Numarqe is Unlocking & Revolutionising Working Capital Opportunities.

Working capital management (WCM) has once again taken centre stage in boardrooms worldwide. As companies navigate the aftermath of recent economic turbulence, the importance of efficient WCM cannot be overstated. A recent study by PWC has shed light on a staggering opportunity: a potential €1.56 trillion of excess working capital is waiting to be unlocked worldwide.

Source: PWC latest study: https://www.pwc.co.uk/issues/value-creation/insights/working-capital-study.html

This article explores the current state of working capital management, the challenges businesses face, and how innovative solutions like Numarqe are transforming how mid-market enterprises approach this critical aspect of financial management.

The State of Working Capital Management

PWC's analysis of over 19,000 listed companies worldwide reveals that while working capital efficiency has stabilised, many businesses are struggling to push further and realise the full potential of working capital optimisation. Key findings include:

1. A 6.6% increase in Days Sales Outstanding (DSO) over the past five years
2. A 4.4% deterioration in Days Payable Outstanding (DPO) for smaller corporations since 2021
3. A 9.1-day rise in Net Working Capital since 2019 for the most cash-intensive sectors

These trends highlight the need for fresh solutions to break the stagnation in working capital management.

Challenges in the Current Environment

1. Interest Rate Cycle
   
   With interest rates stabilising at elevated levels, companies encounter a “maturity wall” as they refinance loans at higher rates than those secured during the pre-COVID low-interest period. This new interest rate environment underscores the urgency of optimising working capital.
   
2. EU Payment Term Regulations
   
   Proposed EU regulations are designed to curtail the power of large corporations to determine payment terms with their suppliers. These regulations are intended to benefit suppliers by reducing the time they have to wait for payments from their customers. However, this shift places significant pressure on companies to enhance other areas of their cash flow management to offset the shorter payment terms.
   
3. Changes in Credit Card Policies
   
   Some major tech companies are shifting large customers to monthly invoicing for recurring expenses like digital ads, potentially impacting payment terms and process efficiency.
   
4. Underinvestment in Accounts Payable and Receivable Functions
   
   Many businesses view these departments as mere cost centres, failing to provide the necessary tools for effective analysis and management.
   
5. Reduced cash reserves to cover operating expenses
   
   The PWC study identified cash days – the measure of how long a business can cover its operating expenses - have been reducing despite a desire by companies to maintain sufficient cash reserves to survive financial shocks and business interruptions.

Enter Numarqe: Revolutionising Working Capital Management

Numarqe, a cutting-edge financial management platform, is at the forefront of addressing short-term financing challenges. Numarqe is helping businesses unlock their share of the €1.56 trillion working capital opportunity by offering embedded credit solutions tailored for mid-market enterprises.

Here's how:

1. Flexible Financing to Navigate the Interest Rate Landscape
   
   Numarqe's Approach
   Rather than relying on expensive revolving facilities or long-term senior loans at high fixed rates, Numarqe offers flexible finance to address short-term funding imbalances. This approach eliminates the need to overcompensate with undrawn credit facilities and their associated non-utilisation fees.
   
   Benefit
   Companies only pay for the credit they need when they need it, optimising their cost of capital in a high-interest environment.
   
2. Innovative Supplier Finance Solutions
   
   Numarqe's Approach
   In response to the EU's proposed payment term regulations, Numarqe offers a supplier finance solution that allows companies to extend payment days without straining supplier relationships.
   
   Benefit
   Businesses can pay suppliers promptly while benefiting from customised repayment terms and flexible credit limits, effectively managing the potential cash flow strain from shorter supplier payment terms.
   
3. Streamlined Invoice Payments
   
   Numarqe's Approach
   As some tech giants shift to monthly invoicing for large customers, Numarqe's platform simplifies invoice payments, offering efficiency comparable to card payments but with extended repayment terms.
   
   Benefit
   Companies can maintain the convenience of digital payments while benefiting from improved payment terms, even as traditional credit card options become limited.
   
