Crédit Agricole CIB’s Jérôme Maziere, Global Head of Corporate Securitisation, and Ugur Bitiren, Global Head of Sales, Receivables and Supply Chain Finance, share their insight on how working capital optimisation strategies can help companies shore up cash flows, control additional debt and achieve supply chain robustness.


The Covid-19 crisis slowed down activities in many sectors during 2020. This contraction of the economy placed corporate cash flows under pressure. To honour their payments, companies took on more debt, sometimes with the help of state-guaranteed loans. Even more so than before, working capital optimisation strategies, specific to each sector, are now being given priority in order to limit the impact on debt and cash flows.

In order to cover operational expenses and maintain liquidity resources, debt has been prioritised to ensure the continuity of business payments. Many corporates had access to loans guaranteed by governments and/or access to the excess liquidity in the debt markets. Hence, for instance, global corporate bond issuance reached its highest historical level ever in the first half of 2020.

This situation has increased the debt of corporates and now the reduction of that debt is becoming one of their main priorities. In this context, the optimisation of working capital plays an important role with a double benefit: the optimisation of cash flow as well as balance sheets.

Optimisation strategies vary depending on the sectors and their future insights. The automotive sector, for example, must adopt a specific strategy due to the nature of its operational flows: most of the time, sales are financed by loans, which impacts the trade receivables position through the transfer into financial receivables, while supplier payments are made on more standard industry terms (c. 45 days on average). Therefore, the sector’s trade payables position is more than twice as high as its trade receivables position (US$73bn vs US$28bn as of FY 2020 for the top 5 OEM). When production stops, the cash flows come to an abrupt halt. Amounts owed to suppliers continue to fall due for several weeks, which puts cash flows under pressure. At a time when some factories in Europe and overseas are gradually restarting, manufacturers will therefore rely on the supplier payment period to support their financial health. But in this case, it is the latter who suffer, and vehicle factories will not restore their maximum production without the full commitment of their suppliers.


The implementation of an optimisation solution such as a supply chain finance programme will allow manufacturers to obtain more flexibility on their outflows dedicated to their suppliers, and the suppliers will be able to benefit from an advance payment. It is therefore a ‘win-win’ solution for creditworthy manufacturers that reduces risk across their entire supply chain. Also, these programmes can be designed in a sustainability linked manner helping the acceleration of ESG transformation in the auto sector. A consideration would be the financial strength of the buyers for the sustainability of these programmes.

As another example, the challenges in the power and utilities sector are very different. Considered as an essential service, production has been resilient and the drop in demand is set at 2% in 2020 compared with 2019 levels, according to IEA. However, the sector might suffer from double pressure on cash flow: loss of income on industrial customers, and slower inflows on other income. In addition, investment plans, mainly linked to networks and the generation of renewable electricity, do not seem to have been significantly affected thus far. Also, renewable power is expected to become the largest area of spending in the energy industry in 2021. A global strategy including on the one hand a receivables financing component to monetise trade receivables could be used in order to limit the impact on cash flow; and on the other hand, the use of solutions that finance the payments linked to the technical milestones of the installations can also be considered in order to keep the course of the investments by preserving the liquidity of companies in the sector, while helping the suppliers and the energy transition.

Globally, many sectors have chosen to reduce costs and resettled capital spending to enhance liquidity position. In order to maintain long-term plans without added pressure on cash flow, capex financing structures would be relevant. Certain financing solutions can accommodate different phases of the contract which enables cash outflow optimisation.

The deployment of working capital optimisation strategies by companies may therefore make it possible to limit certain negative impacts of the crisis linked to Covid-19 with more robust cash flows, controlled additional debt and supply chain robustness.


About Crédit Agricole CIB’s Working Capital Solutions

Crédit Agricole CIB is the corporate and investment banking arm of Crédit Agricole Group, the world’s 10th bank by total assets and Europe’s 2nd bank by tier-one capital, according to The Banker.

As working capital needs of global corporates intensify, Crédit Agricole CIB has set up an organisation focused on delivering the most suitable solution for the working capital needs of our clients. This new global franchise, Working Capital Solutions, combines the award-winning platforms and capabilities of the trade finance and securitisation offerings, and also closely cooperates with Crédit Agricole’s factoring platform.

One of the main drivers of this initiative is to have a client-centric approach on managing the receivables portfolios of our clients by combining the complementary benefits of a portfolio approach and debtor-by-debtor approach for corporate receivables. In the midst of the Covid-19 crisis, it has become evident for corporates to manage their receivables portfolio more actively. This product-agnostic approach has already proven to be very successful with corporates who would like to optimise receivables in a way that is suitable to their needs, but do not want to compromise between the available product choices in the market.

The bank has also been significantly investing in its payable financing capacity and is in the lead on many important transactions in the market, also in cooperation with many different fintechs. Crédit Agricole sees the main growth area in the payable financing universe around ESG financing, as supply chain finance solutions will be a catalyst for ESG transformation in many different supply chains.

Crédit Agricole CIB Working Capital Solutions teams combine a strong local presence in 19 countries across Europe, Americas, APAC and Middle East, with regionally organised industry-leading product experts in securitisation, supply chain finance and forfaiting. The bank has been named the ‘Best Trade Finance Bank in Western Europe’ for the last five years at the GTR Awards, and has also been listed as one of the top 3 ABCP providers on the league tables.

“The working capital financing space has not only shown significant resilience during Covid-19 but also showcased an important growth as the pandemic gave a new reason for corporates to find structural solutions to cash flow issues and working capital optimisation. As a bank we have been at the forefront of finding, structuring and delivering solutions in different sectors for our clients and their supply chains via our comprehensive, tailor-made solutions and state-of-the-art digital offering. We expect this space to grow further not only due to cash flow and digital disruption but also due to the sustainability drive on the supply chains in different sectors. We are well placed to offer the best solutions to our clients in this rapidly evolving environment,” says Ugur Bitiren, Global Head of Sales, Receivables & Supply Chain Finance and co-Head Working Capital Solutions at Crédit Agricole CIB.

“The management and solutions for the optimisation of working capital have become more and more important for corporates and the complexity of their needs are increasing due to changes of their business model, for example the growth of e-commerce. Portfolios of receivables from one corporate to another are different (in terms of the type of receivables, type of debtors, jurisdictions and currencies). The development and implementation of specific and personalised solutions are the main key drivers to offer adequate solutions to our clients. As a bank, we have to cover

the full spectrum of working capital solutions and that’s why Crédit Agricole CIB has established a partnership between our securitisation and receivables and supply chain finance product lines to work together and propose the best solution for our clients, in close cooperation with the factoring offering of the Crédit Agricole Group,” says Jérôme Mazière, Global Head of Corporate Securitisation and co-Head Working Capital Solutions at Crédit Agricole CIB.