Undistracted by the hottest 19th April in British history, our largest ever group of treasury and procurement specialists met at London's Dorchester Hotel to tackle the serious issue of successfully implementing a supplier finance programme.
We were greatly helped by the willingness of one of our members in the telecoms sector to give a 'warts and all' insight into how his company had centralised procurement, standardised terms globally and put in place a wide-ranging supplier finance facility.
As always, the talk was held under the Chatham House Rule, so that members were able to get a true insight, not just into the programme itself, but to the wide-ranging restructuring of procurement and payments that needed to happen before SCF could be truly effective. As our speaker reminded us, SCF is 'just a tool' and works best when wielded as a part of a strategic approach to working capital.
What was very clear was the role of one 'game changing' individual in pushing through those much-needed strategic changes, often against strong internal opposition - an experience that many around the table were beginning to see in their own organisations.
The case study prompted wider discussion of some of the issues around supplier finance programmes. One member asked whether others were mentioning the fact that they had supplier finance programmes in their annual reports - prompted by some analysts' comments after the crash of Carillion. The consensus around the table was that properly structured SCF should present no issue for investors, but WCF director Mike Hewitt agreed to collate and distribute opinions from members and advisors.
A particular feature of this meeting was how many WCF members, who had first attended when they were in the early stages of addressing working capital issues, had moved forward to put in place a programme of their own.
As the meeting closed and members continued discussions on the Dorchester's terrace, plans were already being made for the next round of WCF meetings in Europe and the U.S.
The Working capital Forum is a private networking group for treasurers and procurement directors with a common interest in optimising working capital. If you would like to join us at a future meeting, give us your details here and we will be in touch.
Stockholm's Berns Hotel was the venue for the first ever Working Capital Forum to be held in Scandinavia, which brought together corporate treasurers and procurement directors from 14 companies ranging from global technology firms to pulp and paper producers. The event, sponsored by Basware, was held under the Chatham House Rule, which allowed everyone present to speak freely about the working capital issues they were facing.
The first ever Working Capital Forum to be held in New York City saw a wide variety of organisations coming together to discuss working capital issues, from multinational corporations to a not-for-profit social housing group. As always the meeting was held under the Chatham House Rule, allowing everyone present to speak freely about their businesses in a discussion moderated by Adaugeo Media CEO Mike Hewitt and kindly sponsored by Basware.
As working capital increasingly becomes a top-level agenda item, businesses are struggling with the requirements of the Duty to Report legislation and finding that their data quality presents difficult challenges to their working capital strategy and their compliance.
These tough issues were discussed in the latest Working Capital Forum, held in October at the Institute of Directors in London’s Pall Mall, generously supported by Lloyds Bank. Chairing the forum was Mike Hewitt, CEO of the organisers, Adaugeo Media. Taking part were almost a dozen professionals from the world of treasury and procurement across a wide range of industries.
Conversations about working capital management often go down the route of discussing payment terms extensions and how that can help improve the payables position on the balance sheet. But a different twist to that dialogue featured prominently in a recent meeting of the Working Capital Forum, kindly supported by Basware.
The discussion, which took place at The Ritz on London’s Piccadilly, examined the importance of paying suppliers on time. Whatever the contractual terms may be – and regardless of whether they have been pushed out or not – an organisation’s track record of actually paying on time to those terms is widely viewed as an important part of its reputation amongst its suppliers. In fact, more than half of the participants said on-time payment was a performance target.
“We pay 98% of suppliers on time,” said a senior finance professional at the event. “Our CEO wants people to be paid on time and for our reputation to be held in the highest regard. It’s about how the world feels about our company.”
For the treasurers and procurement directors who gathered at The Ritz for the latest meeting of the Working Capital Forum on 15th June, there was little doubt that a supplier finance strategy was an idea whose time has come. With a couple of exceptions, all were either engaged in, or about to start, a review of working capital or supplier finance in their companies, which ranged from global automotive suppliers to medical, industrial and retail giants.
All were aware of what some called the 'first wave' of supplier finance projects , which concentrated on extending Days Payable Outstanding (DPO), so freeing cash trapped in working capital for other uses. But for at least two of the corporations present, who spoke under the Chatham House Rule, the issue wasn't a desire to pay later- rather, they were interested in using surplus cash to offer early payment to suppliers in return for discounts, reducing the Cost of Goods Sold (COGS) and directly boosting profits.
Underlying the discussion was a 'snap poll' commissioned by the Working Capital Forum and its sponsor for the day, Taulia. The short report on its findings (which can be downloaded here) showed that, for the 26 corporations who responded, the goals for a supplier finance strategy covered a wide spectrum , though the most popular was still working capital optimisation.
Getting internal agreement to such a strategy presented difficulties for many around the table. With one exception, it was procurement rather than treasury which was pushing for supplier finance initiatives. One procurement director said that treasury in his organisation was resolutely opposed to supply chain finance, believing that it simply added cost. Others mentioned the critical role of IT in ensuring that a supplier finance programme was successfully integrated into the business.
For many at the lunch, a key element of any supplier finance strategy was to reach down beyond the top tier of suppliers into tier two and three, where small but critical suppliers might need support. One gave the example of a small software company which was responsible for a critical piece of code.
As the meeting ended, treasurers and procurement directors were exchanging ideas on how to surmount some of these obstacles and looking forward to future meetings. Working capital forum director Mike Hewitt announced that future meetings were already being planned for London, Manchester, New York and Stockholm.
A small selection of images from the April Working Capital Forum meeting.