Thriving in Uncertain Times

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Advise - Major Projects
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Research - Market Data
Inform - Industry Insights


Thursday, February 16, 2023


10:30 AM – 11:30 AM EST


This is an online event


You’ll hear industry experts discuss how you can pull the right levers to keep your business growing. This is a special, live-streamed webinar from Craig Jeffery’s panel discussion at the 2023 Working Capital Leadership Conference in Orlando, FL.

Please note

Continuing education credits will not be offered for this event.

Panelists include

Craig Jeffery, Strategic Treasurer

Craig - Headshot

Todd Yoder, Fluor

Todd Yoder

Vikas Shah, LSQ

Craig - Headshot


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20230216 – LSQ-16 February panel discussion transcript


Vikas Shah  01:26

Morning and welcome everybody. We have a lightning round today talking about timing and uncertainty time. What are the white letters? Your business growing? We have almost 300 attendees online today and almost about some of the attendees here in person the morning was also what do you believe this is a treasury vote and discussion and not have business writing the cigar shop on LSU they are all famous revenue bills sales marketing and


Craig Jeffery  02:11

treasure continue creditors or consulting or advisory research is very, very critical standing on stage today webinar


Todd Yoder  02:37

thank you. No thank you. I mean this is thank you for the invitation to be here. It’s an honor to be here amongst many rising stars superstars in CFOs treasurers supply chain finance chief procurement officers. So that’s amazing group of people. I’d also like to thank my wife who approved and my amazing wife who approved the trip as well. So great to be here. My name is Todd Yoder, global Managing Director of fluor Corporation. And we don’t do flowers. Floor is one of the largest engineering procurement, construction maintenance businesses in the world. And what that acronym means is design engineering, procurement. So that’s supply chain that materials equipment, subcontracts, and then construction, we have some of the strongest, most talented construction craft around the world globally. So floor is a 14 to 5259, I believe. And so we’re very large, huge global footprint. So I think it will be interesting for a lot of the people in the room, just because, you know, we can talk all day about the challenges we have in supply chain, and logistics and materials and sourcing and getting those together and D globalization and all those impacts. But fluor, you know definitely is a business that is sourcing all over the world. And you have to have the right materials in the right place at the right time. And it’s always good to have them at the right cost. So, but engineering procurement construction, so think of the largest, most complex capital projects in the world. So from San Francisco Bay Bridge, just to name a few projects, the Gordie Howe bridge from Windsor and Detroit to or from Windsor, Canada, to Detroit, Michigan, where due in a lot in the Mining and Metals space, we’ve done some of the largest refineries in the world. And so we have three business divisions, we have mission solutions, energy solutions and urban solutions. So we do a lot of different things. And great to be here.


Vikas Shah  05:25

Thank you, Todd, and Craig, once again, huge welcome and pleasure to have you both. As we all know, Treasury is a very, very important stakeholder for us when we’re thinking about working capital. And you know, today’s topic all revolves around how do we elevate the role of treasurer within the CFO office within the C suite? And actually, most importantly, within within board conversations, when it comes to talking about cash, liquidity and working capital? So with that in mind, you know, perhaps maybe I can see you both up for the first question, which is, you know, what are the most concerning events happening in today’s market environment, that’s impacting the role of the treasurer. So maybe Greg, or Todd, either one of you.


