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Minimizing Working Capital

In: Business and Management

Submitted By lanie21
Words 2243
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t is no surprise that many companies are staggering under the burden of today’s financial crisis. Even the most optimistic executives see no near-term signs of improvement. Cash is tighter than it has been in decades, and we are seeing companies struggling to attain sufficient liquidity during the ongoing credit crunch. Many have already taken action to reduce capital spending across the board, while others are gearing up to do so.
Well-capitalized companies are positioned not only to survive the financial crisis today, but also to emerge victorious and thrive when skies turn blue again.
Establishing and adhering to tight working capital standards enables a firm to continue its operations with sufficient funds to both satisfy maturing short-term debt and meet upcoming operational expenses.
Cash
Management
Reducing working capital levels
Laura Greenberg
Cash
Liberating
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by the Association for Financial Professionals. All rights reserved in all countries.
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AFP Exchange
April 2009
2008B CTPs & CTPAs
Working Capital Management
(WCM)—front and center
The current financial crisis has elevated decision-making related to working capital and short-term financing to top-of-mind for today’s executives.
Although working capital is a simple concept, managing it is made difficult by the complexity of the business around it. A focus on short-term earnings without concurrent discipline on cash and working capital has deflected the attention of many companies from the basics, where “cash is king.” As a result of the global nature of large organizations— along with the diversity of systems, processes, organizations and measures of performance—many companies are surprised to find that they are holding excessive levels of working capital. Since free cash flow is a key influencer…...

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