Cash Management
The amount of cash generated within an organization and the ways in which working capital is deployed has a significant impact on the financial strength of the company. A detailed cash management plan will improve cash flow and reduce working capital, freeing up cash for other purposes.
Purpose
To identify and implement cash flow savings across all parts of the organization and thereby improve working capital (e.g. accounts receivable and inventory).
Process
- Mobilize your team and engage them in the project.
- Identify and review the processes that involve cash or working capital such as the sales and purchase cycles.
- Evaluate the policies, practices and people influencing cash flow, customer and supplier relationships, timing of cash movement and comparison to best practices.
- Identify cash improvement opportunities and for each opportunity, quantify the time and effort that would be required in order to realize the projected savings.
- Present to management for review and discussion.
- For the opportunities selected, formulate action items and design a process for implementation.
- Guide execution, track results and report on the impact.
Results
A permanent reduction in working capital and cash requirements that can alleviate the need to borrow, offset revenue declines, reduce risk, fund growth initiatives and increase shareholder returns.
Case Study # 3 describes a cash flow inititiative that improved working capital by $20 Million.