Todd Yoder  06:10

Yeah, I can, I can kick off. So I would say, you know, the times we’re living in right now. And I’ve been very fortunate, I have a background I worked in, primarily treasury, Strategic Finance, spend some time in FP&A started out in accounting, but I worked in a manufacturing environment, I worked for one of the largest insurance companies in the world. And now fluor, which is a project based company. So they’re, they’re different business models, and they operate differently. I’ve been very blessed, at Fluer started 12 years ago with the organization. And from day one, almost, we formed a relationship with our chief procurement officer at that time, he was running commercial strategies. A guy named Raj Desai, who is, is one of the best in the world. And he and I, for him. So I’m in Treasury, building out risk management, capital markets, and all the core Treasury that comes with that. And, and he’s running supply chain procurement, commercial strategies, we formed a relationship instantly. And, you know, to our point, the speakers earlier, from Deloitte were phenomenal. And the language they were speaking, as was Dan as well. But the language they were speaking is, like, just music to my ears, because you know, the importance of that relationship between Treasury fight corporate finance and supply chain. And throughout the, it’s just more and more important, so when we have periods of time with low to no interest rates, right, and free money, and a lot of risk taking in the market. And then we get shocked with a pandemic, you know, it if you were running any sort of complacency. And you, you get called out like Warren Buffett, you know, his famous line, you know, when the tide goes out, everyone sees who’s swimming naked, right. So there was a lot of a lot of companies that got caught with, you know, and granted, we’ve experienced more tail risks than I think we have, and, you know, in ages, but So, so what I’m focused on, I guess, is five different things. And that is people number one, energy, number two, money, financial markets. And then D globalization is huge. And then the fifth 1/5, one is technology. Those five core areas, so I say, a lot the treasure has to bring in my doing. The treasure has to the way we really bring value is we have to be able to see around corners, predict the future. And a friend of mine. He recently said, Well, you know, how do you see around corners with a mirror? And so the mirror to me is really watching these five categories. And people is the most important and leadership, especially over the past three years, is is number one. So it’s excellence. It’s confidence, and it’s humility. Those are mine. I know there are other people’s but those are the ones that I kind of live by. So excellence, you know, being your best self, and and bringing the best out of everyone around you understanding the critical importance of D and I, right now is extremely important, diverse thought. I think one of the most dangerous things that we all face is groupthink. Because groupthink, you things are changing so fast and accelerating, innovating, that if you surround your yourself with people that look like you think like you talked like you act like you, you don’t get a whole lot of diverse thought. And so that’s dangerous. A friend of mine, the Nandini, She’s the senior vice president treasurer of Prudential. So I’ll steal one of her her lines, but it is about, you know, I love to hear the violin. I love to hear the cello. I love to hear a lot of different instruments. But when you bring all those instruments together in an orchestra, you create magic. And that’s where they’re in that is true across a business energy. So energy, Maslow’s hierarchy of needs, right when we were all in graduate school, right? Energy to me, you know, and I get asked a lot to talk about the future of money. And really, I tell him, it’s the wrong question. It should be the future of energy first, because and not to go to down Michael sailor’s narratives. But there are some aspects that I do agree with him that energy and money are very interchangeable. And so energy security. So food insecurity is it is important to me, especially for our young people, for me personally, but for the for the world. And people ask me, I’ve had a couple of questions this morning, this, the pin i Where’s the United Nations? 17 sustainability goals, if there’s any more people that had that question, but energy is extremely important, because energy is what gives us clean water? desalinization, right? It’s critical. Humans have to have water, food. If you have energy, you have the capability to produce food and shelter. Right? So just like let’s say the UK, right, this past winter, you know, asked to keep the temperature in their homes down, right. But can you imagine if you are in freezing temperatures that so that’s the shelter part of so I think energy is extremely important. Energy Security is extremely important. And that mix of energy. So we’re just coming off of China, China saved, I was talking to a group in New York a couple of weeks ago, and I told them, China saved us. The world, China saved the world last last winter. And really what I meant by that is, China’s the largest consumer, the largest buyer of oil, and gas. And when they went into their lockdown, they purchased for the first time in over 40 years. They purchase less oil and gas. And that was swooped up by an EU that was in desperate need due to the war in desperate need of gas and oil. And, you know, we won’t mention coal, but cool, as well, unfortunately. But so, so energy transition is critical energy security. These are things I’m thinking a lot about. And it’s not just because I come from the energy business. And I guess for full disclosure, I normally work in Treasury and Strategic Finance. But for the last few years I’ve had floor I took one of our subsidiary companies New Scale, which is small modular reactors. So it’s not your old school, nuclear, it’s its cutting edge state of the art, Small Modular nuclear reactor that I think will fix a lot of problems. So of the past nuclear that that we’re used to, and I didn’t take them public alone. They have an amazing team at New Scale some of the brightest people in the world But public on the New York Stock Exchange in May, last year, under ticker SMR. Just a reminder, full disclaimer, these are just my personal opinions. I’m not a financial advisor, this is for entertainment purposes only. But the future of energy, we have to have a mix. So nuclear is to me, it has to be a part of the solution has to be I love solar. I love wind. I love hydrocarbons, we have to have oil and gas. I think it was BP who? CEO, right? They came out with record earnings. And it was they’re gonna invest half a billion dollars in energy transition, and half in oil and gas. And so we’re really going to need all of that in order to meet the needs. So we all know electrification, right? We’re becoming more and more dependent on electricity. And so there was one public one published report by EIA that said, roughly give or take 20 of the current mix, we’re using 20 million barrels per day of oil in the US is the largest consumer of oil on a daily basis, right? If we kept the same mix that we have today, by 2050, it wouldn’t be 20 million barrels a day, it’d be 100 million barrels per day. And so there’s some things that have to happen, and especially for the businesses that are in energy transition, I think the future is gonna be amazing. for that.


Vikas Shah  16:54

That’s, that’s fascinating, Todd, I mean, it’s just amazing how you have a very global macro perspective on what concerns treasury and you know, financial officers, you know, at floor specifically, but I’m sure that opinions or opinion has developed, you know, over years of experience, working at your organization, but also interacting with a lot of your trading partners that impact impact energy.


Todd Yoder  17:19

And I’ll just, just quickly, so money and Craig knows, I could talk about the future of money all day long and the Euro dollar system, that’s definitely a part I think we that impacts us, all right. What the Feds doing. So we’re seeing the two to 10, spread 80 basis points. Negative, it’s typically a recession predictor, it has been a recession predictor of since 1955, to 2018, it’s predicted every single one within a six month to a 24 month lag. So that’s all I think, in the back of all of our minds is recession. The other thing is the Euro dollar system and how money and Craig and I, if you’re interested, we did a podcast on money creation, and just how money gets created. It gets created not by the Federal Reserve, they provide cash to primary dealer banks, but it’s really the banks that are creating credit when they’re they’re making loans, putting it into the system and US Dollars offshore, which is the Euro dollar system held outside of the purview of the Federal Reserve in the United States. And so that’s an area and I won’t, because I could talk for an hour, I don’t want to do that. But but, you know, the Fed hiking, you know, my again, my personal opinion, I think they they went too aggressive, too fast. And we’ll see if they go too long or not. There’s a lot of pressure on him, the market, you know, is calling for to is March 25 basis points, and then two cuts before the end of the year. I think the Fed narrative is you know, they want to solve I believe it’s going to be higher for longer. So we’ll have to see how that takes place. And then D globalization, as I said, it’s impacting us all and I’m sure each one of us could come up here and talk for an hour easy on D globalization and how it’s impacting our businesses, and in causing a lot of extra work and how we strategically prefer to prepare for that. And then technology. I know Craig has great, great thoughts.


