Cash and Working Capital Management 

"Looking at these survey results leaves me with mixed emotions. On the one hand, I’m delighted to see that making cash a consistent element of business performance management emerged as respondents’ top ranked priority.
On the other, I’m disappointed to see that focusing on getting the basics right was ranked second.

Given the focus on cash and working capital over the last two years, I would have expected the majority of companies to have already addressed the basics and have moved on to challenging the structural and strategic drivers of cash in the business.

These results reinforce my belief that many companies still have substantial opportunity to improve their working capital performance by over 20% in many cases.

Not only did “getting the basics right” rank second – but over a quarter of respondents had it down as their number one choice. This suggests there are plenty of business (too many, I would say) who are only now embarking on their cash management journey.

By getting the basics right, we’re talking about nothing more than good housekeeping; collecting debts on time, paying suppliers to terms, ensuring system data is accurate and appropriate, improving sales forecast accuracy and demand planning.

Making process changes does not guarantee sustainable improvement though. For more long-term benefits, a cash-centric culture needs to be embedded with cash linked to business performance management.

How heartening that 47 percent of respondents appreciate this and have it as their number one priority.

Looking at the broader survey results, it’s encouraging – if somewhat counter-intuitive – that, overall, the cash theme ranked 2nd of the eleven Succeeding in a Changing World themes; up from 3rd last year.

I would have assumed that with growth prospects slowly starting to improve, cash may have started to slip down the Succeeding rankings.

That it hasn’t done so may well be tied to my opening point about some businesses only now focusing on the cash basics. If businesses recognise the opportunities still available for improved cash generation then perhaps the topic will remain in vogue for longer than anticipated."