How can treasury teams combat rising interest rates and inflation?
A successful treasury department is one that realizes that they cannot work in silo. To find financial efficiencies, they have to work in collaboration with other departments such as operations, sales and the wider finance team. A working example of this is securing funding for inventory, which is a key treasury responsibility. With higher interest rates, inventory financing costs are starting to have a material impact to the P&L.
But if treasury teams work in collaboration with operations teams, there is an opportunity to minimize this impact. If the departments can work together to identify opportunities where inventory can be reduced, such as by adopting a just-in-time model, then the financing of that inventory will reduce accordingly, helping to mitigate the higher interest rates and inflation.
To find financial efficiencies, they have to work in collaboration with other departments such as operations, sales and the wider finance team.
To find financial efficiencies, they have to work in collaboration with other departments such as operations, sales and the wider finance team.
What opportunities does digital transformation present to treasury teams?
Digital transformation is an exciting opportunity for treasury teams, even if they are not the drivers of the transformation. A successful digital transformation improves the quality of data across a business and empowers every department that utilizes the data. For treasury teams in particular, the cleaner and more reliable data makes financial reporting a lot easier and more accurate.
Alongside this, the opportunity to improve securitization financing is huge. The more reliable data and accurate reports are invaluable for maximizing the debt funding that treasury teams are able to capture through securitization. As credit and collections improve through the more efficient use of data, the securitization programme becomes sustainable through any challenge such as inflation or recession.
More reliable data and accurate reports are invaluable for maximizing the debt funding that treasury teams are able to capture through securitization.
More reliable data and accurate reports are invaluable for maximizing the debt funding that treasury teams are able to capture through securitization.
Should businesses continue to follow a one main supplier approach?
There’s no escaping the fact that inflation is making everything more expensive right now. Vendors are seeking to pass on their cost increases where possible which can be seen as a prudent decision. But of course, that results in a higher inventory cost to the customer.
Because of this, having a diverse range of suppliers is now more important than ever. Consolidating your buying power with one supplier may give you some leverage, but the risk of being reliant on one supplier is not one that businesses can afford to take right now. At the end of the day, it may be frustrating to pay more for inventory, but that’s nothing compared to the frustration of losing a sale due to a supply chain issue!
A successful digital transformation improves the quality of data across a business and empowers every department that utilizes the data.
Brian Rosh,
CFA, Director of Treasury
A successful digital transformation improves the quality of data across a business and empowers every department that utilizes the data.
Brian Rosh,
CFA, Director of Treasury
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