Treasury: the lesson I learnt 9,000 km away

Your business needs you. More than ever.

The Strait of Hormuz is effectively closed, causing unprecedented disruption to supply chains. Inflation is back: energy, raw materials, fertilisers. The commodities shock is spreading and margin pressure is reaching every company that can't pass it through to prices. Credit markets are tightening, the cost of capital is rising, and the refinancing windows that looked comfortable two years ago no longer are.

Companies certainly need CFOs with one eye on the future. But the other eye — not to mention the head, the heart and both hands — has to be firmly on the wheel. Especially when it comes to cash, especially in times like these.

I've seen this film before, but in another hemisphere

My time in Brazil made me rethink many concepts ingrained in the European manager's mindset. I came from a country where interest rates had reached negative levels, liquidity was abundant and banks competed with each other to grant credit. So any treasury crisis would, in principle, be resolved by the bank.

The first contact with Brazilian companies showed me a completely different reality. Some operated with significant accumulated cash — and there were even internal policies requiring them to keep the equivalent of two months of salaries and supplier payments on hand. Later, as CFO of a Brazilian company, the bylaws themselves prevented dividend distributions if that cash reserve wasn't guaranteed.

"For Brazilian entrepreneurs, a treasury crisis can be fatal. I learnt that we shouldn't wait for one to give it the attention it deserves."

Although our markets are more stable, we've also had our share of black swans: the 2008 crisis, the sovereign debt crisis, and the post-pandemic price and rate hikes. Relying on market normality alone is dangerous. The context we live in today confirms it.

The signs you can't ignore

Poorly managed treasury rarely announces a crisis abruptly. It sends signals. These are the warnings that deserve immediate attention:

• Constant reliance on overdrafts or short-term credit lines, even with rising revenue.

• Average supplier payment periods below 60 days, with no negotiation of better terms.

• No treasury forecast for the next 12 weeks, or only monthly updates.

• Excess inventory or tied-up stock, with no rotation aligned to the sales cycle.

• Lack of visibility on future commitments: taxes, debt repayments, planned investments.

• Usage above 80% of available credit lines, with little room for the unexpected.

• Reactive instead of proactive management: decisions taken only when there's a breakdown or pressure from the bank.

The lever that never changes

The best way to secure the future of your business remains: free, positive and sustainable cash flow.

No one knows where interest rates are heading, when credit markets might seize up, or how long this shock from the Strait of Hormuz closure will last. What we do know is that the companies emerging intact on the other side will be the ones that know how and when to protect their cash flow.

And the most powerful lever you have? The same as always: working capital.