Vikas Shah  19:29

It’s it’s obvious that we are all interconnected. And what’s happening in the global market impacts everything that we do here with our businesses, if you’re a US focused businesses, but more so you know, for floor obviously, you’re a global business. So consideration around the globe, globalization, energy, the movement of money, you know, interest rates, and all of that impacts, impacts your business directly. Shifting gears, Greg would love to get your perspective on the macro economic climate. You know, thinking about Trade offshore onshore central bank inflation interest rates. We’ve all talked about that, this morning, payments and stuff like that. So perhaps maybe just share with us your perspective. I mean, you do a lot of surveys and research across Treasurers and finance professionals all across, not just the US, but the world. But we’d love to get your take on how you think about the macro backdrop right now.


Craig Jeffery  20:24

Yeah, that’s good. And, you know, hearing Todd, talk about energy, it seems like energy is always really important. Sometimes it’s a huge concern. Sometimes it’s maybe not as important top of mind, it’s certainly important. Now, if you think about, you know, what are some of the concerns we face? It’s like, okay, we’re shooting down spy balloons, and maybe some weather balloons and kid’s birthday party. You know, balloons that got away. So we’re talking about that here in the US. In December, I was at an event. And what did every speaker say, you know, when they talked about their concerns, we have war in Europe. There’s war in Europe, war in Europe in our lifetime, they were talking about that. And it was very interesting and different, because you know, you know, the Russia’s attack on Ukraine, and sustained attack and devastation that country is like, it’s an idea. It’s like one of a mix, but it was very top of mind there. And so I guess that’s when I’m at the war, the implications on food and energy. And the fact that there’s, you know, we don’t have people freezing in Europe this winter, you know, some other things happen to make that take place. But, you know, to continue your discussion, what are some of the concerns, the concerns are, we have a lot more elements that are creating volatility than before it was, we were in a time of calm, you can see now inflation has gone up. And then the central banks are trying to tamp that down by raising the rates. And so that’s creating, you know, a shift from cheap money free money for many, many years. And now we’re in a situation where it costs more and that changes things. You know, from the example of a Warren Buffett’s quote that Todd had mentioned, but the other thing that has impacted with war issues COVID lockdowns is, you know, inventory, people are increasing their inventories. I think Dan was mentioning there’s additional storage activities and and restrictions on that. Why is that a? Why is that a concern? It’s, it’s a significant concern, because we’ve gone from 1015 years ago, everybody’s jazzed about just in time inventory, don’t keep capital on your balance sheet, in the form of inventory, just have it come in and, and move out the door. Well, that creates, you know, the shift from just in time to just in case, we need to make sure we don’t cause a problem. So there’s this element of margin. And so when we think about some of the concerns across the board, it’s from a time of relative stability, to a time of lots of cross winds and cross currents that have to be managed. And so the concern is that there’s a lot of things going on at once that have to be addressed. And you asked him a broader question at the beginning. And I didn’t know if you want me to go into some other topics on that.


Vikas Shah  23:07

You know, that’s super helpful. I mean, you have the advantage of actually looking at the broader market across all industry segments and verticals. You talk to CFOs, and treasurers across all kinds of industries, you know, small, medium size large. So I think that’s a very valuable perspective, but maybe specific, specifically diving into the impacts to Treasury. Perhaps, Greg, I can start with you like, what what are these events? What are these events? And how is it impacting Treasury specifically? So when you think about, you know, all the different areas of impact and how the treasurer is now required to think about many more factors, like what is your research telling you? What are you hearing from all your conversations? And what are specific impacts to treasure in today’s time?


Craig Jeffery  23:53

Yeah, so back in the prior financial crisis, 2008 2009, the treasurer’s role became much more strategic and much more attention was paid to it, the board got involved. And so they had provided an elevated platform. And that really didn’t diminish other crises. In the past, you know, everyone’s focused on topic a or topic B, two years later, everybody forgets this, this provided some some sustenance. But with these, with the move of volatility in different areas, certain topics become more important. They become a greater area of spend. So for example, forecasting has been a huge focus on Treasury for multiple years, there’s always one or two going back five years, this era of rising interest rates, there’s even more emphasis placed on it. And it’s not just what’s the number, it’s what’s the range of number, what’s the potential set of outcomes. So they’re asking procurement, AR AP, are there they’re spending investing in tools, so I don’t know if we have a slide on that. That’s the one that’s up. So 41% of companies plan to spend so significantly in Treasury technology, and another 40% on forecasting, and there’s still some elevated spend levels in AR and AP largely driven the same space. So your peers are spending on technology to address these areas. And it’s become more important when you’re, you know, 25 basis points is your borrowing costs are 1%, it’s a whole lot different when it’s 567 percent, that is shift. I mean, it’s great for your company. This is the right time, because now everybody sees the value in cost of it. Those are, those are a couple of the areas that, that that play out. There’s there’s other things as well, on the payables and receivables side, you know, I like to think everyone pays according to the terms or five days late, besides the quarter end window dressing that takes place, and you can talk to some companies and like, we don’t make any payments in the third month of a quarter. I mean, make all those payments within 10 days in the next quarter. I mean, that’s, that’s been the case sometimes. But that’s exacerbated. But when we hit a time of trouble and crisis, and we have a bit of a survey, we’ve, we’ve been tracking this, you know, during the height of COVID, when we hit that, we don’t know what’s going on, we’re working out of our homes, there’s virus in the air, it was a huge percentage, around 40% of companies extended how they’re paying. This was not through negotiation. This is not using like an LS Q portal or any kind of supply chain financing. This was a delay. So the biggest concern was on receivables. And people were extending payments. As we move through the pandemic and things reached a greater level of normalcy. It shifted down. So this creates, you know, there’s global economic issues, there’s geopolitical concerns. There’s virus and there’s the reactions to it. So this area of lots of crosscurrents requires skill and navigating.


