Ineffective cash flow management can be debilitating for a business, with adverse consequences including inability to fund strategic investments, excessive interest payments that eat into profits, and higher capital costs due to high risk balance sheets. Recent research by The Hackett Group into cash flow management among top Global 1000 companies concluded that if all these firms were to adopt the best practices employed by the top performers, they could free up nearly $800 billion in cash flow, or about $800 million per company.

From the successes of cash flow management top performers a range of general principles and specific best practices can be inferred. For example, some general principles include:

  • Commitment from top executives is crucial. Companies' effectiveness in cash flow management correlates strongly with executive level prioritization of cash flow.
  • It's important to use rigorous cash flow management metrics to baseline your performance and track your progress.
  • Strategic segmentation of customers, suppliers, and inventory is a key driver of cash flow optimization.
  • Process automation is another key driver, particularly in its potential for building good cash flow management practices directly into routine transactions.
  • There's great potential for cash flow optimization in next-generation technologies that can increase your visibility into your supply chain process.

The Hackett Group Can Improve Your Cash Flow Management Performance

As a leading global strategy consulting and operations consulting firm, The Hackett Group offers advisory and consulting services that can help you substantially improve your cash flow performance. Our Archstone Consulting group and working capital group REL have more than 30 years experience working hands-on with major corporations around the world to optimize their inventory management, accounts payable, and accounts receivable processes. We employ proven best practice and process transformation methodologies that have freed up billions of dollars in improved cash flow for our clients. The Hackett Group's cash flow management services have consistently put our clients in better position to invest in new products and markets, pay down debt, and fund strategic initiatives.

Like all of The Hackett Group's advisory and consulting services, our cash flow management solutions also benefit from our renowned benchmarking and best practices repository, the product of more than 5,000 engagements with nearly 3,000 major global corporations, including 97% of the Dow Jones Industrials and nearly three-quarters of both the Fortune 100 and the DAX 30.

To learn more about The Hackett Group's cash flow management solutions, as well as our solutions for other business needs such as supply chain optimization, HR metrics development and HR outsourcing, business cost management and more, contact us.