Improving cost and cash position in an unpredictable climate
Often a hidden concern of the finance team and less often considered beyond, working capital not only looks at the cash available for day-to-day trading operations but can also be a core contributor to enterprise value. Techniques such as optimized buying channels, dynamic discounting, inventory management, and term synergies can all be used in conjunction with traditional payment strategies to cement a stronger cash position.
“When a company has a large cash position above and beyond its current liabilities, it is a powerful signal of financial strength.”
The importance of a healthy cash position
Cash is often thought of as being needed to pay salaries and suppliers and deal with unexpected events, but a healthy cash position is also critical to achieving optimal investment or sale terms. An effective Working Capital program not only improves cash positioning but can also deliver other cost improvements such as simplification, processes, and/or headcount reduction. Procurement can help by aligning the right payment strategies and processes to core buying channels and supplier groups, bringing:
- Practical, targeted strategies designed to deliver impact
- A fresh perspective on business processes and ways of working through customers’ eyes
- Agile and innovative supplier networks and delivery ecosystems to power change
Improving your cash position
Working capital programs can vary greatly in scope and so we start by working with finance to agree the areas to address and levers to use. From there, we deploy the right team to address each focus area and manage the overall program. It is likely that this will include an assessment of processes and payment terms and potentially, if appropriate, extend into systems, tool and inventory. Our team will assess the opportunity to create an agreed plan, which our team will deliver.
- An assessment of current position vs current trends
- A report on potential opportunity levels, strategies, and risks
- An implementation plan and guidance to deliver the change required