Working capital is a simple concept because it’s all about freeing up the company’s cash. Unfortunately, many organizations face serious internal challenges that can interfere with their ability to do this. As they’ve discovered, it’s one thing to recognize the need for working capital improvement and another to understand what steps to take to improve cash flow.
Common challenges to improving working capital:
1. Limited access to needed information – real-time data and metrics are lacking.
2. Lack of formal structure – it’s extremely difficult to sustain working capital improvements without formal structure.
3. Too many stakeholders and perspectives – Each stakeholder is likely to have a different perspective on how to enhance working capital and their own priorities.
4. Time constraints – Organizations often struggle to focus on improving working capital because other priorities are competing for attention. After all, there’s only so many hours in the day.
Consider addressing working capital improvements with intention by including this topic in your 2019 Strategic Planning session.
