Where to invest the huge piles of corporate cash? Time to discuss the elephant in the room?
I've lost count of how many times large company treasurers have told me that they put a large chunk of the cash holdings in banks and government bonds, since it's the perceived "low risk" alternative. The treasurers realize this isn't true though. When the banking sector goes bust, which happens every 20 years or so, they will lose their money if they are unsecured. Additionally most governments in the "developed" world are over-indebted beyond repair and the banks largest investments are government bonds. When the banks go bust, the governments have to bail them out. The simple reason is that without banks, the governments can't borrow.
So everyone sees the elephant in the room and who discusses it? Well, Treasury Peer does :)
We need to start discussing what to do with the elephant. The natural place to put corporate cash maybe is in its own ecosystem, in the small and medium sized enterprises that make up the suppliers, customers and distributors in our supply chains? This is what the corporate sector did before the banks started to dominate trade finance, circa 200 years ago. Is it time to go back to basics? We are convinced that in the not too distant future we will have an additional financial system created by corporations for corporations enabled by new financial technology providers.
In London, the UK, October 9, 0830-1030am we are inviting corporate treasurers to have this discussion with Anil Stocker the CEO and co-founder of MarketInvoice, a very successful peer-to-peer invoice lending platform in the UK. They will present a new asset class, investment in SME short debt portfolios.
Over the very long term the corporate sector as a whole is, in fact, a much safer investment than the governments and banks. The simple reasons are that corporations are much more flexible, professional and have much better governance than banks and governments.
If you are a corporate treasurer and wants to participate, please let me know on magnus.lind@treasurypeer.com or +46704809900.
I'm really excited participating in this discussion. I hope you are too.
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Debt level (not regulation) determines level of financial (in)stability
Publisher of Financial IT Media
9yHi Magnus, this is the butterfly whose fluttering of its wings results in hurricanes on the other side of the earth. This is about risk to the corporate supply chain. The event that keeps CEOs, CFOs and Supply Chain Operations on edge is Supply Chain Disruption. One of the unseen factors in Supply Chain Disruption is a company's suppliers cash flow or lack of it. Rather than have idle cash or worse yet use instruments that pay .5% to maybe 3%, with the banks laughing at you, put this money to work in your supply chain. Paying early, taking a discount, can improve your return to upwards of 20%, allowing you to push for better pricing and as an early payer you will be first inline for delivery and product innovation. Make Money – Reduce Disruption – Become a Priority
Co-Founder at Silver Birch Finance & NED at CapSol Finance
9yHi Magnus - I think this will be a fascinating discussion. Corporates investing their ST cash in their own supply chains benefits them in a number of ways - from strengthening their supply chain to improving the wider economy - as well as offering them a higher return. I would love to attend this event.
Director, Amazon Business Payments
9yLooking forward to this, Magnus Lind. We are already seeing interest from corporate institutions in the growing opportunity to directly finance UK SMEs. The MarketInvoice platform is a unique way for them to do this - keeping a liquid, short duration portfolio secured by trade receivables. See you in London!