A Proactive Approach to Cash Optimization
Working capital (WC) is one of the best indicators of a company’s financial wellbeing, and its cheapest source of finance. Following recent economic developments, companies are looking to release cash trapped in operations to finance their WC. CEOs, CFOs and finance executives should aim for sustainable improvements in the inventory management, accounts receivable and accounts payable processes to reduce working capital and improve return on capital employed (ROCE).
Main challenges that executives face in proactively optimizing working capital are:
- Limited access to information: companies lack the real-time data required to evaluate working capital processes
- Lack of a clear drill-down methodology and cross-functional view
- Lack of time, analytical resources and capability to focus on optimizing working capital