Wall Street Journal, “Rising Rates Boosts Companies’ Focus on Working Capital Management,”

Finance chiefs are aiming to free up cash from their operations as the cost of credit increases. With insights from The Hackett Group’s Istvan Bodo.

Higher interest rates are putting more pressure on companies to free up cash from their operations, a cheaper option than relying on credit.

By taking steps such as reducing inventory or more quickly collecting payments, companies unlock cash that can be used to pay down debt or fund investments. As interest rates go up and the cost of credit rises, companies are finding it more attractive to squeeze as much cash as they can from their own businesses instead of relying on external debt, executives and advisers said. “It’s always cheaper to access your own money,” said István Bodó, a director at business advisory firm Hackett Group Inc.

Source: Wall Street Journal