Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 21

FOCUS

This kind of relationship comes with ups and downs.
Traditionally, utility companies formed agreements with a
stable of suppliers to pay a set amount at a set time, while
they billed their customers periodically. Prosumers dictate
a new model, since they introduce cash flow complexity and
unpredictability, at least at the individual level. With time, the
diverse activities of prosumers will achieve critical mass and
as a collective portfolio, result in more stable cash flows.

Key takeaways
Each of these industries faces unique challenges but do share
several insights. First, as the number of direct consumers
increases, the more volatile cash flows become. For treasury,
the direct-to-consumer model requires IT systems that can
both handle supply chain disruption and identify patterns for
cash flow forecasting. In addition, automation is vital in order
to efficiently reconcile the larger number of invoices a directto-consumer model generates compared to a traditional one
where a few distributors are invoiced with specific payment
terms (e.g., payable once a month or every two weeks).

Second, many direct-to-consumer services, including
auto-scheduled grocery deliveries and insurance, are based
on subscriptions, typically via a direct debit or recurring
debit card payment. However, if a payment is recalled by the
consumer, the business is exposed to risk for as long as it
takes for the recall to be resolved, with treasury taking the
corresponding hit on cash flow. Therefore, choosing the right
payment method for each stage of the customer journey is
crucial. Specifically, customer verification at sign-up may be
best conducted via a credit card, while the potential gap in
receivable costs between direct debits versus credit cards
should be evaluated for determining the preferred method for
ongoing payments.
In this new landscape, treasury teams must be on the front
line of direct-to-consumer transformation from the very
start. Corporates cannot afford to treat cash flow and capital
considerations as afterthoughts. To succeed, they must
partner with treasury early on to set the direction.

LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE

coupled with more electric cars on the road, exemplify how
electricity usage outside of the home can still be linked to
a domestic account. The result? A relationship between
consumers and utility companies that is no longer static and
one-directional, but rather fluid and dynamic.

N°99

- NOV / DEC /

JAN 2018

"These new digital services
often extend beyond borders
and involve considerably
more foreign exchange. While
treasurers will immediately
focus on the organizational
impact, now they must also
think about the customer's
FX experience, which heavily
influences satisfaction and
loyalty," says Simon Jones,
EMEA Head of Treasury
Solutions for J.P. Morgan's
Corporate & Investment Bank.

Table des matières de la publication Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018