Unlocking enterprise value through working capital management
In collaboration with SPRING Singapore
Increase in Net Working Capital (NWC) Days
50% of sectors
studied saw their working capital performance deteriorate year-on-year
Medium size companies struggle the most
Top working capital performers show higher investment rate compared to bottom performers
Working capital is the cash tied up in the daily operations of a business. It is the lifeblood of any business and a measure of short term financial health. The longer the cycle is, the longer a business is tying up capital without earning a return on it.
In the face of declining revenues and today’s volatile economic environment, companies need to manage their liquidity positions carefully to ensure they have enough cash flow to stay in business. Interest rates are also steadily increasing; this means that every extra dollar tied up is becoming more costly and there is an increasing urgency for businesses, especially SMEs, to optimise their working capital.
In collaboration with SPRING Singapore, our second annual working capital study looks at the working capital performance of 1,020 public and private companies across 15 sectors in the country.
This year, we observed an overall 3% deterioration of NWC days year on year, mainly driven by a 2.9% increase in Days Sales Outstanding (DSO) and a 4.1% increase in Days Inventory Outstanding (DIO). In cash terms, this translates into an additional S$ 8.7bn of liquidity tied up.
The three key observations are explained below.
Gain an understanding of Singapore’s working capital performance landscape average, by industry and by company size, using our data explorer.
SMEs in need of financial management advice can approach any of the 12 SME Centres for free business diagnosis and basic advisory services on budgeting, cash flow management, and financial statement analysis. An initiative by SPRING Singapore and five trade associations and chambers, the SME Centres help local enterprises improve their capabilities, increase productivity and grow their business.
For more information or to book an appointment with an SME Centre business advisor, visit www.smeportal.sg/smecentres.
SMEs can access financial management toolkits, business guides and best practices at the SME Portal – the first stop for business information. The Tech Depot on the
SME Portal also provides SMEs with easily adoptable technology solutions that can optimise their finance operations.
Visit www.smeportal.sg for more information.
Wee Tze Wee
Partner, Deals, PwC Singapore
Tel: +65 8218 6342