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Working capital management: Emerging topics and trends

PwC Malaysia’s 2021 Working Capital Study



 

Improvement in overall Net Working Capital days in FY20 from FY19 through extension of payable days

Working capital performance gap between large and small companies continues to widen 

8 out of 14 industries saw a decline in working capital performance in FY20 from FY19

Working Capital Management:
Emerging Topics and Trends

PwC Malaysia’s 2021 Working Capital Study

Our latest report explores the need for a sharper focus on cash optimisation and liquidity strategies by businesses as they navigate the current climate amidst a subdued economy and persisting lockdown restrictions. Over 400 listed companies across 14 different industries in Malaysia were analysed to arrive at our findings. 

Overall marginal improvement in working capital performance  

Our analysis shows a decrease (i.e. an improvement) in Net Working Capital days among companies in Malaysia, from 53 days in FY19 to 52 days in FY20, largely driven by the extension (improvement) in payable days by 7 days. Receivable and inventory days have declined in FY20 with an increase of 2 and 4 days respectively from FY19.

More industries saw a deteriorated working capital performance in FY20

8 out of 14 industries have increased their Net Working Capital days, showing an overall decline in their working capital performance. Several key industries such as apparel and luxury, technology, trading services and industrial products have been adversely impacted, mostly driven by extended inventory holding or receivables collection days. 

Emerging environmental, social and governance (ESG) and digitalisation trends from a working capital perspective

In this study, we share our thoughts on several emerging trends that are redefining the future of Malaysia’s working capital landscape and how businesses can capitalise on these new opportunities for working capital growth.

Download the full report below to explore more about working capital improvement opportunities and emerging trends for your organisation. 

Key findings

Digitalisation and analytics

There is an increasing need for digital technologies to manage and overcome supply chain disruptions that have impaired product flow and significantly affected sales and cash flow due to the pandemic 

  • “Easy” cash wins are possible through a top-down approach allowing immediate remedies which can realise up to ~40% of cash potential

  • Additional cash potential can be realised through a bottom-up approach, utilising transactional data combined with emerging technologies such as advanced data analytics and process mining

Supply chain resilience and agility

A resilient and agile supply chain is made possible with the use of digital working capital levers 

  • Key supply chain capabilities that organisations can invest in includes AI-driven supply chain management, dynamic supply chain segmentation, smart logistics flows, and more 

ESG and sustainable Supply Chain Finance

ESG also has the potential to reshape how organisations strategise, invest or grow

  • Where and how can organisation begin their ESG journey? 
    Organisations can consider the following: reimagining their reporting to take into account broader non-financial metrics, redefining or reinventing their strategy with ESG at its core, and business transformation

  • Integrating sustainability into Supply Chain Finance (SCF) can improve both the financial health of the supply chain and ESG performance

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Contact us

Ganesh Gunaratnam

Ganesh Gunaratnam

Deals Director, Working Capital Management, PwC Malaysia

Tel: +60 (3) 2173 0888

Krishna Chaitanya

Krishna Chaitanya

Deals Senior Manager, Working Capital Management, PwC Malaysia

Tel: +60 (3) 2173 5399

Pawan Kankanwadi

Pawan Kankanwadi

Deals Senior Manager, Working Capital Management, PwC Malaysia

Tel: +60 (3) 21733614

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