Although finance directors are often seen as responsible for working capital performance, the reality is that they often have little influence over it, as the underlying performance drivers lie outside their remit. These drivers lie with activities as varied as contract negotiation, warehouse management and debt collection. This means that any robust approach to improving working capital performance has to be based on an appreciation of how these drivers impact the overall working capital numbers.
We recognise that the traditional, organisation-wide measures of working capital fall short of actually identifying the causes of performance shortfalls, and therefore serve only to describe the problem rather than suggest solutions.
Whilst our benchmarking provides directional guidance, real understanding comes from a review of the financial and operational processes that drive working capital performance. As overall performance consists of a large number of contributing elements, this review is most effective when undertaken at a transactional level.
We overlay each client review with an understanding of the working capital characteristics of their sector, of best practice working capital approaches and experience-based knowledge of the practicalities of working capital improvement. This enables us to structure the right approach, to enable our clients to realise their working capital objectives.