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Cash management debate: Show me the money


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In a cash-scarce world, electronic bells and whistles take second place to systems and partners that help clients marshal their global liquidity as quickly and visibly as possible. Maximizing working capital throughout the supply chain is now a necessity, not a luxury. Clients and banks must change.

Executive summary

• Cash must be immediately visible, centralized and available

• Integrated working capital solutions have direct, significant and beneficial impact on the balance sheet

• Extracting liquidity from working capital can free up billions of dollars

• Inefficiency is now too costly to tolerate

• Risk minimization has become a priority

• Supplier financing solutions have come of age

Cash management debate: Learn more about the panelists

Jack Large Clearly, post-crisis, this industry is at a turning point and banks have different views of the transaction servicing area. What are the key objectives of this business now?

MK, Panalpina For us it is a fully integrated system for pooling, payments and collection with independent bank communication, all based on centralized management with full visibility and access.

VP, FCC The key element for us is to have our cash at the right place at the right time, at favourable prices and with good service. And we need risk control over the FX and interest rate positions of all our subsidiaries around the world. For that more automation is needed: automatic cross-border pooling optimization at the same value dates across regions and the monetization of EU payments through Sepa [the Single Euro Payments Area].

FCC has put much greater focus on liquidity optimization and working capital management and also on the transformation of ebitda into cash. We have placed much greater importance on planning short-term and medium-term liquidity. We have sought an increasing number of bank lines and our cash management business is gaining importance as a trade-off for access to funding lines.

PL, Citi Clearly we all have a strong focus on increasing the efficiency and the processes around cash management, but the sea change for me is that cash management is no longer seen as a separate item but as part of an overall mix that includes working capital and broader issues. The focus is on liquidity, working capital, alternative financing techniques, cash preservation and risk mitigation.

We see five key areas: the first is visibility, control and optimization of cash, which is demanding more discipline because the rating agencies are looking more closely at it. You have to take cash as an internal source of funds and really make it work hard for you.

The second is extracting liquidity from working capital. If we look at our top 3,000 clients worldwide, if they increase their working capital by 12% that releases $1 trillion into their own funding.

The third is risk mitigation, whether you call it supplier/customer or simply counterparty risk. Our clients want to ensure their suppliers and customers will survive this difficult period and are looking at how they can help them while at the same time protecting themselves. The fourth key area concerns how alternative funding techniques can be brought in to play. For example, at Citi we are stepping up very strongly on the ECA [export credit agency]/EAF [export agency financing] side, where we are seeing the highest levels of activity since 1934. We can help corporates in this time when funding is restricted and expensive, yet the agencies have increased lending by around 50% in the last year.

Lastly, we are seeing clients focus on their operational efficiency to drive down costs and streamline their financial processes.

LW, RBS Rather than fundamentally changing the practice of cash management, the crisis has heightened the focus on efficient cash management. For me, it will always be around the stability and reliability of models to help clients optimize their working capital. The essence today is an international cash management model that provides the network, infrastructure and tools at local, regional and global levels for clients to optimize their working capital management. For the FD or the treasurer, it is about maximizing return and minimizing risk across the company’s entire set of flows.

And for the banks, this added emphasis means that our models need to be able to support the client’s local needs. Where customers have local cash management requirements that must be reported on and where treasury needs to have that central control and visibility – whether it is through the treasury or through shared services centres or payment factories – what is key is that banks’ models facilitate that visibility, through automation and electronic access.

What is also critical from the banks’ side is to give the treasury and the businesses the information to enable them to effectively forecast cashflow, whether you’re using Excel spreadsheets or integrating directly back into an ERP [enterprise resource planning] or a treasury system.

PF, BNP Paribas We see four key drivers in today’s transaction banking business. First, clients are focusing increasingly on fully integrated solutions, from bank connectivity through treasury and cash management, payments and collections. This integration is vital to financial supply chain optimization, which is a growing priority among our clients. A second trend is that treasurers are paying greater attention to pricing, and demanding tangible value creation from their banks. This is a positive development in that it encourages banks to deliver services that create value rather than simply selling products. Thirdly, the trend towards centralization is continuing, extending not only to treasury but also to the development of shared services for payments and collections, at a country, regional and potentially global level. Finally, Sepa will in future have a greater impact than we have seen over the past two years. As Sepa services become more clearly defined, and we move towards Sepa migration, corporate treasurers are starting to look at Sepa as a facilitator of more efficient payment and collection activities in the eurozone.

