by Merisa Lee Gimpel, Payments & Receivables Market Manager EMEA and Sameer Sehgal, Head of Trade EMEA, Treasury & Trade Solutions, Citi
Treasurers have been at the forefront of corporations’ efforts to centralise, automate and optimise their financial activities in recent years. As companies have extended into new territories, treasurers have become increasingly adept at using centralised structures, such as regional or global shared service centres (SSCs), payment factories, treasury centres and in-house banks to maximise process efficiency, reduce costs and achieve visibility over cash flows through best practice cash management. In addition, however, treasurers are also leveraging these centralised structures to create working capital benefits, generate new income streams, increase the resilience of their supply chain and minimise counterparty risk on an unprecedented scale.
A payments toolkit
Liquidity and risk management have become the watchwords of the global treasury community. Although external financing may not be a priority for cash-rich, or large highly-rated companies that have easier access to capital than their smaller, lower-rated peers, optimising working capital is a priority for all companies. Put simply, this involves managing functions that impact payables and receivables so that there is sufficient cash available to fund obligations as they fall due. There are a variety of levers that treasurers and finance managers can use to influence working capital, reduce costs and minimise supply chain risk, not least the way in which they pay suppliers. These range from more efficient processing of traditional electronic payments, to innovative structures such as supplier financing, dynamic discounting and purchase and virtual card settlement.