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Cash and working capital optimisation

Cash and working capital are part of the core drivers of shareholders' value, the lifeblood in every organisation.

During periods of tightening credit facilities, lack of market liquidity and increased cost of funds, unlocking cash “trapped” within an organisation can provide headroom and stability.

Purpose

The core of the capability we offer is the ability to address the cash and working capital needs and issues of stressed and underperforming organisations.

The purpose is to help clients to focus on cash management and optimise their working capital investment. This, in turn, will assist clients in improving their cash position and manage cash through a turnaround.

Common symptoms of poor cash optimisation

  • Deteriorating working capital ratios
  • High levels of bad debts or stock obsolescence
  • Withdrawal of credit terms by suppliers
  • Freezing of trade facilities
  • Lack of cash pooling procedures
  • Frequent breaches of bank facilities covenants
  • Frequent cash requests to parent company
  • Period end cash drive to boost cash balances

Benefits of cash optimisation

  • Reduce bank debts
  • Fund investments, acquisitions and/or organic growth
  • Fund restructuring and performance improvement programmes
  • Create a period of stability in which to develop turnaround options
  • Ensure survival of business in financial distress situations and restore the confidence of key stakeholders
  • Improve shareholders’ value
  • Avoid financial covenant breach
  • Increase the prospect of dividend payable

The Deloitte Approach

The Deloitte cash optimisation programme delivers permanent improvements in cash flow and working capital through:

  • Cash management , forecasting and reporting tools
  • Review and remove inefficient working capital techniques
  • Implement long-term working capital efficiency controls
  • Optimise the structure of financing facilities
  • Train finance and operation departments on proper cash management
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