Trade Finance
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Terms and Endearments: Managing the balance sheet and supplier relationships

by Andrew Sawers for Taulia

As companies seek to improve their working capital, suppliers may be seen as an easy target. Better tools and strategies can bring the interests of finance, procurement and suppliers into closer alignment, writes Andrew Sawers.

The financial crisis has taught the corporate world two important lessons: the importance of cash and the need to diversify your sources of funding. Between the beginning of 2008 and the middle of 2014, UK corporate cash piles increased by around 25%, according to a survey by the Association of Corporate Treasurers (ACT). Moreover, 43% of companies said they expected to continue to carry higher cash balances than they had in the past, with very few expecting to run down cash as the economy recovers.

“Since the start of the financial crisis, companies have said that they want to be less reliant on banks,” says John Grout, policy and technical director of the ACT. They are also more wary of capital markets.