RM, Barclays For us the business revolves around robust working capital and liquidity management coupled with efficient payment and collection solutions across all the areas in which the client operates. This includes supporting best practice in corporate treasury and the latest technology to ensure the cash is in the right place at the right time in the right currency.

DM, Deutsche For me the essence is centralized, visible, available cash; that is the key. Clearly the crisis has just put much more focus on that than there has ever been before. The issue is that inefficiency in how cash was managed came at a relatively low cost over the last decade because access to funding was quick and straightforward. If you were indifferent to stranded liquidity and you didn’t maximize balances in the right places, if you needed last-minute solutions to having money available in the right currency, that didn’t cost you that much because the cost of capital was so low. Now the cost is high and so Lesley’s point is a good one; it is what has always been there, it is just that now people care.

Total working capital management

Jack Large The common theme in your answers has been the drive for centralized, available cash extracted from the entire financial supply chain. Integrated solutions for this give customers a weapon in the fight against the increasing costs of working capital. This sounds great, but it requires customers to understand their processes across the whole business, and get senior buy-in, and for banks to know their customers in a lot more detail than is usual.

DG, Charter From a personal view I understand what is happening in our business and what is driving working capital levels. I don’t detail manage it, it is owned by the operational management.

Jack Large That is an important strategic decision: the operational guys own it; you don’t.

DG, Charter The ownership is very much with the businesses – it is up to them to deliver the cash from operating profits. Good discipline was needed when annual growth was 20% or 30%. There was a tight focus on working capital – the basics – inventory levels, customer exposures looking at days outstanding by key customer accounts by country. For me, the challenge was to be clear as much as I could to our CFO and CEO on the significance of the areas I look at – particularly central liquidity position, cash held overseas – and the impact of working capital trends. Looking forward, if I see solutions coming out of banks that can help me, it is up to me to try to explain that to the business to show them where there is something that is going to help them.

PL, Citi You have more of a support role to them to help them?

DG, Charter It has been a tracking and monitoring role, particularly when we were growing so fast.

PL, CitiI was in Brazil last week in a similar situation where they said that DSOs [days sales outstanding] were managed by the marketing side, while DPOs [days payable outstanding] was procurement. The treasury had a clear role to try to help them, but they would not measure themselves on that working capital. We went to the next company and they said: "We are now totally measured on working capital for the first time and at the end of the year we also have an MIS penalty of an additional 20% to manage that down." There was more pressure on them. We are seeing a lot more of these performance matrices coming into the treasury area.

PF, BNP Paribas One of the problems with devolved responsibility for working capital is that each department or subsidiary is measured on different metrics, and speaks a different language. While each will understand the cashflow dynamic for which they are responsible, it is really only treasury that sees and recognizes the way that these dynamics interact. This is where a bank can help. By bringing together the different players and establishing a common language, there can be a closer dialogue and more strategic decision-making on working capital issues.

RT, HSBC We are spending a lot of time talking to treasurers, the businesses and the shared service centres about how they are managing the whole purchase-to-pay, end-to-end cycle. We look at how it currently works and go through each area to maximize efficiency. Then we tie all that back into liquidity – getting that working capital out of the business and turning it into cash more quickly. We can then use tools like HSBC’s cross-currency pooling products to optimize this for the customer. All this means spending a lot of consultative time working with clients to try to get the results they want.

PL, Citi Victor, you were talking about working capital; are you looking at this as well?

VP, FCC This has been one of our main areas of focus. We have established two risk committees in our two main areas of business. One effect is that we have imposed more stringent conditions on our projects. For example, we are no longer willing, unless there are exceptional conditions, to waive prepayments or mobilization payments on infrastructure contracts because it affects our working capital and our debt position. We have incorporated the average payment period into the automatic control circuit for suppliers and have specific authorization for payments outside these average payment periods. We have a detailed analysis and authorization process for any commercial loan outside the standard company conditions. We are willing to sacrifice business to preserve working capital levels. We may discontinue a construction project if the customer is not able to pay on time or until the financing needs of the customer are resolved. Before we might have financed the customer ourselves for some months as a bridge loan. Now this is not the case.

