What It Means for Your Organization
In this 2023 ETE session on working capital management, industry expert Sandra Carter guides viewers through key strategies for optimizing working capital to maintain financial health and adaptability. The session includes an overview and definition of working capital, key calculations such as the difference between a company’s current assets and liabilities, and discusses how working capital is critical for covering short-term obligations and ensuring smooth business operations. The session outlined types of working capital, from net to temporary, noting how each supports different business needs. The webianr also presented a practical example, emphasizing the need for a balanced approach to assets and liabilities to maintain sufficient cash flow and flexibility.
Attendees were introduced a working capital checklist recommended by KPMG, covering essential factors like cash management, liquidity planning, and credit availability. The session stressed the importance of clear cash visibility, efficient inventory management, and regular communication with financial stakeholders. Addressing the recent PwC study findings, Ms. Carter noted that while working capital days are at a five-year low, rising inflation and supply chain disruptions are adding pressure to businesses’ cash positions. The need for proactive liquidity planning and short-term cash forecasting to prepare for potential economic shocks remains.
The session concluded with best practice suggestions for improving working capital, such as maintaining optimal inventory levels, managing expenses, and leveraging data analytics for better insights. Too much or too little working capital can both be detrimental, leading to cash shortages, missed growth opportunities, or idle funds. Companies should strive to find a working capital balance that aligns with their operational needs and financial goals, using modern tools like Treasury Management Systems to gain visibility and optimize cash flows effectively. For more information on implementing a TMS and additional ways how your organization can improve working capital, reach out to [email protected] to get in touch with our team.