2012).
At the same time, it should also be noted down that this bank will also offer different services to the company regarding the receivables management processing. Hence, with the help of this service, company can improve efficiency and effectiveness of the collections cycle. On the other hand, bank of America and city bank will not deal with the receivables management (City Bank. 2012). In this manner, these banks cannot offer efficiency of the collections of the company. Apart from this, HSBC bank will enable Acme to speed up collection, slowdown disbursements and therefore maximize net float. These are the distinct services or facilities provided by HSBC. In addition, this bank will help the company in cash transfer as soon as possible (Grais & Pellegrini, 2006).
On the other hand our Acme Company analysis assignment help experts said that the most significant aspect in the selection of HSBC bank is its capability to transfer funds out of the country and ensure that it facilitates foreign currency exchange for the company (HSBC. 2012). In contrast, Bank of America and City bank can transfer funds from one to another nation, but not smoothly. In this way, HSBC bank also enables Acme Company to combine its all banking relationships and operations in different countries in order to make easy control of cash flows. In addition, it is also noted down that HSBC bank also provides payment advising services that will enable the payers of Acme international to send and advice simultaneously with the payment instruction to the beneficiary.
As per the Acme’s assumptions, company would have subsidiaries in South America and Asia that import materials and parts and assemble for export. In this condition, HSBC bank will enable the company to finance the cash conversion cycle and its transaction from the time it pays the account payable until it collects on its sales (Liaw, 2011). Additionally, HSBC is also located in many parts of Asia as compared to bank of America and City bank by using the bank to facilitate its cash management and working capital that will enable Acme Company to centralize cash management (Grais & Pellegrini, 2006).
HSBC would also help the company in reducing the credit risk, because through HSBC, the exporters can purchase export credit insurance. The insurer will be committed to pay the company in the condition of importer’s defaults. Through this, the firm is assured of centralized management of its cash. In the same manner, both Bank of America and City bank can also provide such types of facilities (Hayler & Nichols, 2006). Apart from this, HSBC has its centralized cash management system that will help Acme company to capture transactions and deliver comprehensive timely information regarding the cash position of the company. This is possible because HSBC bank has a global computer platform and a nearly ubiquitous presence (HSBC. 2012).
HSBC can also provide local lending sources for operating cash effectively as compared to the other two banks for Acme Company, because this bank has its own investment management division to increase its investment business by using in house products when appropriate (Liaw, 2011). This is enabled by HSBC’s new global lending solutions that are specializing in the development of the full range products and services for local lending. Hence with the help of HSBC bank, Acme Company will fulfill its short term investment vehicles for its excess cash balances through using the banks in-house investment capabilities But, both bank of America and City bank do have not their own investment management division (Green, 2010).
At the same time it is also analyzed that the selected bank will facilitate the company to efficiently carry out its foreign exchange services. For instance, the bank will personally make conversations with foreign and domestic markets due to its leadership position in the country (Dlabay & Burrow, 2007). In addition, HSBC bank has the capability of global infrastructure to provide a wide range of foreign exchange services. Apart from this, the bank has a technical platform that will assist the company with risk assessment and risk management based on their outreach and participation in global markets. As a result, Acme Company would be able to pay its bills in both local and other currencies through the bank (Grais & Pellegrini, 2006).
Conclusion
From the above conversation, it is concluded that to explore the strategic options, HSBC bank should be selected by Acme, as this bank can provide some specific financial services or facilities to the company to manage its working capital. In addition, HSBC bank can provide a variety of working capital and multinational cash management services to the company effectively in comparison to bank of America and City bank. In addition, the company can manage their international working capital management requirements with the help of HSBC effectively.