Vikas Shah  26:52

You said it well. And we also talked about in the earlier sessions, where you know, people process technology and data specifically are extremely important for us to be able to get to better forecasting, I can’t even imagine, it was already hard back, you know, back couple of years, in terms of getting to accurate forecasting, can’t even imagine in today’s time, when you’re thinking about all these different moving parts, both within your business and the macro environment, for forecasting probably has become even more important. And for that reason, the Treasurer of today is facing a lot more pressure in these unprecedented times and is, is almost expected to have very, very accurate forecasting in terms of their cash and liquidity position, obviously working capital as part of that. So Todd, maybe a perspective from you. And by the way, we’re open to q&a as we go through this panel discussion. So if you have a question, please raise your hand. And we’ll pass the mic around to make sure that we take questions as we go through this. So Todd, how important is forecasting for your business? How are you interacting with other stakeholders across across the aisle across all the different functions to make sure that you have an accurate picture for your business? And how do you think about that as a priority for the treasurer.


Todd Yoder  28:06

And I’ll echo the q&a. I love q&a, because that’s one of the reasons I love to come to these because I learned more from from you folks then than I do when I’m in the office. So please, with the q&a would be wonderful. But the customer you are I mean, technology is huge. So we have we’ve advanced so fast. And we’re continuing to advance and I kind of bucket into four areas that are driving it. So the compute power. And just to give you an example, like my my friends at nividia. And there are others that compute power so much faster. And smaller. It’s it’s amazing what they’ve been able to do with compute storage, you can now buy storage to store data at Let’s call a reasonable prices. It’s amazing how much storage you you can do. And so you have compute power, you have the storage you have, you know, the developers, there’s more developers now developing things, languages using a lot of the programming languages. And I know chat GVT is kind of a hot one right now that, that people are talking about the generative AI. But then there’s also a lot of applications that we’re all used to which, you know, the term AI I try to stay away from that as much as possible. Because when I think of that I think of as AI or AGI and we’re not there yet. But so trending data and what we’re doing we’re just taking machine learning and we’re running algorithms on history and trying to predict the future, right. That’s what it comes down to, but to your point the relationship So with supply chain, and again, I’ve been blessed, you know, especially at floor to have that solid relationship right up front. But when you’re doing engineering procurement construction, you know, if a project doesn’t happen when it’s supposed to happen, liquidated damages could be in the millions of dollars per day. And so if I spent a million dollars on a technology that helped me not have 30 days of liquid, it’s a 30 to one return right? On on the investment. But you have to have those relationships. So from the treasurer seat, we want a solid relationship with supply chain. So estimators that are going out and getting estimates on different costs. We want to relationships with Project controls. So those folks that are managing the process, the critical path to construction, we want relationships with the engineers, and then we want relationships with contract construction, and the supply chain. So we want to know where we’re going to be sourcing how much we’re going to be sourcing, logistic logistics, right? Container prices, all it’s amazing, I mean, much less than commodities, and currencies, right? I mean, so 2022, the year of volatility, right, and this is where, if you haven’t had that close relationship with supply chain, chief procurement officers office, in those folks, you you missed all that risk, and then all of a sudden, it comes to light and it comes in, it can have a huge impact. So now more than ever, it’s those relationships are key. And the second one is, if you’re not investing in the technologies to be leaner, meaner, optimizing cash, analyzing credit, risk, understanding liquidity, you know, it, you run the risk, it’s not the strongest that survive, it’s the most agile, that survive those companies that have the ability to react quickly and decisively. And technologies just due to the acceleration is huge part of that.


Vikas Shah  32:22

That’s fantastic. Todd, I don’t know, if you have a take on like, specifically, AR versus AP. I mean, we’ve talked a lot about that this morning. And the imbalance between the two, you’d obviously talked about relationships, making sure that you have those cross functionally, with all the other stakeholders that manage those aspects of the business, but maybe just talk a little bit about specifically AR versus AP, and how you think about that balance. And you know, what’s your take on, you know, businesses being able to manage that in a healthy manner moving forward? Any kind of advice or perspective that you can share for the audience here? Yeah.


