Working Capital Management

Companies which excel in their management of working capital have a real competitive advantage.

Current uncertainties in the global economy and financial markets are putting increasing pressures on companies and their supply chains. In these times of economic uncertainty, working capital remains an obvious and key source of finance - it is the cheapest source of cash and it is available to most businesses.

The fundamental principles of working capital management are clear: reduce inventory and receivables whilst increasing payables balances. Unfortunately, many companies lack a systematic approach to managing their working capital and treat the issue in an ad-hoc and decentralized way. As such they find it hard to optimize working capital. 

 

Potential working capital issues

Based on our experience of working with companies to improve their working capital, CEOs, CFOs, Group FDs and Group Treasurers are likely to face the following issues:

  • additional funding requirements due to increased working capital driven by business growth
  • lack of visibility on cash and working capital performance across the organisation, and entire working capital cycle
  • lack of cash awareness across departments and geographies, with no working capital targets and incentives
  • difficult working capital balancing act managing the trade-offs between cash, cost and service
  • high levels of overdue receivables and bad debt write-offs
  • sub-optimal controls in relation to setting and managing payment terms of customers and suppliers
  • broken Sales Operations and Planning (S&OP) process and poor stock visibility; and
  • poor levels of customer service and On Time In Full (OTIF).

 

View more

How we can support your business

We can help you overcome your working capital challenges by:

  • completing a working capital benchmarking exercise to compare performance against peers and identify potential improvement opportunities
  • performing a diagnostic review to identify ‘quick wins’ and longer-term working capital improvement opportunities
  • developing detailed action plans for implementation to generate cash and make sustainable improvements
  • assisting with the implementation of sustainable working capital reduction using robust, efficient and collaborative processes, with a focus on the key levers of:
    • process optimisation throughout the entire end-to-end working capital cycles
    • compliance and monitoring
    • identification and improvement of commercial terms; and
    • creating and embedding a ‘cash culture’ within an organisation, where the trade-offs between cash, cost and service are evaluated and optimised.

View more

Pressure in the system Working Capital Study Region in focus: The Nordics

Unlocking enterprise value through working capital management 2017/2018. 

 

Read the study