It can feel uncomfortable questioning good relationships with suppliers and customers, but Skrzypczak warns against complacency. “Always think about substitutes or plan B. And, likewise, think about where you could have markets if your current market base collapses.”
There are opportunities for smaller businesses to collaborate. Syndicates are forming to create buying groups – working together to share sourcing costs and create a critical mass that provides specific suppliers with greater certainty. “You don’t want your supplier to fail – that’s why you’re forming your purchasing group to make sure there is enough demand to sustain them,” Skrzypczak explains. “I believe there’ll be a shift in how people work together, with much greater collaboration between businesses.”
Understand your working capital requirements
Critical to the health of trade, of course, is managing working capital. “There is always an imbalance of working capital in a post-recession scenario,” Skrzypczak says. The gap between accounts payable and accounts receivable is often disrupted, for example when businesses in the chain delay payment to suppliers to preserve cash flow.
“You may have a funding gap because you have suppliers pressuring you while your customers are not necessarily paying you on time, and you want to maintain those relationships,” Skrzypczak says. “So, solutions around how you can finance and bridge that working capital gap become more important in a recession.”
In the first instance, this requires businesses to negotiate with customers and suppliers. “When businesses pick up the phone to suppliers, they are frequently surprised at how much leverage they have,” says Skrzypczak.
For businesses that have trade receivables, there is scope for them to use forms of invoice financing or receivables financing to bridge any gaps. There are also other trading instruments to help finance the purchasing of goods from abroad before you can physically pay for them yourself. “Before using any of these, it’s important to understand at which point in your trade cycle your outlay is highest and find the solutions that address the cash crunch points,” Skrzypczak cautions.
The International Trade Festival is aimed at businesses of all sizes and sectors with sessions tailored to different types of audience. “The event is for all levels, including FDs and managing directors, but also operational directors, procurement functions, logistics managers, and all those managing working capital within the business,” says Skrzypczak. “It’ll be wide-ranging and thought-provoking. The world is in a state of flux, so that’s all the more reason to look globally at your company’s potential and its place in an international market.”
The International Trade Festival takes place from 16 – 19 November 2020. To find out more about the event and how to register, visit https://itw2020.virtualhub.events/.