Effective solutions for maximizing working capital


Back to Success in the face of change

To maximize your cash flow, here are some approaches and solutions from Jean Caillé, Vice President and Regional Manager, Commercial and Corporate Banking–Montreal Region, and Maria Spezio, Region Head of Sales, Global Liquidity & Cash Management–Quebec & Atlantic Canada, HSBC Bank Canada.

Working capital: Fuel for growth

“The main issue when a company experiences strong growth is maximizing working capital,” says Caillé. As corporate lines of credit are usually based on the previous month’s results, the amount available may be insufficient to meet requirements when a major new order comes in. “That's why we offer forward-looking tools and order-based financing,” he adds.

For example, let’s say a Quebec-based manufacturer receives a sizeable order from a big box retailer. Upon receiving the purchase order, the bank can free up the necessary funds for the manufacturer to import goods from a foreign supplier and process them locally. Just 24 hours after shipping the merchandise to the retailer, the manufacturer has its money, minus the advance. “This approach considerably reduces the time required to access cash,” says Caillé.

Solutions for every situation

Every company is different and has its own particular needs. “Since HSBC operates in over 60 countries, our tools reflect best business practices across the globe,” explains Caillé. Here are a few examples of solutions to common challenges.

Reducing transfer fees

High volumes mean high international transfer fees. If transactions are made primarily in one particular country, opening a local bank account can save you a lot of money. “In that case, just one international transfer is needed—local suppliers are paid from the local account for just a small fee,” says Caillé. “A foreign account can also be used to deposit cheques issued in that country more quickly.”

For companies that do business in several countries, but don’t want to open a bank account in each one, Foreign Disbursement services are an attractive option. “HSBC's global presence makes it possible to send payments to several payees in different currencies from a single file, at a lower cost than individual transfers,” says Spezio. She gives the example of a law firm that was able to save over $100,000 in annual fees by doing this.

DISCOVER international payments solutions

Guarding against rate fluctuations

Since there is a delay between taking an order and receiving payment, currency fluctuations can impact a project’s profitability—either positively or negatively. Forward contracts make it possible to set a fixed conversion rate for a later date, which reduces the risk. “Some contracts include an option to withdraw from the arrangement if the actual rate ends up being more advantageous,” says Caillé.

Managing multiple international accounts

An international presence makes management more complex and the ability to see the bigger picture is a must. “The HSBCnet virtual platform provides access to all bank accounts in one place,” explains Spezio. “The company can manage its working capital and make payments in every country, all from its headquarters in Quebec.”

DISCOVER the HSBCnet platform

Venturing into foreign waters

Caillé encourages local entrepreneurs to work with experienced professionals early on in order to properly plan their entry into international markets. “International trade is what we do every day,” says Caillé. “Whether it's for building a plant in France or opening a line of credit in Hong Kong, we help entrepreneurs reduce their risk and maximize their business opportunities on a daily basis.”

A valuable resource for a global perspective

International markets are constantly evolving. To get your bearings, HSBC’s Navigator report provides an overview of business conditions based on a survey of 2,500 companies in 14 countries. It presents the latest outlooks for performance, efficiency, technology investment and recruiting, as well as the most promising regions and obstacles to overcome.

Read the Navigator report

Want to learn more? Find out how businesses like yours are managing cash flow to help them keep operations running, while investing for the future. Sign up for more insights in your inbox.

How do other non-manufacturing businesses successfully enhance efficiency of their cash flow?

Make your cash flow work harder for your business. Find out how organisations in other sectors do it

Discover how to get all your internal stakeholders to agree on a shared vision for cash management

Sign up for insights

Step 1 of 2

Need help?

Get in touch to learn more about our banking solutions and how we can help you drive your business forward.