Safeguarding liquidity through working capital optimization
Working capital management is an interdepartmental activity. Mainly managed by the finance department, procurement, supply chain management, production and sales have a major influence on the variables – but often without being aware of their role.
The basis of efficient liquidity management is therefore to build up knowledge of the interrelationships among all parties involved and to create clear responsibilities. Bringing our comprehensive hands-on project experience, we will support you to improve your working capital in a sustainable way, with a total cost of ownership (TCO) approach.
The benefits of professional Working Capital Management
- Improved cash flow allows strategic flexibility that can yield in a competitive advantage in today’s rapidly changing markets
- Leaner balance sheet leading to improved KPIs and valuation metrics – less cash needed to fund the company allows higher valuation
- Improved bottom-line through less bad debt, less obsolete inventory and decreasing financing costs
The Cash Conversion Cycle
To prepare for sustainable optimization of your working capital, we perform a comprehensive analysis to create full transparency of your cash conversion cycle (CCC). Behind every SKU (Stock Keeping Unit) of dead stock there is a process, incentive, governance model or stock model that is not adjusted optimally to a company‘s needs. We review existing policies and interview key personnel from relevant departments to ensure that we capture the full picture and understanding of your organization, its current situation and its future requirements.
Working very closely with the organization in cross-functional teams and based on our proven standard practices, we define measures for implementation within DIO, DSO & DPO that will improve your cash conversion cycle. We organize the identified measures in a list of concrete initiatives including an implementation roadmap with milestones and action plans.
We support your team in realizing the implementation and provide guidance as well as assistance in writing policies, negotiating with suppliers for improved DPO terms, delivery terms or volumes. By doing this we are assuring correct anchoring within the organization.