Working Capital Imperative: Challenges and Necessities

As global economies sway under the weight of uncertainty and supply chains remain fragile, working capital has emerged as the epicentre of corporate resilience. For finance leaders, particularly those stepping into the CFO role, mastering this essential discipline is no longer a tactical responsibility—it is a strategic imperative.

In conversations with Kumar Sunit, Head – Strategy and Investor Relations, Somany Ceramics, and Amit Baraskar, Vice President and Head – Treasury, Thomas Cook India, a compelling narrative of adaptation, innovation, and leadership emerges. Their insights paint a picture of how businesses are rethinking working capital management in an era of relentless volatility.

Volatile markets, fragile ecosystems

“Interest rate volatility has become the new normal,” says Baraskar. “Rate cuts across major currencies—like the Euro and Swiss Franc this December—force us to pivot rapidly, reshaping our financial strategies almost monthly.” Thomas Cook’s treasury operations span ten geographies, requiring Baraskar’s team to manage daily cross-currency swaps to optimise liquidity. “We move money across time zones—Australia, Europe, and the US—within a day. It’s not just management; it’s a constant exercise in innovation,” he explains.

For Sunit, the challenge lies in sustaining liquidity across a vast dealer network. “With over 3,000 dealers, we often encounter liquidity crunches at the channel partner level,” Sunit notes. “Even generous cash discounts of up to 4% can fall flat when dealers prefer credit due to cash flow issues. This disrupts the entire cycle, affecting both their growth and ours.” The aftershocks of such disruptions ripple across the supply chain, making resilience a critical focus​​.

Technology as a strategic ally

Digital transformation has become the linchpin of effective working capital management. Sunit’s organisation has deployed a digital channel finance model, cutting processing times from 20 days to two. “This speed and transparency have redefined our relationships with channel partners,” says Sunit. The company has also rolled out a private digital platform for supplier financing, providing liquidity to vendors outside the scope of government schemes. “Requests raised in the morning are often cleared by afternoon, ensuring operations continue unhindered,” he adds.

At Thomas Cook, automation has redefined treasury management. “Bots handle reconciliations and payments, while advanced treasury systems optimise multi-currency cash flows,” Baraskar explains. The company is now exploring AI-driven treasury solutions to enhance efficiency further. “Automation will soon touch every aspect of treasury, from hedging to credit management, making manual interventions obsolete,” he predicts​​.

Strategic adaptability and innovation

The leaders agree that a proactive, strategic approach is critical to navigating working capital challenges. “We’ve introduced early payment incentives and enhanced cash discounts during liquidity crunches,” says Sunit. “On the supplier side, we’ve partnered with banks to offer early payments at competitive rates, ensuring their cash flow issues don’t cascade into ours.”

Baraskar takes a broader view, focusing on reducing debt and refining investment strategies. “We’ve brought short-term debt to near-zero levels in India, while optimising fund allocation to maximise returns,” he notes. “The aim is not just operational efficiency but creating a financial framework that supports long-term growth.”

The path ahead

Both leaders see the role of finance evolving into a cornerstone of corporate strategy. “Treasury and working capital management are no longer back-office functions—they are at the heart of decision-making,” asserts Baraskar. “The shift to automation and collaboration is uniting finance teams globally, enabling quicker, smarter responses to market changes.”

Sunit adds a word of caution: “The next generation of CFOs must balance technology adoption with the human element of building resilient ecosystems. Working capital strategies should not only protect liquidity but also drive innovation and growth across the supply chain.”

As the world grapples with uncertainty, working capital has become more than a metric—it’s a measure of resilience, adaptability, and foresight. For next-in-line CFOs, the ability to navigate this complexity will define their legacy.