Title: 4 Tips for Effectively Managing Working Capital - SoftCo
Headings: 4 Tips for Effectively Managing Working Capital
4 Tips for Effectively Managing Working Capital
Blog - 29 Oct 2020
Benefits of Positive Working Capital
Improved Liquidity
Operational Efficiency
Increased Profits
Achieving the Correct Level of Working Capital
The State of Working Capital in 2020
Tips for Effectively Managing Working Capital
1. Manage Procurement and Inventory
2. Pay vendors on time
3. Improve the receivables process
4. Manage debtors effectively
Conclusion
Posted by
James Duffy

Content: The Hackett Group state that “by optimizing working capital performance, companies could reduce debt as a percentage of revenue by about 11%”. PWC report that €1.36 trillion could be released from the balance sheets of global listed companies by addressing poor working capital performance. Similarly, the Hackett Group note a total working capital opportunity of $1.278 billion for US companies in the areas of inventory, accounts payable and accounts receivable. Inventories offer the biggest working capital opportunity, with 39% of total working capital tied up in this area. With such working capital opportunities in mind, we have come up with a list of 4 tips for effectively managing your working capital during these economically challenging times. Tips for Effectively Managing Working Capital
1. Manage Procurement and Inventory
Prudent inventory management is an important factor in making the most of your working capital. Excessive stocks can place a heavy burden on the cash resources of any business. On the other hand, insufficient stock can result in lost sales and damage to customer relations. When looking at inventory, it is important to monitor what you buy, just as much as what you sell.