Working capital improvement

Working capital is key to all businesses but working capital is not always well managed. There are many reasons it is important to have effective systems and processes to manage working capital including:

• Tight liquidity – having more cash than necessary tied up in working capital is dangerous but can be an opportunity to improve liquidity if action is taken

• Reduction in equity value – where assets are tied up in high working capital debt is usually high to fund that position resulting in an equivalent reduction in the external view of equity value

• Profit risk – having too much inventory runs the risk of obsolescence and high receivables usually means a substantial overdue element which is where bad debts can arise

Icknield’s working capital improvement services cover all aspects including:

• Receivables reduction can often be about proactive management together with changes in processes and procedures as well as trading terms. We have taken over direct management of credit control functions on some projects in order to deliver receivables reduction.

• Inventory reduction often requires detailed analysis of a large number of line items in order to generate an effective place to release cash tied up in stock. Our team is experienced in undertaking this analysis.

• Where appropriate we can support projects to extend payment terms with suppliers

• We don’t just look at receivables, inventory and supplier credit, we look at everything that could result in a permanent cash flow improvement when we undertake projects to improve working capital. This involves the processes in the business e.g. how quickly a customer receives an accurate invoice.

We work closely with the management team so that they own the project and will therefore make the improvement permanent