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Cash & Liquidity Management
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Optimising Cash and Working Capital in a New Environment

by Dámaso Cebrián, Head of Trade & Supply Chain Finance Products Europe, Banco Santander

The change in the economic cycle, together with the financial crisis, has forced companies to shift from expansive and aggressive business strategies to conservative positions that allow them to weather stormy conditions. The downturn in consumption and public expenditure, combined with constrained liquidity in the banking market, have forced companies to postpone their long-term investment strategies and focus instead on cash. Cash and working capital have become top priorities, and we have seen many of our clients engaging in programmes to optimise inventory, payables and receivables management. 

The crisis has had a particular impact on SMEs, who often lacked the financial resilience to weather the storm. Consequently, sectors that rely heavily on SMEs as a key part of their supply chain have been focused on securing their supplier base, leading to the growth of supply chain finance. While this concept has existed for many years, and proved very successful in certain countries, it has become a mainstream solution. By using supply chain finance, major companies with a clear focus on cash generation have improved their working capital position and optimised their cash conversion cycle, without damaging the position of their customers and suppliers