Harpe Corporation Case Study

Harpe Corporation

You are the Relationship Manager in HSBC managing corporate accounts.  Tiffany Huang used to be the Financial Director from the company in your portfolio, who recently left the company and joined Harpe Corporation (“Harpe”) one month ago as the Director of Treasury and Credit Control.  After reviewing Harpe’s current status, Tiffany called you to seek your help on the below issues as well as potentially overall banking support from HSBC.  

What Tiffany needs is to help on below issues:

• Account Receivable (AR) risk management.  How to manage the AR quality with considering the company sales growth, market penetration and risk management?
• How to manage the Foreign Exchange (FX) risk when Harpe about to have more foreign currencies?
• Working capital management.
• What are the possible financial crime risks associated with this case?

According to the preliminary financial analysis and market survey, Harpe’s credit is strong with good market reputation. Harpe is in the growing stage. It is a great opportunity to approach Harpe as their banking list is short and HSBC global capacity match Harpe’s needs.  You will prepare the presentation to address the mentioned issues as well as provide the total solutions to Harpe.  You expect to start the banking relationship with Harpe after this meeting.

Company Brief

Background Information

Harpe Corporation (“Harpe”) is a private company, a Notebook and PC manufacturer with headquarter in Taiwan. Previously, Harpe focused on OEM / ODM and sold products to well-known brand companies.  Recently, Harpe has changed the business strategy and started to establish self-owned brand rather than just an ODM.

With the self-owned brand, Harpe’s operation model is different from before.  

Sales and Global Footprint

Harpe has business relationship with diversified buyers after being the brand companies.  No single buyer accounts for more than 10% of Harpe’s sales turnover.  Buyers include full range of companies, listed companies, mid-size and small enterprises.  The payment term is decided by Sales and Credit Control team of Harpe.  More than 50% of the buyers are private companies and it is difficult to obtain public information and audited financial of these buyers.  Normally, Sales team like to propose Open Account term (buyers make payment at certain period after receiving goods) as it can easily obtain more business.  However, the risk is higher to Harpe (supplier) if the buyer credit control is not strict.  

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