4. Centralised Financial Management Platform
   
   Numarqe's Approach
   Addressing the underinvestment in accounts payable and receivable functions, Numarqe provides a centralised platform that supports multi-entity operations, integrates with accounting systems, and enables data-driven decision-making.
   
   Benefit
   Finance teams gain powerful tools for analysis and management, transforming these functions from cost centres to strategic assets.
   
5. Credit on Tap
   
   Numarqe's Approach
   By facilitating instant digital payments through a dedicated, flexible credit line, corporates can continue to meet their regular obligations and outflows whilst preserving their cash balances.
   
   Benefit
   Companies can create liquidity shock absorbers with healthier cash reserves for longer periods, allowing corporates to navigate their cash flow through seasonal or stressed periods and when encountering unexpected short-term shocks.

Key Features of Numarqe's Working Capital Solution

1. AI-Powered Credit Decisioning
   
   Numarqe's advanced AI algorithms analyse spending patterns and financial data to offer credit lines up to 10 times higher than traditional lenders. This unprecedented financial flexibility allows businesses to optimise working capital and seize growth opportunities.
   
2. Multi-Currency Capabilities
   
   Numarqe's multi-currency functionality is a game-changer for businesses operating in the global marketplace. With support for credit lines in GBP, EUR, and USD, Numarqe simplifies international operations and reduces FX transaction costs. This is particularly valuable for businesses managing global supply chains and diverse customer bases.
   
   But Numarqe takes it a step further. The platform offers corporations a facility to pay invoices in any currency while allowing them to repay Numarqe in the currency they choose - typically the one they operate in. This innovative approach eliminates the need for companies to maintain cash reserves in multiple currencies, which often end up forgotten or underutilised.
   
   By streamlining multi-currency transactions, Numarqe helps businesses:
   - Simplify international payments
   - Reduce foreign exchange costs
   - Improve cash flow management across currencies
   - Eliminate the need for complex currency hedging strategies
   - Enhance financial flexibility in global markets.
   
3. Real-Time Financial Visibility
   
   Numarqe's unified platform aggregates all business spending data, providing real-time visibility into a company's financial position. This enables proactive cash flow management and accurate forecasting, which is essential for optimising working capital.
   
4. Automated Workflows
   
   By streamlining tasks like expense reporting, invoice processing, and vendor payments, Numarqe frees up finance teams to focus on strategic initiatives. This automation reduces errors and accelerates financial processes, improving overall working capital efficiency.
   
5. Enhanced Financial Governance
   
   Numarqe offers robust controls, allowing businesses to set card limits, block specific merchants, and implement customisable spending policies. This level of control ensures compliance and reduces unauthorised spending, which is critical for effective working capital management.

So, what is the result of using Numarqe? Optimised working capital and improved financial flexibility, especially but not limited to corporates in seasonally volatile industries.

Seizing the Working Capital Opportunity with Numarqe

As businesses grapple with the challenges highlighted in PWC's study, innovative solutions like Numarqe are becoming increasingly crucial. By addressing key pain points in working capital management – from navigating high-interest environments to simplifying multi-currency operations – Numarqe is helping mid-market enterprises unlock their share of the €1.56 trillion working capital opportunity.

The platform's combination of AI-powered credit decisioning, real-time financial visibility, and automated workflows provides businesses with the tools they need to optimise their working capital efficiently. As companies look to break free from the stagnation in working capital management, Numarqe offers a pathway to enhanced financial agility and strategic growth.

In an era where efficient working capital management can make the difference between thriving and merely surviving, platforms like Numarqe are not just facilitating better financial management – they're revolutionising it. By embracing these innovative solutions, mid-market enterprises can position themselves to navigate the complexities of modern finance, seize growth opportunities, and build resilience for whatever challenges the future may hold.

As we move forward in this new financial landscape, one thing is clear: the companies that will lead the pack will leverage cutting-edge financial technology to unlock the full potential of their working capital. With Numarqe, that potential is within reach for mid-market enterprises ready to embrace the future of financial management.

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