Cash, trade, supply chain – it’s all the same

Jack LargeSo how do you provide truly integrated working capital management, rather than just a series of products from payments, cash management, trade finance, factoring and so on?

DM, Deutsche The way we try to offer solutions in this area is through regional sales forces responsible for cash and trade or, put another way, they sell solutions that deal with payables and receivables, to do with risk and with working capital; and they are pretty agnostic, meaning they are focused on the client, they are not focused on trying to meet a quota for what they sell around LCs [letters of credit] or guarantees or bid bonds versus selling cash management mandates. We think that is critical because with financial supply chain it becomes an academic exercise to try to separate what is cash and what is trade. You don’t say, "I want to buy a trade product", you say, "I need an LC"; an LC has to do with risk and it has to do with cashflow, but you don’t think about buying a trade product. More broadly, clients worry about working capital and about risk and they are looking for an integrated solution.

PL, Citi And that means that the solutions we have to offer to cover working capital, risk management and alternative funding are not just around cash. We provide a mixture of different solutions that can include financing, enabling technology, balance sheet analysis, sensitivity analysis on DSOs or DPOs which may lead to a financing solution on the distribution side or reverse factoring and so on. The other thing to be said on the supply side is that with the crisis suppliers are under tremendous pressure and if a key supplier goes down, that can completely disrupt your business. It is critical that you have the lifeline into those suppliers where they can get the funding as well.

Jack Large But these financial solutions start to become part of the internal processes within companies. Is that the role of a bank?

PF, BNP Paribas What you need to remember is that the role of a banking partner, and banks’ relationship with their clients, has changed considerably. While a bank used to be simply a supplier, this is no longer the case. For example, we have talked about straight-through processing for many years, which involves the close integration of processes and information flows throughout the life cycle of a transaction. This inevitably involves a closer dialogue between a bank and a corporate client about how this information flow should take place. If a bank washed its hands of a transaction as soon as it left its system, integration would never happen. I also mentioned earlier that departments involved in working capital often use different terminology and view cash from a different perspective. By facilitating greater dialogue and providing the tools to create greater visibility of cashflow, the bank is intrinsically involved with a client’s internal processes.

PL, Citi In other words, our job is to help our clients increase internal cashflow and improve working capital. It is not saying: "We have cash management, do you want to buy it?"

DM, Deutsche It is understanding the client. If the client’s principal issue is that they depend on a bunch of very small, mid-cap, Asian suppliers for their business to run and all those Asian mid-cap suppliers are at risk of going bust then everything that is contingent on that problem is irrelevant. You have to go back to the problem and perhaps there is an opportunity to do credit rating arbitrage and finance those suppliers using the buyer’s credit rating.

PL, Citi Put the other way, if we can help the suppliers by helping the client, they can expand and be able to buy more and you can help finance them to expand and then they are going to help the clients grow.

PF, BNP Paribas Understanding what working capital truly means to a client requires treasurer and bank alike to have a detailed understanding of a company, how and where it operates, where decisions that impact on working capital are taken and the company’s strategy for the future. Having established this, the treasurer is then in a position to become an adviser to the business and help others take the strategic decisions that affect working capital. This could take the form of a working capital committee, for example, which includes all the key individuals to ensure that the implications of working capital decisions are understood and managed strategically. Once banks have fully understood their client’s working capital drivers and influencers, they are in a position to give the right advice to help clients achieve their financial objectives. Today, efforts by both treasurers and their banks are often thwarted as companies are frequently managed in silos, which limits visibility across the business and prevents strategic working capital decisions.

VP, FCC I like the idea but I think it’s hard for banks to devote sufficient time to understanding your business so profoundly that it makes a difference in terms of working capital management. I would not buy any solution that gave the bank control over the financing because this is a key area for any business. I like the idea that the banks are providers of more integrated solutions for working capital but I don’t think we have seen such a solution yet.

