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Making Your Working Capital Work for You

by Robin Page, Chief Executive, TMI

The management of working capital is one of treasury’s key responsibilities – ensuring that money is available to a company when and where it is needed. Our annual survey of working capital optimisation (often referred to as supply chain finance) has proved very popular with TMI’s readership in recent years and this 2015 edition will, I am sure, be warmly welcomed. It contains the usual interesting mix of articles, interviews and reports, all written by experienced practitioners who know that this topic is high on today’s treasury agendas.

In an innovative format which has been successfully showcased in TMI itself, two senior executives from Bank of America Merrill Lynch, Bruce Meuli and Jonathon Traer-Clark, go ‘head to head’ in a conversation which focuses on the importance of managing working capital, and highlights some of the operational and strategic challenges involved. As Helen Sanders, TMI editor, points out in her summary, among the points discussed by the two executives are the important topics of the discrepancies of definition and the relative importance of working capital in different organisations.

A particular aspect of the subject is covered by Sebastian Hölker of UniCredit, whose article deals with a solution to the long-time problem that treasurers have experienced in financing their entire receivables portfolios when those did not fit into large-scale securitisation projects. The answer, he says, lies in collaboration between banks and existing factor-insurer partnerships. He describes how UniCredit is currently working on a solution involving collaboration with several insurance companies to produce a single solution that will allow all types of receivables portfolios to be taken on together. The solution uses a state-of-the-art receivables finance technology that the bank has recently established, allowing the corporate treasurer “maximum transparency about what is going on with his receivables, and how he can make best use of this asset type”.

“What is really needed to get your working capital working for you is a broad, sound and dynamic analysis of your processes,” states Sven Lindemann, the CEO of financial software experts Hanse Orga. Lindemann outlines the various new and valuable analysis tools for working capital modelling, which mean that “for the first time, companies will be able to obtain comprehensive real-time data and to achieve dynamic analyses and enhance management decision-making”. These broad data sets empower companies to assess their working capital metrics over time and track improvements via changes in processes.