Todd Yoder  32:58

So from the treasurer’s perspective, and I don’t want to dive too deep into a lot of what we already know, about capabilities and technologies that are out there. But for us from a high level, you know, the forest for the trees is CCC, right? So the cash conversion cycle, right? DSO and monitoring that. And if you’re an inventory business, or how you carry di out, and then DPO, right, and being able to bifurcate those and look at them different. There’s this old term called C, CSR. And I tried to revive it a few years ago, but people didn’t understand the acronym. But cope corporate social responsibility, right. And life is all about relationships, and business is all about relationships. You know, it’s not businesses doing business with businesses, to humans doing business with humans, right. So having those solid, solid relationships, and, and working. So you know, there’s all kinds of creative things. And it depends on your business. I say businesses are just like humans. They’re all different. They all have different perspectives. They all have different business models, they function differently. So it’ll be a little different for everyone. But taking accounts receivable, there’s so many creative things you can do. And I’ve seen a lot of companies. I’ve had three conversations in the last three weeks with CFOs. Not with my company, but with other companies and they have such a huge asset with their AR. But they’re not taking those steps yet to really look at how can we monetize that? How can we accelerate that while still keeping our client relationships and and solid and strong. And then if you move over the DPO side, you know, it’s even more important now that you understand the credit risk of your partners. I deal a lot with currency, commodity, price risks. And so sometimes it’s, it’s beneficial to pass that risk along to a supplier fabricator, a subcontractor, let’s say currency risk. But if you don’t really have the Treasury in the supply chain relationship, a lot of times you’ll miss out on, you may have a Korean supplier, that is adding in a five, we’ve seen five to 8% contingency, right an escalation or reserve kind of like a Risk Number five to 8% on top of the notional of what they’re charging you because they’re taking currency or as you’re paying them in US dollars, and all their costs are in Korean Wan. So if you don’t have that communication, Treasury supply chain and supply chain to, you know, the fabricator or the supplier, you may just think, Hey, I’ve got five bids. All in US dollars. And I’m going to take, you know, whoever technically qualifies best, and then whoever’s price is the best. But now you really need to think more into Are they able to take that currency risk. Because if they’re not sophisticated, and they you know, to take that risk, and they miss manage it, then that can lead to a lot of problems down the road with them delivering on what you need, when you need it. And so, so you have that to think about, and that’s an area that I’ve see get missed a lot across different businesses, so that it’s helpful.


Vikas Shah  36:59

If we have a fantastic session coming up later this afternoon, just specifically talking about customer credit risk, and when they’re third party risk. Shifting gears, Craig, you spend a lot of time in data and technology, you’ve scan the landscape extensively, you also interact with a lot of technology vendors, technology is a common theme we’ve been talking about, perhaps, you know, share your views in terms of what you’re hearing from Treasury office, in terms of their investments and technology. Payments, in terms of paying to vendors and payments, in terms of collecting from customers is an important part of data and technology as well. So maybe you can share some thoughts on that front?


Craig Jeffery  37:37

Yeah, certainly. And I’ll I’ll tie back into some what was said in the previous two sessions, the two keynotes that Dan talked about payables and receivables from two different companies. And I’ll use that as a to provide a little bit of the background for the comments on technology. So every payable is a receivable. And they’re these are not discrete events. They’re different companies. If you don’t communicate what’s going on and receivable group doesn’t know, if you don’t send enough information, they come back. And there’s this defected process where they call and say, What are you paying for? And so those are the two elements that exist between the payables and receivables. What do people want, they want to know where their cash is where it’s flowing throughout the cash conversion cycle through their banks, they have good visibility through their banking system, but on the receivables and payables side, they may not have it. So visibility is extremely important. And that shows itself in forecasting. And that’s where we see people spending a lot of money. If you look at companies, the biggest area that they’re spending their time in, is in forecasting, the area that they would spend more time if they had the time is in forecasting where their plan is investing significantly. One of the top areas is forecasting that around 40%. So forecasting is a key theme this is this is a key area of visibility. So if we’re looking at how do we manage liquidity, you know, if the treasurer is looking after risk management for financial risk, liquidity management, whether it’s sourcing from banks, managing from their financial supply chain, this is this is the context, that’s so essential. And so when you think about what do you need to do, whether you’re in the payables, you’re in the payer, or your receiver, there’s a responsibility of the organization for visibility. There’s an impact here, how many organizations are looking at it end to end, not just in their company, but from the start to the end? That’s around 17 to 25% of companies, whether you’re looking at receivables or payables, that’s a small fraction, you know, 1/4 to 1/5 have this end to end view and you live in the same world, you impact the others. So that’s a that’s a huge gap for efficiency. When we think about forecasting where people are spending technology, one I need to know where what’s happening, what I can count on, like, I know this is coming in five weeks. Anybody get those EO B’s from your insurance company? It says they’re going to pay your doctor In 60 days, and you’re like, Oh, that’s great. It was like 60 days. But at least they know when it’s coming. And so there’s at least visibility to it. And so this idea is I know when it’s going to happen. Now I know this component, this is what I know. And then there’s a whole area above that, where how do I use levers to move those? And so we talked about tech technology, there’s a huge portion of where’s my cash? Where’s my cash in the cash conversion cycle? What’s shifting? And so using tools to track to monitor to estimate, you know, whether it’s machine learning on an individual basis, whether statistical analysis for large groups of numbers, people are spending that to know what’s occurring. And then the other technology they’re trying to do is, how do I have levers to move? What’s what the reality is? And for treasurer, it’s not just like, hey, what can I borrow, because some companies have great access to capital. And they can pull that lever all day long, and they don’t need to pull multiple levers. Other companies don’t have access to, you know, bank debt, or not very easily. And so across the board, having more Levers is better, having more visibility is superior, having more levels of levers is superior. And so that feeds itself into the technology. And then, you know, on the data side, we’ve gone from a period of this dearth of data, a lack of data, to more and more data, and a harder time managing that, but that’s where we can do better with forecasting, we can make better decisions about what levers to pull.


Vikas Shah  41:34

And working capital is part of the overall cash and liquidity story, obviously, it’s, it’s really important to get that visibility, so you can forecast better, the way that you can get better visibility, investments in technology, and making sure that you’re able to make sense of all the data that’s out there. Right. So uncovering insights from the data to get to the visibility, that’s going to ultimately help you get to better forecasting models. When it comes to broader liquidity. And more specifically working capital. We have one question from the audience. So maybe we can take that high.