Clients must change too

LW, RBS We run things in much the same way as Dan described. And we’re increasingly seeing a demand for these cross-product solutions that fully integrate into the client’s back office and other systems. But this requires changes inside clients too since historically the trade sales team would speak with one person within the corporation, while the cash management sales person would have a different contact.

PL, Citi Exactly. The challenge for the banks is finding the right people in the client. Purchasing, treasury, the business unit or wherever all have a big impact on working capital but the buying centres or the decision-making points within the clients are scattered. So the banks’ challenge is not just trying to get into the value chain but to make sure that we are getting with the right people that could pull it together – often to CFO level.

RM, Barclays This is an issue but one result of the financial crisis is that the role of the treasury is becoming core to the whole business. We are seeing the treasurer becoming more involved and influential in any decision that involves finance, which is helping corporates manage working capital more effectively. This is the case particularly when financial decisions are either centralized or treasury agreement is required before any decision is made, for example on sales terms or discounts offered.

RT, HSBC I agree; the situation at clients is changing. We have many conversations these days that are focused on supplier financing through, say, reverse factoring that are being led by the finance team that holds the bank relationship.

DG, Charter I judge the banks by the quality of their suggestions and how well they relate to our business. That is the first test: you know our business, you know what you are talking about before you offer us products.

Jack Large Victor, can you respond on the responsibility of the CFO to get the right people/decision-makers involved in creating more financial efficiency?

VP, FCC We have not managed that so well. I don’t remember any meeting with a bank in which we have had all the people around that are related to working capital management either from the bank or from our side, mainly because I have not seen that approach, at least from the banks so far.

RT, HSBC It is a real challenge for the banks to do that. I was at a very big pitch yesterday for business for a big, global company in London and they brought together many people from their business, from their supply chain, from their shared service centres, from their centralized treasury – people from all over the world. You are saying that we should know everything about the company in real depth; it is quite hard to do that in a global company like that which may not even fully understand itself.

MK, Panalpina I appreciate that the banks want to understand the whole picture regarding their clients but do I want to allocate all that business to one bank, especially in these times? No. That is why the banks should start – as complicated as it might be – to talk to each other and let us set up club deals on the operation side, not only for funding.

PL, Citi That is a good point and it does get raised quite a lot. For example, if we are talking about working capital, some corporates would say, "we want a multi-bank system like Ariba for supply finance"; we then say, "tell us who your relationship banks are and if you have four or five, we will then package it so that when we are doing the funding you can then draw on all of your relationship banks, we can structure that together with your relationship banks". The banks are moving forward in that direction, so it is not necessarily the front end that is important, rather it is the banks behind it. You can say, "I want those five in there".

MK, Panalpina Yes, but everybody wants to be the front-runner.

PL, Citi Not really. You can decide which banks to include and in what role. The banks know that the multi-bank approach is important, but what is of overriding importance is that you decide where you think that bank has that strength and does it add value.

Not just sweating the supply chain

Jack Large A lot of this boils down to innovative solutions for DSO and DPO that don’t put supply and distribution chains in jeopardy. What have the changes been in this area? What issues are here and what solutions are actually finding favour with the customers?

LW, RBS It used to simply be about you paying later and incentivizing people to pay you earlier so your DPO and DSO looks great, and that used to be how companies were benchmarking themselves. Now clients have to dig a lot deeper, look at inventory levels and manage their entire supply chain. The "simplistic" answer of extending payment terms brings related stresses into the supply chain, which both procurement and treasury will be concerned about given potential negative impacts. We’re looking to help them automate their entire process from invoice initiation through the supply chain finance modules back through the settlements – through discounted or non-discounted invoices. End-to-end automation is key.

DM, Deutsche And of course supplier financing has become more high-profile for a number of reasons: it is the unavailability or high price of bank lending; that forces people to look at collateralized funding sources, ie, trade finance. It is the development of new technology that lets people do these things efficiently for the first time. It is the fact these concepts have been around long enough now that they have started to percolate through the banks and the clients. And it is distributors as well. Supplier/distributor financing is a concept that has been around for a long time, but the technologies that make this feasible have really only been developed recently.

