Point of View Working Capital Optimisation – by Seamus Desouza
Obillex is on a mission to transform Working Capital Management globally. Damian Crowe has assembled a world-class team with the necessary procurement, technology and finance skills to realise the vision. Today, trillions of dollars are locked in low-yielding investments while small business struggle with late payments and access to capital at a reasonable price. There is both a need and an opportunity to re-engineer this failing market.
The trend of the last twenty to thirty years toward the efficiency of enterprise systems presents both an opportunity and a challenge. Data flows easily within large organisations but fails to maintain that velocity and accuracy when moving between organisations. This is especially true when that data is to accompany a financial transaction, particularly across ageing infrastructures like SWIFT. Consequently, very limited use is made of current transactional data to support the provision of finance. Yet the combination of trading history, financial statements and current orders present a more compelling basis for a credit-rating, in real time, than anything offered by the ubiquitous ratings agencies. The situation becomes more acute with the record growth of small businesses, e.g. in the UK economy, moving in a different direction to the late 20th Century enterprise trend. Small business data, representing cash demand, increasingly moves into the cloud. At the same time government and large corporate data, largely representing cash supply, remains dormant in enterprise architectures.
The 2008 crisis gave us another demonstration of what happens when liquidity dries up and we now have the effect of Quantitative Easing, in a number of economies, with the new normal of low yields. Another consequence of the crisis has been further financial regulation and the need for various financial intermediaries to hold regulatory capital.Liquidity can be defined as the continuous availability of cash at a constant price across the economic cycle.
Liquidity can be defined as the continuous availability of cash at a constant price across the economic cycle.
This demand for high-quality, liquid assets is not currently met by the market and the ongoing tendency towards credit tightening at times of stress remains. The new normal has come to pass with disturbing pre-crisis characteristics.
Obillex presents an efficient and effective conduit for flows of cash into the real economy, with reduced risk and higher yield for the participating institutional investors. At scale, this is a world of technology enabled, real time, data-driven exchange of capital. Greater transparency of timing as well as the sources and destinations capital will be realised. There are built-in protections for the tails of supply chains from insolvencies at the, typically larger business, heads.
It is an environment of ready access to information-enabled capital, from sourcing and procurement decisions through to order fulfilment and prompt payment. This has the effect of accelerating the flow of cash through the economy. Credibility and scale is being driven by government-backed standards and principles.
Obillex is redefining traditional workflows, through the rigorous application of standards and interoperability, to deliver true liquidity; i.e. availability of cash at a constant price across the cycle. Innovative mechanisms to deliver this liquidity down the supply chain have become ever more important since 2008 due to the focus on counterparty credit and the resulting appetite for funding.
“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
Steve Jobs, 1989, Interview with Inc. magazine.