2. Treasury must adapt to changing industry dynamics 

The shifting landscape of retail has wide ranging implications for treasury management including:

• More payment options: To compete online, retailers need to offer a wide range of payment options, including digital wallets, cards, buy-now pay-later and instant payments. If a consumer doesn’t see their preferred option, they’ll look to purchase from a competitor that offers it.
• Improved inventory storage: Geopolitical instability and supply chain challenges, such as recent Red Sea shipping delays, may require companies to hold larger inventories to ensure continuity of production or sustain sales volumes, locking up additional capital.
• Streamlined invoicing: Higher interest rates have increased working capital costs. Companies can mitigate this by accelerating receipts. One way to do this is through receivables automation via digital platforms that streamline invoicing and send payment reminders.
• New capital sources: As rates have risen, companies are looking to new sources of capital; asset-backed lending secured by inventory, accounts receivable or real estate can be more attractively priced. Likewise, convertible bonds can reduce the cost of debt by monetising the potential upside of a company’s share price.
• Concentrating cash: Higher rates also mean the returns on surplus cash have improved. Treasury should aim to concentrate cash by adding relevant entities and countries to its pool (accounting for local regulations). This not only increases access to cash but improves visibility, so treasury is better placed to make investment decisions and optimise returns on surplus cash.