LW, RBS We definitely see the same trend towards supplier solutions, and our relationships across the globe allow us to manage the risk that the transaction will not be settled. So we believe that what is really needed is how you integrate the ERP systems through the portal, which gives access to the supply chain finance, and then mapping that back to settling those invoices, whether they are discounted or not, and then it all comes back into the ERP and is completely reconciled. Customers see the real value in integration through the whole of the chain, outside of the risk discussion that has been going on.

RM, Barclays I broadly agree with that synopsis. We are certainly seeing an increasing interest in end-to-end supply chain finance solutions that reinforce the relationship between buyers and suppliers and provide an alternative source of finance into the trade cycle. Visibility of balances clearly has become more important, with particular focus on intra-day visibility. This has driven enhancements to cash-pooling solutions to ensure that a corporate can not only see balances held across its operations globally but also provide cross-currency solutions to manage that liquidity in order to maximize interest yield, minimize interest costs and of course manage the amount of short-term borrowing facilities it requires across the whole group.

PL, Citi Victor, do you use outsourced reverse factoring [bank-funded early payment at a discount of suppliers’ invoices qualified by the buyer]?

VP, FCC Yes.

PL, Citi In Spain this is very prevalent and from a bank’s point of view it is one of the biggest trends we are seeing; at the AFP conference in LA recently this was the number one topic. For example, at one of the large US retailers, just a 1% change in their DSOs generates $4 billion of internal cashflow for them, so the power of releasing these funds internally as an alternative funding source is immense. This is where a lot of the banks are focusing.

Jack Large But it has not been the most successful product, has it?

PL, CitiThings have changed. Everybody has woken up to the fact that they have to do it. If you want to increase your clients’ working capital, you have to be able to help fund their suppliers. To get that you have to understand their suppliers, you have to be able to finance those suppliers and look at your customers’ customers, so you are getting into this value chain much more in a collaborative way.

RM, Barclays I agree that is the case but what we do not have yet is a market-wide agreement on how this can be effective, In the case of Spain, France and Scandinavia, they have provided domestic supply chain finance solutions for a number of years and the processes and systems are common and well understood. Elsewhere in Europe these solutions are still very much in their infancy. It may be difficult for one supplier working with numerous buyers and having to manage numerous systems if each buyer implements a different solution. What is true, however, is that supply chain financing solutions can and do offer benefits for both the buyer and supplier, helping both parties to manage their DSOs and DPOs. If these solutions could operate on the standards that make the various schemes interoperable and extend to using invoice information to manage inventory, then the benefits could be huge – and the take-up significantly accelerated.

PF, BNP Paribas It’s true that there have been major regional difference, in adoption of financing solutions such as factoring in the past and, as with any financing solution, a single product cannot be applied to every situation. But banks need to offer a variety of factoring and alternative financing solutions according to a client’s specific needs and those of their suppliers and buyers, and to work closely to understand clients’ working capital drivers and implement solutions to accelerate the cash conversion cycle and reduce the working capital requirement. Any reduction in working capital has a direct impact on the balance sheet, so the benefits are immediate.

PL, Citi We are doing a tremendous amount in this place. Two years ago companies did look at this, though often it wasn’t with the treasury area; it was with purchasing and it was not a priority. Now the security of suppliers is paramount; and there are supply chain people who are designated to look just at this now.

PF, BNP Paribas In an environment where small and medium-sized enterprises are being squeezed the hardest, larger companies are recognizing that they are very dependent on these firms. Many are highly specialist in the services they provide, and a company cannot simply switch to another supplier if their existing one ceases trading. Security in the supply chain is paramount, and as Peter explained, companies are focusing on this increasingly. Larger companies are not providing supplier financing simply for altruistic reasons, they are protecting the integrity of their own supply chain.

Jack Large Marcel, you have a frown on your face.

MK, Panalpina I just feel that this is more difficult than it seems. Did a producer really care about the supplier before? No, not really. Do they now talk to each other? Maybe. Can they treat each other as financial partners? I don’t know. Do we really need the banks?

