Last June the Federal Reserve reported that corporate cash balances of US non-financial corporations were close to US$2 trillion dollars, an increase of 36% since 2009.

The ratio of liquid assets to short-term liabilities continues to be highest it’s been since 1956*.

As CFOs remain uneasy about the economic outlook, this ratio will only stretch further.

So this presents a new problem to financial management: what to do with all that cash?

This is where finance shared services can have a big impact. And this is where shared services can make huge leaps up the value-chain.

Because of the swelling in liquid assets, treasury find itself working increasingly with shared services and procurement. Why?

Well, although the concept of supply chain financing has been around for eons, it’s in an economic cycle, such as this one, where it relevance really kicks in.

Treasury is sitting on cash in an uncertain economic climate. So they are looking for arrangements which are short term (so they’re not locked in), low risk and high yield.  What better than use the cash to pay a supplier earlier, help them stay liquid, and take a discount on the way?

This is a quick, clean way to make this excess cash work for you. But shared services need to be able to support the intentions of treasury, to enable supply chain financing savings to be realised. It’s the cornerstone, the critical link. Shared services need to be able to have their processes running smoothly so invoices can be paid in 5 days or ten days so that discounts can indeed be captured. Without this efficacy, financing arrangements will fall flat.

The treasury-procurement-accounts payable triumvirate is realising exciting gains. One shared services I know of is seeing a £1.3 million annualised net saving because of what they are doing with supply chain financing.

There are some exciting technologies on the market well worth looking at including Taulia. Join me and the Taulia team for our webinar on the 22nd February.

*According to GT News