By Joseph Neu
C2FO sponsored our recent Assistant Treasurers’ Leadership Group Meeting on Zoom. Their scope expansion, which is indicative of ways working capital platforms can support business ecosystems in this crisis, is my first of three takeaways from that meeting.
Working capital platforms expand their scope. Platforms such as C2FO’s focusing on intermediating between buyers with access to capital and a wide range of suppliers with working capital needs have a vital role to play in this pandemic.
- C2FO is focusing on bringing more small and medium-sized businesses to their platform to better access working capital.
- They can use their platform to connect suppliers with buyers in a position to offer early payment directly in reaction to the Covid-19 triggered economic downturn or to connect suppliers with their buyers’ banks and other financial providers to fund their working capital using the buyer’s superior credit.
- C2FO is also advocating for government stimulus aimed at small businesses to get channeled through its platform.
- Finally, to get access to working capital sooner, platforms are looking to offer pre-invoice, or purchase order financing in response to this crisis.
Either way, C2FO says, firms helping suppliers with earlier payment are generating stickiness and loyalty.
Insurance renewals won’t be fun. Several members noted working on insurance renewal projects and hearing from peers that it is a nightmare, with premiums going higher for less coverage, starting with D&O.
- In response members are working more closely with their brokers, even changing brokers to seek better advice, as well as focusing internal risk teams on coming up with solutions.
Bond economics are key to positive bank relationships. In a session where members narrated their recent bond deals to shore up liquidity for the crisis, all mentioned more attention than ever being paid to using bond economics to reward banks:
- in the RCF,
- who indicated a willingness to step up with new lending, or
- who had helped advise on pre-crisis capital structure and capital plans.
There was also attention paid to familiar faces who had been actives on a bond deal with them before, given that everyone had to do this remotely.
- Passives who lost out due to this “familiar-faces” bias, might also have gotten some make up money.
Such is the importance of bond economics to bank relationships these days.
Stay safe and well.