The vast majority of treasury teams view boosting working capital as a high priority for their organisation, but many spend less than 10% of their time improving it.
This is the finding of research carried out by treasury software provider Kyriba and advisory firm Aite Group.
Three quarters of all respondents to the research (76%) cited extending account payables as an important feature of working capital improvement, while even more (86%) viewed reducing account receivables as crucial. Despite this, 39% of organisations spend less than 10% of their time optimising their working capital.
The research also revealed that although almost two-thirds (63%) of organisations are interested in integrating reverse factoring into the cash forecasting and payment systems, just 14% have already implemented a reverse factoring supply chain finance programme.
Meanwhile, there are discrepancies in how organisations’ procurement departments interact with their suppliers. While 70% of respondents’ suppliers request early payments, only 47% of corporate procurement departments are asking for additional discounts for prompt payment.
“This research shows that, although most organisations see the benefits of using supply chain finance (SCF) tools to improve their working capital, it is still an area that treasury teams have not yet fully embraced,” said Edi Poloniato, SVP of strategy and corporate development at Kyriba. “The business case for working capital improvements, as well as reverse factoring and dynamic discounting, is clear. SCF has been shown to track directly not just to many billions of dollars in working capital improvement, but also to share price and earnings per share increases.”
Sally Percy is editor of The Treasurer