Recent economic and political disruptions have highlighted not just the importance of working capital management, but also the sector-specific impacts of those disruptions. Lockdowns hit hospitality harder than tech, but chip shortages hit tech harder than hotels. Net working capital days vary widely across sectors for good reason and other measures of working capital efficiency should be taken in a sector-specific context. That said, there are broad lessons to be learned from the experiences of the past two days, and some companies have done much better than others. So in this session, three treasurers from leaders in three different sectors give their advice on building working capital best practice in a post-pandemic world of climate change and Great Power politics.

Given the maturity of the ESG funding markets, companies now have to consider more carefully which instruments deliver the funding costs they want with the ESG-outcome that makes the most sense for them. Firms can choose from use-of-proceeds bonds or bonds linked to any number of ESG-related KPIs. They can also choose from a growing and somewhat confusing palette of green, social, sustainability and sustainability-linked bonds, loans and trade/SCF funding. So, what was once a niche decision to issue an ESG-linked bond for a small funding cost saving and some cosmetic PR, has become a core business, treasury and finance decision around market, structure and the ESG KPIs the company should develop or attach itself to. This company has thought hard about how its own ESG stance should be incorporated into its financing and has started to ‘green’ its loan and other funding programme. Here the treasurer explains their thinking.

How times change. In a world of hyper-efficient, just-in-tine supply chains, inventory funding may have fallen down large firms’ list of priorities. Even then, unless an entire supply chain back to every manufacturer and materials supplier was just-in-time, some firms had to fund inventories to ensure those efficient supply chains kept running. Not any more. Inventory is now an important buffer against disruption and is the only real guarantee of being a reliable supplier or end-seller. But funding inventory ties up working capital and can be hard to arrange.  Newer off-balance sheet structures are available, involving third-parties or SPVs as buyers of (usually) insured bundles of inventory from a company. These effectively hold the inventory as consignment stock (there is no commitment from the company to purchase the inventory from the SPV) until the company has orders for its own products. So are the complex accounting and regulatory questions of these structures worth the effort? Are these kinds of highly bespoke structures the only way to get around costly on-balance sheet funding? Or do other techniques like tokenisation represent a better way forward?

Recently an increasing number of banks have announced the launch of green deposits programmes as cash management solutions for corporate clients. Generally this means sub-12 month term deposits where the cash finances an equivalent amount of the bank’s green asset pool. Often corporates need to fulfil certain eligibility criteria such as minimum deposit amount and certain level of ESG ratings to use these programmes. So why are banks keen to attract green deposits at a time when corporate cash is at an all-time high and they have been discouraging treasurers from depositing more in conventional accounts? What are the yields on green deposits relative to other short-term alternatives? And what kinds of eligibility criteria are required to use these new schemes? Find out here.

It’s a cliché, but managing what you can’t see is not very easy. The larger and more complex the company, the more difficult that visibility is and the more likely that the data needed to create it is tied up in manual processes and disparate, poorly connected MIS, TMS, ERP and other systems. Creating a better technology foundation able to deliver visibility into the data is a key first step in better working capital management. For example, access to near real-time intra-day cash balances not only helps better hedging, it drives cash forecasting and cash management. And broader shared visibility starts to break down the silos between treasury, procurement and the business. This treasurer went back to these basics in an attempt to solve long-standing working capital pain points. This is what they discovered.

Much the focus on what treasury can do in pushing sustainability through the supply chain has been on green SCF – linking suppliers’ funding costs to their meeting defined ESG KPIs. These indirect measures are a good start and innovation in this space continues. But the real sustainability issues in supply chains lie in more mundane areas such as consignment stock, returns policies, and so-called ‘reverse logistics’ that includes the ability to repair and refurbish products, recycling and ensuring a cascade of sustainable practices that flows smoothly throughout the supply chain. These are business not treasury decisions, but as companies move towards more meaningful definitions of green supply chains, treasurers will find themselves at the centre of the data and financial complexities such practices entail. This company is at the forefront of the push for green supply chains: this is their view.

In-house banking and payment hubs are hardly new, and neither is their availability in the cloud. The underlying concept is straightforward: minimise the movement of physical cash and bank account activity and do as much of what would have been provided by commercial banks to business units as possible internally. But the true benefit of implementing a SaaS in-house bank and/or payment hub is what comes next. These solutions provide companies with the foundations for working capital efficiencies across a broad range of intra-company activities from payments to cash and liquidity management to tax. While the savings in bank fees, the cost reductions achievable through OBO-structures and so on are significant, it is the information flows through the in-house bank and the use of the technology and data together to drive further optimisation that provide the long-term value.

If you thought moving to a greener treasury and business stance was hard, then the ‘S’ in ESG is going to surprise you. Most people can agree on what a green or sustainable agenda looks like, even if they may disagree on its necessity. But social ‘goods’ such as workplace diversity and gender equality in pay are more tightly bound to cultural norms and what seems obvious in one part of a business can be controversial in another. Social-linked instruments of course cover much more than these factors though, with everything from affordable basic infrastructure, to access to essential services to employment generation, and food security. Here the challenge is data: how can issuers prove that their funding programmes really affect any of these meaningfully? Taking up these challenges this company has committed itself to significant use of social-impact-linked finance. This is how they’ve begun.