Benchmarking Treasury for Shareholder Value

8 Treasury and Trade Solutions More importantly, treasury’s role in relation to working capital continues to increase: More than 80% of respondents said that treasury is involved in working capital in some capacity. For some companies (31%), treasury is central to working capital management with full visibility over commercial activities. The employment of working capital optimization programs varies considerably by industry, but overall, 37% of respondents have deployed supplier financing and 32% the sale of receivables. The impact of implementing such programs can be considerable: Over five years, Citi’s consumer and healthcare clients that implement supplier financing typically improve days payable outstanding (DPO) more than those that have not. Given the impact that improvements in working capital can have on the overall financial performance of a company, treasury’s increasingly strategic partnership with the business is expected to grow further (Figure 10) . For many corporations, traditional cash management processes can be leveraged to manage both on-balance sheet and forecasted transactional FX risks. Cash pooling, for example, is traditionally used by companies seeking to mobilize global cash. But it can also reduce, or even entirely eliminate, the need to perform certain FX transactions. It is not surprising then that 59% of respondents reported pooling cash at either a global or regional level; 76% of which reported concentrating cash on a daily basis. Moreover, 65% of respondents reported including at least 75% of their operating cash flows in their pooling structure. A total of 84% of respondents either completely or partially use automated pooling processes (Figure 11) . DPO of respondents that do not use Supplier Financing DPO of respondents that use Supplier Financing Figure 11: Cash Pooling Processes: Though automated, they are not generally used to manage risk Respondents with Automated Pooling Processes 84% Yes, completely Yes, partially No Supplier Financing 37% Distributor/Customer Financing 10% Sale of Receivables 32% Figure 10: Optimizing Working Capital: Supplier finance an optimal choice for DPO Use of Working Capital Optimization Programs Corporates that Adopt Supplier Finance Exhibit Higher Average DPO Healthcare Industrials Telecommunication Chemicals Consumer Technology Power Mining Energy 76 46 85 62 51 75 36 67 45 60 41 55 51 54 60 43 81 166 42% 42% 16%