RT, HSBC If your suppliers are that critical and you know them really well, probably not as you will have your own ways of showing support. However times have changed and the provision of external credit to your supplier base is critical.

DM, Deutsche Exactly. If you are a big US technology company and you are getting faxes coming in saying: "Send me 5,000 printers" from some company in a faraway place such as the Philippines that you have never heard of, you realize that the aggregate of 50 companies you have never heard of is quite a lot of business, but you don’t have the resources or the inclination to try to figure out what is the financial situation and the risk associated with all these guys. That is where a bank can help.

RT, HSBC We certainly see the value in it, particularly with our footprint of having lots of big buyers in Europe and the US and also being on the supplier banking side in Asia; that helps us a great deal because we are on both ends of the supply chain, which works very nicely. I know those five suppliers in the Philippines very well and I can have a really good discussion with them. These products are out there and we have seen a tremendous growth in supply chain and reverse factoring this year, driven by the credit crisis. These products are available and people want to take advantage of them.

PL, Citi Just to add to that, if you, the corporate, can help your suppliers obtain preferential financing without increasing risk on your side, then not only are you are helping your suppliers financially, you will have better security of supply. Furthermore, you may be able to leverage this financial benefit to renegotiate and improve the prices from your suppliers or payment terms with your suppliers to improve working capital. For example, through supplier financing, your supplier may be able to obtain 6% financing, rather than having to pay 10% by borrowing from their local banks. Indeed, perhaps, they are not able to obtain more funding from their local banks at this point in time. In any case, this can be a win-win for both your supplier and the corporate.

Risk customization

MK, Panalpina Yes, but we are being pushed by investors and by analysts to increase DPOs. So we are also being forced to penalize our suppliers by extending our payment terms to them and making people pay us earlier. So there are contradictions in all this.

Also of course we always try to minimize risk but supplier financing is complex. Let me just make a short example where we still have a big exposure towards a big auto supplier in the US which went into Chapter 11 bankruptcy. We thought, "we need some protection", so we bought some credit default swaps on it. Here comes Chapter 11 and we unwound that CDS at 55%, which theoretically should have been at 100%. Did we really have protection? No.

RM, Barclays But financial supply chain solutions must offer benefits to both parties to be successful. It may well be possible for the buyer to extend terms and if at the same time the supplier is able to obtain cheaper finance through the bank using the credit rating of the buyer, then there is benefit for all parties. However, where such payables financing schemes are with recourse to the buyer, it has to be recognized that this will mean that the service provider will need to mark limits against the buyer. This potentially uses up some of the available risk appetite to the buyer from that institution, although typically these are off-balance-sheet structures. This really does mean that the benefits of these services have to be compelling to the buyer in order to establish such a programme.

DM, Deutsche The key is to decide what risks you are prepared to understand and to manage. Supplier finance and distributor finance give you the ability to say "we know lots about our suppliers because we manufacture in Switzerland and we deal with guys who are in Switzerland, Germany, Italy – we can get the car and be there in two hours; we can know these guys really well". The guys in the Philippines who buy our stuff or then distribute it and sell it on to somebody else, those guys we don’t know at all and to get to know them would be really expensive and difficult and we cannot claim to know those distributors well. Perhaps a bank can help us with distributor finance because they have the knowledge base. If you have the knowledge base, why should you pay a bank to do it? I agree.

MK, Panalpina That is not how the product is being sold by the banks. We are just told these are good products, not that they are tools for customizing the risks we feel we can and cannot take.

DM, Deutsche But that is natural. I can’t know where you feel comfortable and where your relationships are. It makes sense for a bank to come to you and say: "Financial supply chain is fantastic, you should buy it" and it is up to you to say, "on the supplier side I feel really good; we only buy from five guys who represent 75% of our spend".

PL, Citi The sea change is that nobody is just selling products any more. They really are only trying to analyze what is important for you and what could add value. Then you make the decision.

MK, Panalpina Let me make one last comment. Usually, if I only present these customers or these suppliers to you, with whom I am uncomfortable, I don’t have the critical mass. That is the starting point usually. If I only bring these 50 customers in the Philippines or wherever, you tell me, "yes, okay, that is nice, but I need more".