Yeah. Is the song. Yeah. Okay. I was wondering from Craig’s perspective, you spoke a bit about the ability to forecast and using the the wealth of data that’s out there now and kind of the technology that’s available. And you spoke about that in conjunction with the levers to pull. I’m wondering, from your perspective, what you’re hearing from the companies you speak to about, where’s the real need in that velocity of cash? are they hearing from their suppliers that they need to get paid earlier? Are they are suppliers coming in and looking to renegotiate terms shorter? You know, are the companies themselves looking to take terms longer or be more efficient with our supplier handling? And so so when we talk about those levers and use of data and where it takes us for 2023? What do you think the need is around how we service those different contingencies?


Craig Jeffery  42:57

Yes, I think the answer to like, every individual component that you asked all those stratifying questions is yes, depending on the type of company and their partner. So, you know, at the same time, we saw companies holding back their payments during the pandemic, other companies increased prepaid to support their, their trading partner, so So that can be kind of that can be a strategic ecosystem activity. So some are paying sooner, particularly large suppliers will capitalize support their network, others are saying we want to extend terms, but one of the Levers is we’ve had this, you know, I win, you lose, if I pay you 20 days later, you get paid 20 days later, that type of binary on off thing is not. It doesn’t need to be the case, right? If you can stick other capital in the midst of it, I can pay later and be a good steward of my payments. And I can support my suppliers by Hey, they can take their money sooner. And usually suppliers do not have access to capital. You know, we’re in a capitalist, capitalistic society, there’s tons of cash available, but it’s not available to every company. At the same level. It’s just it’s not. And the democratization of capital is getting better the technology is helping that occur. But same thing with tools that help D link the the movement, so that other capital can come in is a key, a key area. So people are having those discussions, extending terms. Paint, you know, pain later, having flexibility to pull things earlier. You asked a number of other points that kind of lost track of a few of those. Yeah, but but but to your point, the answer is like yes, everywhere. And the importance is where does it matter? How do we stratify our customers or suppliers? And where does it make the most sense?


Vikas Shah  44:44

OK, one more question.



Question for Todd. I’m curious with short term funding costs going up so dramatically over the last sort of six months. Is there anything you’re doing differently now that you know, a year ago, two years ago when we were in a different environment you weren’t doing you know, With, with the steep rise and rates that we’ve had,


Todd Yoder  45:03

yeah. Now, that’s a good question. And I think that could probably be answered better by somebody not sitting in my current situation. Maybe, you know, if you take when I was in insurance or in manufacturing it would. I could give you a little bit more on that. But really, it’s, you know, to me, it’s asset liability management, right repricing Risk Management from a capital markets perspective. And so what do you look like on the assets over love having, you know, the yields that we’re earning on short term money? I mean, it’s, it’s amazing. On the debt side, you know, so you just want to kind of line up, right, you know, assets. Are you floating? And and on the debt side, you know, how are you fixed or floating, so that you can hopefully kind of navigate through some of these? I mean, no one that I know predicted the Fed was going to do what the Fed did, right. So I think it took took a lot of companies off guard, but But you know, from a cost perspective, if you really need capital, I think that’s an area where, you know, we happen to be in a blessed situation. But if you can go into your supply chain, and leverage utilization of some of that working capital, that cache to build stronger relationships with your key supply chain, folks, I think that’s a huge opportunity. So I would say that would be one key takeaway.



We, we do also have an online question. How is LSQ solving forecasting through technology? And what problems are they addressing?


Vikas Shah  46:58

Yeah, let’s use investing a lot in data science models, especially around assessing monitoring and managing credit risk counterparty credit risk. So we’ve talked a lot about understanding trading partners, the trading partners can be on your receivable sides side, that are your customers, or it can be on a payable side. And those are your suppliers. We are a FinTech platform, we focus on working capital management for receivables and payables. And we’re looking at transactional data in a real time basis, we have more information about these businesses in terms of how they’re either paying fast or slow, and how the businesses are operating on a real time basis. So when we’re looking at all this transactional data, we’re working really hard to uncover all the insights that are important to provide the visibility to businesses so they can forecast better. So that’s really our focus area forecasting around payables and receivables. So we can help these businesses manage their working capital more effectively. And more importantly, not only manage it, but also think about all the different levers that they can exercise to unlock more cash and optimize working capital. And that strategy can be different, depending on the size of the business, the industry vertical of the business, As Todd mentioned, you know, the answer can depend. But just making sure that having access to that, to that visibility in the hands of not just the Treasury office, but also the supply chain office, the procurement office, the finance office, just making sure all those stakeholders are on the same platform, accessing the same data and having that visibility across the business is extremely important. Because we’ve talked about the stakeholders being disconnected and not really talking to each other. You know, our goal is to bring them closer together and give them a platform that’s unified in a manner that they can manage working capital across those two businesses.


Craig Jeffery  48:46

I’ve got a question. Oh, we had a question here. No audience first.



It was probably gonna be a topic change. So it was more or less we are either in a recession or going into a recession, depending on whose definition you use. Do you think long term will be more than a period of stagflation? And how does that affect the role in the decisions of the office of the treasurer?


