Corporates explore new options to release working capital
Unpredictable receivables together with difficulty accessing traditional sources of liquidity have forced treasury teams to explore all possible sources of working capital during the coronavirus crisis.
The challenges presented by the Covid-19 pandemic have driven a move away from traditional providers of working capital towards alternative sources, such as institutional investors, as businesses seek the right financing mix to tackle a new set of circumstances.
Institutional investors are also seeing the opportunity to provide liquidity to trade finance, says Michael Rieskamp, managing director, EMEA sales at Taulia.
“Trade as an asset class has been discussed theoretically for a long time but it is now becoming common practice,” he says. “This has been supported by developments in technology that can capture information and provide access to help institutional investors offer liquidity where needed.”
Foresight is crucial to ensuring progress at this more difficult time
Apart from the usual options – which include delaying payments and applying to supply chain finance schemes – Enrico Camerinelli, senior analyst at Aite Group, refers to the emergence of a number of solutions for sourcing liquidity from inventory and employee salaries.
The first of these is from Supply@ME, which has developed an alternative platform focused on inventory monetization.
“This can enable a wide range of manufacturing and trading businesses to improve their working capital position via a ‘true sale’ of their inventory to special purpose vehicles,” explains Camerinelli.