Working Capital Management - Citigroup Case Study
Working Capital Management
Strategies for Improving Working Capital Management by Dorothy Rule, Director and Global Head of Liquidity and Investments, Citigroup Global Transaction Services n 2004, treasurers worldwide continue to strive to manage working capital more efficiently. They are under pressure to reduce Days Sales Outstanding, to measure Days Payable Outstanding, and to find alternatives for enhancing yield management due to record low interest rates. Other factors are impacting corporate treasurers as well. Corporate governance initiatives such as SarbanesOxley are increasing the treasurer’s need for access and visibility to accounts around the world. The continuous rollout of Enterprise Resource Planning (ERP) systems worldwide is to some degree providing the needed increased visibility of accounts, as well as greater control and a single point for information retrieval on a real-time basis. Finally, the trend to gain efficiencies through treasury centralisation continues. The leaders in treasury and cash management have discovered that regional and global liquidity management are very effective working capital tools. Some are also discovering that newer tools such as Electronic Invoice Presentment and Payment (EIPP) and even Continuous Linked Settlement (CLS) can improve working capital management as well. These treasurers are developing effective strategies – sometimes using liquidity services, EIPP and CLS in innovative ways – to meet their own corporation’s unique needs.
I
solutions can be linked to other core cash capabilities – such as payables and receivables – enabling corporations to optimise their funds flows end-to-end, free up working capital, and maximise investment returns while minimising overdraft expense. Debit and credit positions are offset globally, reducing the impact typically caused by overnight overdrafts. The importance of real-time information integration With today’s technology, treasurers can view and manage their cash
Strategies for Improving Working Capital Management by Dorothy Rule, Director and Global Head of Liquidity and Investments, Citigroup Global Transaction Services n 2004, treasurers worldwide continue to strive to manage working capital more efficiently. They are under pressure to reduce Days Sales Outstanding, to measure Days Payable Outstanding, and to find alternatives for enhancing yield management due to record low interest rates. Other factors are impacting corporate treasurers as well. Corporate governance initiatives such as SarbanesOxley are increasing the treasurer’s need for access and visibility to accounts around the world. The continuous rollout of Enterprise Resource Planning (ERP) systems worldwide is to some degree providing the needed increased visibility of accounts, as well as greater control and a single point for information retrieval on a real-time basis. Finally, the trend to gain efficiencies through treasury centralisation continues. The leaders in treasury and cash management have discovered that regional and global liquidity management are very effective working capital tools. Some are also discovering that newer tools such as Electronic Invoice Presentment and Payment (EIPP) and even Continuous Linked Settlement (CLS) can improve working capital management as well. These treasurers are developing effective strategies – sometimes using liquidity services, EIPP and CLS in innovative ways – to meet their own corporation’s unique needs.
I
solutions can be linked to other core cash capabilities – such as payables and receivables – enabling corporations to optimise their funds flows end-to-end, free up working capital, and maximise investment returns while minimising overdraft expense. Debit and credit positions are offset globally, reducing the impact typically caused by overnight overdrafts. The importance of real-time information integration With today’s technology, treasurers can view and manage their cash