Working Capital Management

Working capital advisory is the management of a business's short-term liquidity — the operating cycle of the receivables, the inventory and the payables, the cash conversion cycle, the working capital requirements computed and funded, and the processes that keep the business liquid. The working capital is the cash the business needs to run its day-to-day operations, and its management is the difference between the business that runs smoothly and the business that is perpetually short.

The working capital position is decided by the operating cycle — the days the inventory sits, the days the receivables wait, the days the payables defer — and the management is the compression of the cycle and the funding of the gap. The working capital requirements are computed from the cycle, funded through the facilities and the discounting, and monitored through the ratios and the forecasts. The business that manages the cycle finds its cash runs; the one that does not finds the cash crises.

The cost of an unmanaged working capital is the constant crunch: the purchases delayed, the payroll stretched, the growth starved, and the emergency borrowing at the worst rates — each a cost of the cycle that was never managed.

This service is for businesses whose cash is tied in their operations. We analyse the operating cycle and the cash conversion, compute the working capital requirements, structure the funding — the facilities, the discounting, the supply chain finance — set up the processes for the receivables, the inventory and the payables, and monitor the working capital so the business runs on its liquidity rather than around it.