Bringing disparate entities together in a centralised treasury or shared service centre can be a positive step along the road to better working capital management. 

That was the view of several participants at the latest Working Capital Forum Virtual Round Table, sponsored by American Express, where two participants both suggested that their very decentralised approach was a barrier to be overcome in implementing working capital improvements.

By contrast, one hospitality and FMCG firm, part of a global group, had been able through negotiation to harmonise payment terms across dozens of suppliers at a standard 120 days.

While the conversation around the virtual table ranged widely , the topic this month was ‘who owns supply chain finance’ and guests were asked whether treasury or procurement took the lead in driving supplier finance programmes. 

The group was split evenly, with around half of programmes initiated by procurement teams as an additional offer to suppliers, and the rest driven by treasury’s desire to free up cash. All agreed, however, that close co-operation between teams was essential to success.

Diving further into the detail of working capital optimisation schemes based around payables, one treasurer at a large multinational was looking at a three-tier approach to supply chain finance: A bank programme for the very largest suppliers, a fintech solution for the ‘mid-sized and smaller suppliers and, finally, a card programme for the smallest suppliers in the ‘long tail’.

For everyone, the pandemic had focussed attention on the details of paying suppliers, with several having reviewed payment terms and looked at new ways of supporting the supply chain during difficult times.

This is the latest in a monthly series of Virtual Round Tables in which corporate treasurers and their peers in procurement and supply chain roles get together to discuss working capital and supply chain finance. 

The group will meet ‘in real life’ for the first time in nearly two years at the Working capital Forum London Conference on 14th October. Complimentary places at the event are available to bona-fide corporate treasurers, procurement executives, supply chain directors and AP and AR leaders at www.workingcapitalforumlondon.com

Event Sponsor

American Express