The Association of Corporate Treasurers (ACT) will hold a seminar in October on working capital management which is expected to attract a large number of businesses interested in managing their own working capital during an economic downturn.
John Grout, the ACT's policy and technical director has said that it is likely the responsibility businesses will need to take up now is that of their entire supply chains, from inside and outside their own organisations.
"If your supplier is suffering liquidity problems because he is losing orders and paying late, you may need to get involved with him to help him survive," Mr Grout suggested.
"The ACT urges companies to consider intervening directly with the banks of a less creditworthy supplier to help convince the lender that the supplier can meet sales targets and book receivables by a certain date.
"Particularly if you don't borrow from your supplier's bank it's using your credit standing to reduce your total supply costs."
Such supply chain management may be better served by a third party who can look objectively at the needs of your business, and provide experienced ideas to protect a supply chain from potential weak links.
Best Practice:
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