Working capital is a critical measurement to any organisation. Skilful management of working capital is the most cost-effective way to free up cash, invest in the organisation and improve operating efficiencies.
A shortage of working capital could result in serious consequences and can lead to financial alarm bells with shareholders as the ability to satisfy outgoing expenditure becomes an issue.
Working capital can be broken down into three fundamental areas each of which have their own pain points. Some examples are given below:
Receivables - low levels of customer service and On Time In Full (OTIF)
Inventories - poor Sales Operations and Planning (S&OP) process and limited stock visibility
Payables - sub-optimal controls regarding setting and management of supplier payment terms
Our approach aims to provide a short payback and cash to fund other activities within your organisation.
Our approach consists of the following steps:
Conduct a working capital benchmark to compare your organisation's performance against rivals and identify areas for improvement
Perform a diagnostic to identify quick wins and mid to long-term working capital improvements
Develop detailed action plans for implementation to unlock cash and make sustainable improvements. We work to gain buy-in and support for the agreed implementation targets with the client team members who will be responsible for delivery
We support the implementation of sustainable working capital reductions using the following key levers of:
process optimisation throughout the entire end-to-end working capital cycles
capital compliance and monitoring
identification and improvement of commercial terms; and
creating and embedding a ‘cash culture’, where the trade-offs between cash, cost and service are continually evaluated and optimised.