Todd Yoder  49:13

Yeah, I’ll take that real quick. And then I’ll pass it. So Milton Friedman, yeah. Inflation is anywhere in everywhere a monetary phenomenon. Right. And it kind of goes to the Eurodollar system, right. So we saw 2019. Right. It was like the Fed could we couldn’t get inflation right and as much as they tried, so we went 1.7 1.2 to 1.7 4.7 to 8%, inflation and, you know, transitory came up early, and then it turned into a bad word. And, but when you really look at inflation, and especially for the supply chain, folks in the room, you know, much more about it than I do. But you know, price increases when you have a shutdown. Right? Everyone go home, there’s no production, there’s no mining, there’s no shipping. And then you say, okay, because we’ve sent you all home, we need, you know, financially, you need some money to survive on. It can be debated. I’m not a politician, it can be dated. Was it too much of money? It wasn’t not enough? And I’m sure the real answer is it was not enough for certain people. And it was too much for other people at the end of the day, but it is what it is. So we saw a huge demand for goods, no services, right? Because we’re all we’re all locked down. And if you look at the history of inflation cycles, over the past 60 years, you’ll see kind of this wave of, there’s high demand. And then there’s high production once they got back online, because everyone’s everyone wants to meet that demand and make those sales. So then you have inventories that build and build, right. And then you see the shock the the other way, where, you know, we all bought the exercise equipment, the extra screens, the extra desks for home and extra chairs and got comfortable. But then they have all that all these businesses have all that inventory. Right. And so the cell damage is slow. But then you history shows that then sometimes there’s like a whip, a weapon that comes back and inflation is either stronger in this case, I don’t think I don’t think we’re gonna see it. I think, you know, I see, you know, disinflation? I think we could actually, again, personal opinion, we could actually see a couple of short term deflation prints. But but definitely disinflation. coming faster than than what a lot of economists are, are expecting. I mean, a lot of it will come back to the China reopening. I mean, that’s a huge wildcard. So when we did the reopening in the US and Europe and and Singapore, even, you know, it was huge boom, in energy uses and demand. So will the China reopening be is the same intensity? And if it is, that that will definitely send a different wave through the global financial markets than if China’s reopening is, is lower? I don’t know if that answered. any follow up?


Vikas Shah  52:47

That’s helpful. Okay. Your point of view?


Craig Jeffery  52:50

Yeah, yeah, I think it’s a great question. Well, we have stagflation, what’s the number? Who’s gonna win next Super Bowl? Those are really, really hard, hard questions to answer. But, you know, will there be some areas of the in the globe where there is a recession? Yes, I think we know that, you know, is second to be the UK, Germany, where outs, especially for company for countries that actually report their numbers properly. That is gonna have is there gonna be global, global recession? We don’t know, are we gonna be like low low growth, some people have coined a new phrase, which really just means slow growth, but inflation, but that stagnancy and inflation. I mean, we’re doing some things, if you look at different talk tracks, I’ll just give you one, you can come up with different answers. But one is, you know, we released a million barrels a day out of the Strategic Petroleum Reserve for like, 200 days, right, we didn’t quite get to the midterms, we added some more to get us through then. And then we’re doing the same thing. I think it’s another 29 million is going to be released at the lowest level in the Strategic Petroleum Reserve. What does that do? Is there, you know, is there a natural disaster? No, what what does that do that keeps prices down? For this time, but, you know, the natural supply and demand it’s like, we’re flooding it with with some supply without building it. And so it just exacerbates the issue. And so that’s one chalk track that says, well, that’s gonna put inflation higher, you know, unless there’s, you know, stagnancy. And that’s one. And there’s some that point to up, and some of that pointed down, but you can look at some of these major items of, you know, you know, you know, energy, for example, right, that’s a, that’s about what 1/14 of we use about 14 million barrels a day, something like that. 13 So, essentially, another million barrels a day pumped into the economy so that there’s there’s some repercussions. So we don’t know but it’s it nobody’s saying it’s gonna be super rosy. It’s, it’s gonna be low or dip low if it’s if it’s in this range of recession. Okay, but if it’s if it’s larger, what will that mean? It’s probably a harder question to answer


Vikas Shah  54:47

One more question.



My question is the biggest because you talked about a dashboards everyday I work with minority owned businesses, and I know their challenges when it comes to accessing working gap. Adele, can you kind of tell me what is the picture? You’ll see when it comes to timely payment of invoices and receivables? Because I’ve seen where a major client for a minority business if they don’t pay on time, I’ve seen these MBAs have to forego their salaries or just to keep their lights on make sacrifices. What are you seeing? And what can you share with us?


Vikas Shah  55:24

So, Peter, that’s a great question. I don’t think that there’s enough being done right now. I think that that really is the leadership opportunity for all of us in this room. And I think it goes back to a couple of themes we’ve been talking about since morning. One is better relationships with other stakeholders within your organization. So it’s extremely, it’s an extremely important issue for procurement or somebody in supply chain, or somebody heading supplier diversity at a large company. But does your treasurer know about it? Does your CFO know about it? Do you have an executive sponsorship from the CEO? Right. And and those bridges have to be built? So you know, answering your question. It’s a it’s a massive opportunity for all of us as leaders in the industry to do more there. You’re absolutely right, diversity businesses, minorities is absolutely the other ones. And we either as economical, or have had the ability to do our best point from a CSR perspective, to make sure that is a strategic imperative for the business. And corporates are in the best position to deploy those solutions in the market. I think the traditional lenders are doing some of that, but they’re not fast enough. And they’re not driving innovation, for sure. So we as leaders in the market can actually drive that change and make sure that working capital solutions are provided to you minority and diversity businesses. Dot I’d love to get your perspective because you’re thinking about CSR as well. And being a large corporation, I’m sure that’s top of mind, for your business.


