The ACT had a terrific day’s event about working capital two weeks ago (see Peter Matza’s blog). But I was struck that all of the many excellent treasurers on the platform were from the service sector of the economy (including utilities). The event included really good presentations and discussions as well as interesting and pertinent case studies. The audience, me included, loved it and left looking forward to the next one, but maybe there was something missing.
My background has mostly been in extractive or manufacturing based firms (oil; food; vehicles and defence; cables construction and engineering; fast moving consumer goods), so working capital management had big numbers to do with raw materials, goods and work in progress, finished stock on or expected to come on to our balance sheet. Plus, when procuring commodities (hards or softs), margin on associated futures. Not just receivables and payables.
So, ACT Events, next time can we please have one session on how the treasurer has that conversation about why we have increased the financed commodities pipeline by 20%+, or why finished goods stock has gone out of sight (anticipation of war; inability to meet California vehicles emission limits for three months as cars had to wait for new components to be fitted so as to meet – not to defeat – new regulations), how we cope with seasonality (drop-head sports cars; model years; Easter and Christmas confectionery), how we ensure that when considering where something will be made, attention is given to pipeline effects, not just that it might be a fraction cheaper to make on the other side of the world?
Treasury must be part of the decision making, not just expected to finance the consequences.
I know that services dominate in advanced countries. Manufacturing is around 10% of UK outputs and jobs, as the House of Commons statistics and policy briefing on manufacturing tells us, but a session about stuff you might kick or splash in would be appreciated.
