Working Capital Freedom in 1,000 Small Steps

By Rich Bond

Many large public companies are spending millions of dollars to mobilize their working capital as they prepare for further interest rate increases and possible credit restrictions.  I learned this because I’m currently recruiting for a Big 4 Accounting Firm’s Treasury Consulting practice. The public companies are scrambling.

If you own or run a business, you should be, too.

I’ll let you in on a secret: Working capital mobilization succeeds by taking a thousand small steps in the same direction. It is NOT a quick fix, but when it works, it is like emerging into bright sunlight after having slogged through a dark unpleasant jungle.

Here are some of those thousand steps, which are really quite simple. The person who heads up finance needs to:

  • Set up metrics and targets
    • Days Sales Outstanding (DSO),
    • Days Payables Outstanding (DPO),
    • Inventory Turns by SKU,
    • Reporting of Aged Receivables to identify problems as they are developing.
  • Monitor the targets
  • Analyze the results
  • Identify problems as they are developing
  • Make forecasts
  • Communicate the information with the management team

Without these metrics and practices, it is hard – if not impossible – to proactively manage your working capital.

If you’re looking for a working capital solution, contact me, tell me your story, and we’ll figure out a way to work together to get you a financial expert who can free up working capital and help your business thrive – not just survive. richard.bond@bondandcompany.com.

 

 

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