Todd Yoder  57:01

it’s very important to me personally and professionally. So at floor, I serve on the DEA and I counsel within the supply chain, and so flew, we’re making a conscious effort to to really be we want to be a leader in minority owned business support. And because it’s not equitable at this point, and there’s a lot of work that needs to be done. I also serve on the Board of Directors of the Women’s Business Council southwest. And it’s a large organization, we have so many, it’s not just women, it’s minority owned businesses, as well. And I’ve learned so much. It’s been eye opening. I mean, if you stay in your own little bubble, you don’t learn and grow. And that has opened my eyes to a lot. And so it’s critical. And that’s why to me, one of my five pillars, is we’ve got to focus on more awareness and, and be more responsible as a human race to support minority owned businesses. So we can all be successful because at the end of the day, because to DNI and diversity, you groupthink is no good for anyone. And so that’s where we all benefit, as a human race is when we get everyone involved. And we support everyone. And there’s a lot of really cool things being done and in equitable finance I’m excited about.


Vikas Shah  58:38

And we’re seeing a lot of that happening. The Treasury office, the finance office is getting a lot more aware and cognizant, and signing up to these imperatives across the corporates. So I think we are almost at time you got three minutes left, I want to just quickly talk about credit and the balance of power. borrowers and lenders have always had a little bit of tension. And maybe some quick thoughts from both Craig and Todd on how you think about balance of power, and what kind of levers Do you think treasurer’s can pull? given today’s time?


Craig Jeffery  59:18

I’ll start the balance of power, you know, who go back two years ago, what’s the expectation from borrowers and lenders who has more power in the relationship? It was fairly heavily oriented towards the borrowers. It was more more cash awash. A year ago, the outlook was pretty even now it’s shifted another you know, if you look at the average 50% are saying it is favorite net 50%. Say it favors the lender. So that’s a pretty significant shift in just a few years. And so that’s, that’s the environment these levers change. And so some of the discussion about whether it’s, you know, minority women owned businesses, how there’s, there’s a balance of power between regular lending, but also how do we tap into the whole cash conversion cycle so that There’s more democratization of capital and availability through the financial supply chain can lead to quite a bit of solutions there. I’ll let you talk. How are you thinking about this?


Todd Yoder  1:00:09

Just real quick, into your question earlier, just stagflation. I think it could be argued that we’re already in. Because employment numbers, do you do you trust those employment numbers? And we’re definitely seeing inflation, but balance of power. I mean, it kind of goes back to, if I borrow $10 million, it’s, it’s my problem. If I borrow $10 billion dollars, it’s the bank’s problem. Right. So I think, you know, it’s an interesting dynamics. I mean, and I don’t want to go back into economics. I think I’ve bored you guys enough with economics. But you know, as my my friend, Kyle bass, he’s a hedge fund guy from Dallas, Texas, my hometown. And, you know, he says, a floating loan never fails. Right. And, and so we’ll see with these rates, right, not only what is the Euro dollar system doing to those offshore loans that are outside of the for the Feds purview? I mean, how often do you get a letter from United Nations, you know, to the US Federal Reserve saying, hey, rates, you’re killing the emerging markets. But, yeah, so So time will, will tell.


Vikas Shah  1:01:27

It’s fascinating. I know, we’re almost out of time, I would love for both of you to give us and the audience maybe quick three takeaways from this panel, thriving in uncertain times, putting the right levers to keep growing your business. So Todd, maybe if I can start with you, three takeaways.


Todd Yoder  1:01:45

Let’s start with him. I didn’t quite pick up the question.


Craig Jeffery  1:01:48

Oh, yeah. So that the three takeaways, you know, we’re in turbulent times now. And so what use use more levels rather than rather than less, get more information, rather than less and so so data and use technology to drive your forecasting your visibility, to support support those activities? I think those are, I don’t know, if that’s three or two, I lost count. But we’ll round up.


Vikas Shah  1:02:15

Key takeaways from you, Todd?


Todd Yoder  1:02:18

Yeah, good, I would go back to my five things that are I’m kind of focused on. And I won’t bore you with going back through all five of those, but I would say number one most important is, you know, life is short. And, and be blessed, be thankful. And, you know, treat treat, we’re all humans. You know, with this D globalization or nationalization, or whatever you want to call it. I’ve got really good friends and China, I’ve got really good friends from Russia, I’ve got from you name it. We’re all humans, and there’s good people everywhere. And, you know, it’s sad to see some of the propaganda. But I would say, you know, now more than ever before, it’s important to be a leader. And, again, that come my kind of my, my things are excellence, and a lot of excellence has to do with the technology and in doing things as smart and as most efficient as we can. And then be a confidence with leader you know, lead without fear and live without regret, and, and humility. Be smart, be smart enough to know that you’re not that smart. I’m smart enough to know that I’m not that smart. And wear a bathing suit if you’re out swimming in the ocean. And yeah, where are your trunks? Because the tide goes out.


Vikas Shah  1:03:45

Well, being being human in uncertain times is a fantastic way to summarize this battle. So once again, huge thanks, staad. And Craig, both of people participating on this panel, tons of insights and perspectives. Thank you so much for taking time. Thank you to our audience for taking time as well for dialing in. Once again, thriving in uncertain times, pulling the right levers to keep growing your business. Todd and Greg, thank you so much. Once again.

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