Working Capital Management
Recent research by The Hackett Group found a significant gap between the working capital management practices of top-performing companies and those of average performers. The Hackett Group estimates that if underperforming companies in the Global 1000 were to match the working capital management best practices of top performers, they would free up nearly $800 billion in cash flow – an average of nearly $800 million per company.
While companies can readily enhance their short-term working capital position by slowing down payments, speeding up collections, or starving inventory, sustainable improvements to working capital management require an ongoing effort and systematic approach. In its extensive experience working with major companies around the world, The Hackett Group has observed a pattern of practices that help top performers master their working capital, including:
- Make working capital an executive suite obsession. Companies with world-class working capital management performance are most often companies whose executives have made working capital management a priority.
- Segment your customers and vendors, and take the best care of the customers and vendors that you need the most.
- Reward employees for reducing corporate working capital.
- Develop and apply good working capital management metrics.
- Automate cash processes in a manner that establishes and enforces good working capital management practices, especially for lower value transactions.
- Leverage next-generation technologies to improve visibility and collaboration with supply chain partners.
The Hackett Group Can Help You Achieve World-Class Working Capital Management
Through our working capital group REL, The Hackett Group offers advisory and consulting services that drive measurable improvements in our clients’ working capital management performance. Drawing from our more than 13,000 benchmarking engagements with major companies from around the globe, The Hackett Group delivers best practice expertise in inventory reduction (forecast-to-fulfill), accounts payable (source-to-settle), and accounts receivable (customer-to-cash). We can help you substantially improve your cash flow, creating the liquidity to fund product development, acquisitions, debt reduction, share buy-back programs and other strategic initiatives.
Supplementing our deep knowledge of working capital management best practices, The Hackett Group offers expertise in business process reengineering and other process improvement methodologies, as well as in IT strategy as it bears on working capital objectives.
To learn more about The Hackett Group’s working capital management advisory and performance improvement consulting services, as well as our solutions for other business needs such as enterprise performance management, outsourcing consulting, IT metrics development and more, contact us.