Working Capital Optimization

We help release cash from operations to finance your growth and strategic initiatives by optimizing your working capital.

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Release cash for growth and investments

 
Time is money and you have cash tied to your day-to-day operations. Finance your growth or strategic development initiatives by releasing cash from your own operations instead of using external financing. We help you to improve your profitability and release cash from the balance sheet by optimizing your working capital.

Working capital optimization is a cross-functional effort of the entire organization. By improving visibility to the key operative processes, waste and delays can be eliminated – may that be shortening lead times, optimizing the inventory levels to better match the demand or extending the time suppliers are paid. All in all, these actions aim to reduce the time you have money tied to the operations and having the cash in the bank account faster.


Improving cash flow by optimizing working capital is an organization wide cultural transformation that – when executed properly – leads to sustainable results and also enables future improvement of your profitability.

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“As we continue to grow, that 30% released working capital will convert into several million euros less external financing needed. That really puts you thinking. Let alone to mention how much more financing we would need if our relative working capital would start to develop in the wrong direction.“

Merja Rantala, CFO
Pinja

Ebook

Learn the basics of how to execute a successful working capital optimization project.

Working capital optimization ebook

Working capital optimization is not only about releasing money, it also makes you a stronger player in the market

Working capital optimization
Increased control over your key operational processes

As working capital is the best indicator of a company’s operational effectiveness, it is related to all your key operative processes. Working capital optimization relies on fact based and transparent understanding of the key process drivers and metrics. Hence, allowing your organization to make informed decisions and putting the focus to where it counts.

Working capital people growth
Improved capabilities to drive your profitability

Optimized processes rely on cross-functional co-operation with silo breaking mentality, improved knowhow and capabilities to respond to challenges. By strengthening the cash culture in your organization you improve the ability to make decisions that take all perspectives of profitability into account.

Cash flow - working capital
Permanently improved cash flow performance

At the end of the day, it is the results that count. Systematic optimization of working capital leads to permanent improvement of your cash flow and profitability. Additionally, the improved processes and transparency allow your organization to respond to changes in your business environment in a more flexible manner.

What our customers say

See what some of our customers say after the working capital optimization project.

What we do

See examples of what we actually do with a different kind of working capital related challenges.
Click the plus icon to see symptoms of the challenges, how to solve them, what the impacts are and related customer cases and blog posts.

Symptom
High Overdues

Solutions

  • Creation of global overdue management process
  • Clarified roles and responsibilities regarding the whole dunning process
  • Creation of Accounts receivable and overdue reporting

Impacts

  • Increased collaboration between sales and finance functions lead to improved situational awareness
  • Amount of overdue payments reduce significantly

Read case Normet: Cash to grow

Symptom
Low Accounts Payable

Solutions

  • Payment term analysis​
  • Discount and rebate analysis​
  • Payment policy revision​
  • Training of sourcing department and purchasers of indirect services​
  • Creation of “handbook” for purchasers​
  • Structured negotiation of supplier terms

Impacts

  • Greatly improved Days Paid Outstanding (DPO)
  • Consolidation of suppliers lead to more streamlined supplier base and, thus, more efficient supplier management

Related blog posts

Symptom
Rising Accounts Receivable

Solutions

  • Complete revision of customer credit policy and collection process​
  • Updating contract templates from a cash flow perspective​
  • Creation of an acceptance process for non-standard terms​
  • Creation of credit policy ​
  • instructions for sales​
  • Training the new policy and processes to sales and finance organisations

Impacts

  • Halted the increasing trend in Days Sales Outstanding (DSO)​
  • Improved level of customer credit term management

Related blog post
Checklist: myyntisaamisten turvaaminen poikkeustilassa

 

Symptom

High amount of un-invoiced work in progress (WIP) in the balance sheet

Solutions

  • Invoicing process mapping
  • Invoicing process redesign
  • Creating transparency to the invoicing process by selecting the key process phases and defining data needs for those phases
  • Setting up reporting for all organizational levels

Impacts

  • Created visibility to the invoicing process and its key phases
  • Greatly reduced invoicing delay in invoicing process with a road map for future improvements

Read case Maintpartner: Improving cash flow through tran­sparency and structure

Symptom
Low inventory turn

Solutions

  • Training the category managers of inventory turn’s role in total profitability (Earn & Turn)​
  • Creation of visual tools that allow category managers to easily identify the parts of their product portfolio that have below requirement performance​
  • Revision of assortment/portfolio management process with a clear focus on both margin and inventory turn targets

Impacts

  • Culture change from P&L focus to total profitability​
  • Improved both inventory turn and inventory profitability (Earn & turn)

Symptom
High inventories

Solutions

  • Re-designing the Sales & Operations
    Planning process with focus on
    mid-to-long demand horizon. 
  • Applying statistical methods in the process to ensure that the best available demand signal is in replenishment.
  • Improving replenishment timing by ensuring that the demand plan is in line with supply capabilities.

Impacts

  • Improved cost efficiency & flexibility through better ability to adjust resources
  • Improved delivery performance
  • Better stock turn

Read case Normet: Customer-driven demand planning

Symptom
Stock-outs for high running items and excess inventories for items with low demand

Solutions

  • Defining delivery model for all items in the portfolio based on their demand behavior
  • Setting replenishment model for all items in the portfolio based on delivery method selections and supply parameters

Impacts

  • Improved delivery performance by reducing stock-outs for high runners
  • Overall healthier inventory structure leads to better stock turn

How we work - From a business case to measured sustainable results

We work hands-on with our customers to build the insights, visibility and tools needed to improve capabilities, empower people and achieve measurable profitability improvement, now and in the future.

We have tested our ways of working in 300+ projects, releasing millions of euros. Read more about our Changemakers toolbox, project framework, and pricing on the How we work -page.

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Should we discuss how you could release cash for your growth and investments?
Book a meeting from Maria's calendar or send us a message and let’s find out together!

 

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