Finance & Corporate Development

Working Capital Optimization

Working capital optimisation is an effort to improve a company’s daily operations to limit the cost of borrowing, free up cash flow for investment and reduce limitations on operations caused by the need to meet current liabilities. Working capital optimisation incorporates a range of efforts to analyse and enhance the day-to-day inner-workings of your company.

Within a company’s daily operations lies an incredibly complex web of processes and relationships, which require a constant stream of cash to function. The goal of working capital optimization is to untangle this web and identify the areas of your daily operations that offer the greatest potential benefit from restructuring and streamlining.

Whether it involves reducing your inventory holding times, finding better sources of short term debt, reducing accounts receivable delays or one of the hundreds of other potential examples, a seasoned working capital optimisation consultant from Consultport can guide your company down the best course.

  • Performance Metrics: Many companies have daily operations that have evolved to their current state day-by-day with little explicit oversight or revision. One of the most important tasks a working capital optimization consultant can perform for your company is to apply industry standard key performance indicators (KPI) to the various elements of your company’s daily operations to evaluate their productivity and efficiency.
  • Stakeholder Management: A company’s relationships with its stakeholders can often play a major role in the optimization of its working capital. Both accounts receivable and accounts payable are critical elements of any company’s working capital, and the relationship between a company and its customers and suppliers will determine the company’s financial performance in these key areas.
  • Discovery and Analysis: Likely the most complicated aspect of any working capital optimization is identifying the key problem areas in your company’s daily operations and cash flow management, and then developing solutions that target the areas that offer the greatest potential benefit to your company. The depth of analysis required often means that only a focused working capital optimization consultant is qualified to oversee these projects.
  • Ensuring Optimization Sustainability: Most problems in working capital performance ultimately stem from the accumulation of numerous small inefficiencies over time, as your company’s daily operations evolve to meet the changing demands of the market. A working capital optimization consultant can provide analytical frameworks and training for a company to ensure that the disorder from the passage of time can be minimized and new problems can be identified and resolved in-house before they become routinized into your company’s daily operations.
  • Inventory Management: Inventory is often one of the key problematic areas in a company’s daily operations. Inventory management solutions require close collaboration between management and finance departments, which is rare in most companies as they have conflicting interests when it comes to inventory levels. Proper inventory management involves a critical look at the different classes of inventory, and optimizes the quantity held relative to the speed of its turnover.
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