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Efficient Treasury Management in the Professional Services Industry

featuring Bo Jansson, Senior Vice President, Sweco

Bo JanssonLeading engineering company Sweco has pursued a successful growth strategy in recent years. This has required a highly efficient approach to treasury management, and a focus on mitigating core business risks and optimising working capital management. In addressing these challenges, it was important that any solutions were specifically tailored to Sweco’s individual needs, as defined by its industry, strategy and organisational structure.

Releasing working capital

As a technical consulting company engaged in complex engineering and infrastructure projects, Sweco has few fixed assets and low levels of traditional inventory on the balance sheet. Bo Jansson, Sweco explains,

“Consequently, Sweco is not a capital-intensive company as such, but working capital, particularly accounts receivable, is a key consideration. Instead of physical inventory, our inventory takes the form of consultancy hours that have been invested in projects, but not yet invoiced. Around 80% of revenues are derived from work invoiced by the hour, and the remaining 20% from fixed price contracts that typically have milestone payments.”

This is a very different situation from that of, say, a truck manufacturer, which would have significant amounts of fixed assets and tangible product inventory on its balance sheet.