Working capital is one of the most significant investments that many businesses make. It can also be one of the most inefficient.
Excess working capital often moves up our clients’ agendas when there is a need to free cash in order to invest in other areas. These cash triggers range from funding market growth or acquisitions to providing cash to bridge a temporary downturn in business performance.
Often, once the task of freeing working capital reaches Management’s agenda, a series of short term actions are initiated: customers are aggressively chased for payment; payment to suppliers is delayed; and inventory levels are reduced. Often the unpalatable results and organisational upset caused by these actions mean that they are quickly shelved, and no underlying improvement occurs.
Deloitte supports clients in understanding the scope for the sustainable release of cash from working capital, identifying what steps need to be taken to release the cash and providing the implementation expertise to enable them to achieve their optimum level of working capital.