Working Capital Management

Cash for growth: Our 2014 Global Working Capital Survey
How do regions and sectors compare in their management of working capital? What levels of investment are needed to fund the increase in working capital? How large is the opportunity to release cash for growth? Read more
Cash for growth: Our 2014 Global Working Capital Survey

Most companies can release significant amounts of cash from their balance sheets by managing working capital more actively. In these times of economic uncertainty and reduced access to credit, this is the cheapest source of funds and it is available to most businesses.

PwC is a market leader in the field of Working Capital Management (WCM) The WCM group pools experienced practitioners from across the world. Our people have many years of experience at delivering world class working capital performance both as consultants and from time spent in Industry.

PwC has positioned itself as a competence leader in the field of WCM. PwC stands for optimisation through profound experience and has a strong track record in various industries for both national and multinational clients.

Increase your company's value through professional Working Capital Management The fundamental principles of Working Capital are clear: reduce inventory and receivables whilst increasing payables balances. But many companies find it hard to optimise working capital. Our specialists provide you with dedicated expert resources to help drive cross-functional working capital improvements, keeping you free to deal with the everyday challenges of running a business.

WCM initiatives release working capital and increase liquidity that can be used for strategic investments or the reduction of debt. In addition, profitability is enhanced due to an efficiency improvement within the processes and a reduction in cost of capital. Considering all of these effects, improving working capital inevitably leads to a sustainable increase on Economic Profit / ROCE and therefore to a higher corporate value.

Potential Issues Based on our experience of working with clients to improve their working capital, CEOs, CFOs, Group Finance Directors, Group Treasurers or Shareholders are currently likely to face the following issues:

  • Additional funding requirements due to increased working capital driven by business growth
  • Lack of visibility on cash and working capital performance across the organisation, and entire working capital cycle
  • Lack of cash awareness across departments and geographies, with no working capital targets and incentives
  • Difficult working capital balancing act managing the trade-offs between cash, cost and service
  • High levels of overdue receivables and bad debt write-offs
  • Sub-optimal controls in relation to setting and managing payment terms of customers and suppliers
  • Broken Sales Operations and Planning (S&OP) process and poor stock visibility
  • Poor levels of customer service and On Time In Full (OTIF)

How we can support you

  • Complete a working capital benchmarking exercise to compare performance against peers and identify potential improvement opportunities
  • Perform a diagnostic review to identify ‘quick wins’ and longer-term working capital improvement opportunities
  • Development of detailed action plans for implementation to generate cash and make sustainable improvements
  • Assist the implementation of sustainable working capital reduction by robust, efficient and collaborative processes, through focus on the key levers:
    • Identification and improvement of commercial terms
    • Process optimisation throughout the entire end-to-end working capital cycles
    • Compliance and monitoring
    • Creating and embedding a ‘cash culture’ within the organisation, where the trade-offs between cash, cost and service are evaluated and optimised.


Activities

  • External and internal benchmarking using best practice analysis
  • Identification of working capital optimisation potential
  • Project definition

Objective: Identification of potential, cost/benefit decision

Activities

  • Analysis of processes and procedures
  • Management interviews, site visits
  • Working capital potential quantification and validation of selected areas
  • Identification of relevant measures
  • Development of high level implementation plan

Objective: Validate improvement areas with highest potential

Activities

  • Implementation of quick wins and short-term measures
  • Action plan development
  • Develop reporting (KPIs) and target setting
  • Develop training / awareness programme
  • Develop negotiation toolkits and monitoring approach
  • Update T&Cs
  • Policies and procedures

Objective: Implementation planning, policy redesign, quick win realisation

Activities

  • Support with implementation of the revised structure, processes, policies and tools
  • Embed the changes through a programme of training, coaching and communications;
  • Monitor progress and contribute to ongoing Steering Group meetings

Objective: Working capital reduction realised, ensure sustainability, KPI system/ dashboard




Example of how PwC supports you (Selection)

Accounts receivable

  • Credit risk policies
  • Aligned and optimised customer terms
  • Billing timeliness and quality
  • Contract and mile stone management
  • Prioritised and proactive collection procedures
  • Systems-based dispute resolution
  • Root cause elimination

Accounts payable

  • "Centre Led" procurement
  • Consolidated spending
  • Aligned and optimised supplier terms
  • Supply Chain Finance
  • Purchasing channels (to avoid contract leakage)
  • Payment method and frequency
  • Early payment prevention
  • Spending approvals in purchasing process
Inventory
  • Lean and agile supply chain strategies
  • Global coordination
  • Forecasting techniques
  • Production planning
  • Accurate tracking of inventory quantities
  • Differentiated inventory levels for different goods
  • Balanced cash, cost and service