Working capital in service of shareholder value
This article is written by Embat Creating sustainable value over time depends on efficient management of financial resources, with optimising working capital as a critical element. It acts as a financial health indicator, measuring the organisation’s stability while directly supporting shareholder returns. Far from being just another finance KPI, working capital reflects operational discipline across the entire business and demands active engagement beyond the finance function. Linking daily operations to long-term strategy Working capital is fundamentally the difference between current assets (short-term resources) and current liabilities (short-term obligations). It represents the liquidity buffer available to meet near-term commitments, sometimes described as operating liquidity or a financial cushion. It serves as the essential link between daily operational management and the company’s medium- and long-term financial strategy. By providing a clear measure of operational solvency, it ensures that the business can meet its obligations on time, maintaining stability even as priorities evolve. Effective working capital management is about having the right liquidity levels, tailored to the specific operating model and the stage of the business cycle. This helps reduce reliance on external borrowing, improves return on invested capital, and directly supports shareholder value. Additionally, it acts as a shock absorber for unforeseen disruptions or internal issues, such as production line stoppages in manufacturing. The goal is to achieve balance: avoiding both liquidity shortages that create financial stress in the short term, and excess idle cash that cannot be deployed to generate additional value. Poor working capital management can effectively paralyse the core of any company, even one with strong paper profitability. Turning efficiency into cash flow Often, companies can unlock more value through effective working capital management than through simply expanding operating margins. It is about improving the conversion of assets into cash while managing liabilities with precision. Optimising working capital creates a virtuous cycle over time. By shortening the cash conversion cycle, businesses can accelerate the return on investments and improve overall profitability. This process directly increases free cash flow, which becomes a powerful lever for corporate strategy. Companies can choose to reinvest in new projects, reduce debt, or return value to shareholders through dividends and share buybacks. It also builds the capacity to adapt to market changes quickly, funding growth opportunities without compromising financial stability. A strategic priority for the entire organisation Improving working capital should never be viewed as a narrow technical exercise owned solely by the finance department. It is a strategic priority that demands collaboration across all business functions. Operations, procurement, sales, and finance must work in concert to manage payment terms, inventory levels, and receivables in a way that aligns with the company’s overall strategy and risk appetite. Ultimately, cash remains the central measure of a company’s resilience and opportunity. Optimising working capital is about reliably turning profit into cash, and managing that cash to deliver sustainable value for shareholders over time. It is the practice of converting earnings into liquidity—and liquidity into lasting strategic advantage. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
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EuroFinance 2025: AI Takes the Stage, but Core Treasury Still Reigns
From Treasury Mastertminds This year’s EuroFinance conference was buzzing with energy — and Treasury Masterminds was there in full force as an official media partner, with nine board members attending sessions, moderating panels, and walking the floor. If one theme stood out above all, it was clear: AI has moved from curiosity to conversation — and now to early experimentation. “I clearly see strong interest in AI,” said Patrick Kunz, Founder of Treasury Masterminds. “My sessions on this topic were fully booked. When polling the audience, there was a noticeable shift — more treasurers are experimenting or running first use cases. Last year it was mostly about interest.” But while AI dominated headlines and hallway chatter, the classic topics of treasury weren’t going anywhere. “That doesn’t mean that the standard treasury topics were less in demand,” Patrick added. “Cash optimisation, working capital management, and yield enhancement for cash investments remain high on the agenda. The roundtable knowledge-sharing sessions were particularly popular — treasurers still love learning from each other.” AI Everywhere – But Still Early Days For many first-time attendees, the scale and scope of EuroFinance were eye-opening. “I was amazed by the number of banks and fintechs, especially smaller ones focusing on AI and innovation,” shared Kortam Mohammed. “All the sessions were highly relevant — from working capital to digital assets and AI adoption.” Kortam observed a growing number of practical AI solutions already in the market — particularly around cash flow forecasting, working capital optimisation, and digital payment automation. But he also noted two key challenges holding treasurers back: That tension — between the potential of new tech and the reality of operational focus — seemed to echo across the event. AI, Upskilling, and the Future of Treasury Roles AI wasn’t just about technology — it was about people. “AI was mentioned in nearly every session — even by José Manuel Barroso in his closing remarks,” said Benjamin Defays. “Many treasurers were uneasy about what it means for their roles, but the message was clear: AI will replace tasks, not entire jobs.” Benjamin’s takeaway was that upskilling is now non-negotiable. “It’s time for treasurers to look at their work and identify where they add value. We shouldn’t be ashamed to say we used AI to get something done — we should foster this mindset in our teams. Learn the AI language, and teach it internally.” Benjamin also highlighted growing interest in Fixed Term Funds (FTFs) — an investment approach offering greater control over counterparty risk — and virtual accounts, which continue to evolve but still lack clearly defined corporate use cases. Tokenised MMFs Make a Comeback “Adding to those comments, I was curious to see the return of tokenised money market funds,” noted Nicholas Franck. “There’s no sign of corporate adoption yet — mainly financial institutions — but their reappearance suggests the market is maturing.” This re-emergence fits into a broader trend of digitalisation of liquidity and investments, where treasurers are increasingly looking for secure, transparent, and efficient ways to deploy excess cash. 🎙️ Live from EuroFinance: The Treasury Masterminds Podcast One of the highlights for our community this year was hosting a LIVE podcast recording right from the EuroFinance venue, in collaboration with Nomentia. The discussion explored the hottest conference themes — from treasury digitalisation and TMS innovation to how AI is reshaping the way treasurers work and collaborate. “Conversations like these capture the pulse of treasury,” said Patrick. “It’s exactly what Treasury Masterminds is about — connecting experts, sharing real stories, and turning ideas into action.” 🎧 Listen to the full live recording here:👉 Treasury Masterminds LIVE with Nomentia at EuroFinance 2025 Looking Ahead: From Awareness to Application EuroFinance 2025 confirmed that treasury innovation is no longer a niche side conversation — it’s part of every treasurer’s strategic agenda.But as our board’s observations show, the gap between awareness and application remains wide. Bridging that gap is where communities like Treasury Masterminds play a role — helping treasurers share experiences, experiment safely, and translate technology into real impact. Were you at EuroFinance 2025? We’d love to hear your takeaways — especially your first-hand experiences with AI, digital investments, or other treasury innovations. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.