by Sebastian Vestergaard, CFO, Joe & the Juice with Paula da Silva, Head of Transaction Services, SEB
Treasurers and CFOs are well aware that managing working capital is essential to the financial health of a business, but it is often difficult to know where to start, and where the greatest value can be added. Furthermore, responsibilities for working capital are often distributed across different departments. As a result, it often seems easier and less disruptive to maintain existing processes and responsibilities and use bank facilities as a source of liquidity instead. As the regulatory environment evolves, corporate awareness of liquidity risk increases, and margins continue to be pressed, however, companies of all sizes need to identify and tap into internal sources of liquidity.
One company that has been particularly successful in optimising working capital is Danish-headquartered corporation Joe & the Juice. Joe & the Juice has established a strong and growing reputation for premium quality coffee, juices and food through stores in 11 countries. As Sebastian Vestergaard, CFO of Joe & the Juice, explains in this feature, a key element of corporate strategy has been to enhance its working capital fundamentals whilst strengthening the physical and financial supply chain. Paula da Silva, Head of Transaction Services, then provides the bank perspective.
Sebastian Vestergaard, CFO, Joe & the Juice
Joe & the Juice is growing at an enormous rate, with new stores opening across Europe and now Asia and the United States. While this is an exciting time in the company’s development, managing working capital effectively is critical to our success. Given that we receive payment from customers at the point of purchase, we are fortunate in that the mismatch between payables and receivables is in our favour. Even then, however, we sell loyalty cards to customers as a way of accelerating receivables: by purchasing a loyalty card, customers benefit from a discount, while we enhance our working capital position and lock in a profit margin.