Cash Flow & Working Capital Management

By Wayne H. Smith Storing inventory creates expenses for insurance, staff, space, utilities, and financing. The best way to reduce the cost is to reduce your inventory balances. Where to Start Here are some key steps to consider before taking action on driving down working capital: Establish an organizational structure. The CEO or COO should...… Read More

Controllers who neglect the importance of effective working capital management do so at their own peril, warns Judith D. Sherling, CPA, CGMA, Controller Services & Solutions, LLC (Douglas, GA). Working capital consists of several “moving parts” that must be closely tracked and managed, says Sherling. These include inventory financing, accounts payable, and accounts receivable. “Controllers...… Read More

By Robert Jaffe  Controllers with the vision to see profit potential in accounts payable have a unique opportunity to deliver several cents a share in earnings for their organizations. Such measureable results have been evidenced in more than 100 AP systems over a period of 23 years when a coordinated vendor payment strategy is implemented...… Read More

As part of its ongoing efforts to better utilize its working capital, Walgreens is using a collaborative cash flow optimization solution that is a win-win for the retail giant and its worldwide suppliers.

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In exchange for paying invoices early (on average, 29 days early), Walgreens receives a discount from its suppliers. Since launching a pilot program in September 2011, the company has saved more than $2 million via supplier discounts by using C

Reducing working capital can significantly increase cash flow and reduce financing requirements, and should therefore be a major focus of management. By Wayne Smith      Minimizing the investment in working capital in a company is critical in today’s tight credit environment. In a study of 15 US manufacturing companies conducted by Working Capital Concepts LLC, operating working...… Read More

AP Automation In a recent survey of more than 160 companies worldwide, the Aberdeen Group found that businesses adopting electronic channels have been able to achieve a 16 percent decrease in accounts receivable (AR) processing costs and a 14 percent decrease in accounts payable (AP) costs year over year. “While the adoption of electronic payment...… Read More

Any effective cash management strategy must include consideration of the accounts payable function. Unfortunately, the tactic most companies employ as soon as cash gets tight is for upper management to instruct AP to stretch payments. This is done in the mistaken belief that stretching payments will solve the problem. As those in AP know, this...… Read More

Inaccuracy in the areas of receiving and supplier return processing has a real impact on AP efficiency and on timely payment processing. “Each match failure costs four to six times what it costs to efficiently post an invoice,” points out Al Barrett, Shared Services Manager at Briggs & Stratton Corporation. At a time when the...… Read More

By Mircea Stanciu, Finance Controller, BIC One major objective for any company is optimizing cash flow—and having cash available in the right amount and at the right time. Your sales may be growing nicely—and the company may be profitable—but if cash is not readily available, discounts and investment opportunities may be missed. Not only do these...… Read More

By Wayne Smith An organization's debt management strategy should be linked closely to its cash management strategy. The amount of short-term debt a company can manage is a function of projected cash flow and earnings fluctuation over a yearly or business cycle. The minimum amount of short-term debt is the amount required to maintain the...… Read More

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