DM, Deutsche That is why the relationship bank idea makes sense. That is why we want you to have just two or three so that if you want to stick me with having to deal with the 50 little companies in the Philippines, I am happy to do it because I also help you with your Swiss core concentration stuff; and then it works. That is where the give/get makes sense.

Jack Large So are there opportunities from the working capital management platforms from OB10 and others?

MK, Panalpina What is a working capital platform?

Jack Large You have everything from e-invoicing platforms, you have spending platforms from Ariba, you have spend-control platforms; Citi has a partnership with Standard Chartered that integrates everything they say. You see Tesco just signed up for OB10, the world’s biggest e-invoicing system, but it is all done piecemeal. How are you approaching this?

MK, Panalpina Remember, we are an asset-light company so the biggest exposure we have are our accounts receivable. About a year ago we had a difference or a delta between DPO and DSO of about 21 days, which is a lot. At the same time, we had about SFr1 billion of receivables on our balance sheet and our market cap was about SFr3.5 billion. It is a massive exposure for the company, which is the reason that the credit collection (which manages the accounts receivables) is not integrated in the treasury. Today, we have been able to reduce our net working capital dramatically. Also, the delta between DPO and DSO is about 15 days and something we are now looking into is how can we get a part of these receivables off our balance sheet. That is where we started to look into solutions with one bank to see what we can do to get these receivables off our balance sheet. It is not about the cash itself because we have enough cash, it’s about risk. The final decision rests with senior management.

More work needed

Jack Large It does seem that there are still gaps between what the banks say that they can do, and what the customers believe can be done or is desirable.

DM, Deutsche For me what is interesting is that all the banks seem to be on the same page around financial supply chain, but the corporates perhaps not. That is interesting. We all think that we should sell it, but you are not necessarily sure you should buy it. And all the banks are in absolute agreement that corporate access for Swift is big and growing, and again it’s not so obvious to the corporates.

RT, HSBC It’s clear that the core issues are still around liquidity, choosing the right banking groups to work with and apportioning wallet share to those banks that best help you with solutions to your problems. The world is now a more complex place and those providers are having to step in at a much deeper level to understand the company and the interaction between them and their supplier and customer base.

PL, Citi The one point I really took away from Victor and the others is the working capital focus that really is becoming stronger and stronger and we still have more to do in this space together.

DG, Charter I could easily be overwhelmed with everything that is going on! For me the key is to understand: ‘Does X work for me?’ when looking at potential solutions.

LW, RBS I agree with Dan: banks need to get better at looking at the whole working capital chain, really understanding the client’s needs, being flexible and looking at where we can alleviate issues by taking on some of the work that may be required to help clients integrate through Swift or through a bureau. We need to be more effective at helping clients through those processes.

RM, Barclays We have spoken a lot about technology – we must use this technology in the future development of our products and services as a matter of course. What was reinforced today is that relationship is still vitally important. You need to understand your customers’ business, and provide integrated solutions that meet their needs across the end-to-end working capital cycle, including liquidity management solutions and channel capability.

PF, BNP Paribas What this discussion has emphasized for me is that the industry has gone through a fundamental shift. Banks and corporates are closer than they have ever been, which is a positive development and allows more open dialogue, creativity and a focus on value creation rather than products and services. Technology should be an enabler to communication, not a way of tying companies to their banking partners. The right technology should facilitate collaboration, interaction and recognize that treasurers are focused on the needs of the business, not the individual products offered by their banks.

VP, FCC For me it has become clear that cash generation is a very important part of the value embedded in your company, because it reduces debt and by reducing debt you increase the value of your company with shareholders, investors and analysts. Secondly, it seems that despite all the developments in technology in different areas, there is still a lot to do in terms of standardization and creating truly integrated solutions that the companies see as valuable.

Jack Large The phrase I wrote down, and the three corporates all repeated this, was they want to buy more integrated cash management solutions. My take from what cash management means today is that it doesn’t mean cash management, it means totally integrated working capital management. And I also took away the fact that clients judge banks by the solutions they provide and their total business understanding. Thank you very much; it has been a great session.