Financial Supply chain has to cope with the physical one
- Hindu Business Line October, 2007

Ask company treasurers about the performance of their working capital processes, and most cases the answer may be, 'Sub-optimal'.

Working capital management is often fraught with inefficiencies that cut across multiple subsidiaries, deparments and financial institutions, writes Sanjay Dalmia in Financial Supply Chain (www.tatamcgrawhill.com). For instance, "the order to cash position consumes significant time and resources - 30 days is typically a minimum, while 120 days is common if there is a dispute."

To achieve end-to -end automation, there are collaborative offerings such as BOLERO (Bill of Landing Electronic Registry Organisation), SWIFT (Society for Worldwide Inter-bank Funds Transfer) and TWIST (Transaction Workflow Innovations Standards Team).

The author explains how a key problem collaborative solutions face is that of consensus on standard definition, considering the wide variety of industry practices for even routine activities such as invoicing, and multiple activites involved in a trade transaction, for example, acceptance, goods receipts, returns, etc.

"Standards are beneficial only if they are adopted by a wide range of market participants. However, the early birds will need to invest and also provide the required R&D and experimentation budgets without corresponding benefits."

Worth adding to the professional's shelf.