In current times of economic uncertainties created by the widespread outbreak of the Coronavirus covid-19, many companies will face financial challenges in the near future. Facing these upcoming challenges – either caused by Coronavirus disruption or any other underlying cause – freeing up cash rapidly to secure access to capital and a good cash position will be key to minimize losses.
Now is the time to target specific initiatives that will reduce working capital requirements and put your company in a financial position to successfully weather this economic storm. A cash race is a number of focused efforts within a short period of time – mainly focused on quickly reducing working capital and improve cash flow as well as reviewing the cost-structure. Capacent has experience of supporting our customers during this journey where some of the key success factors are:
- Management Support and prioritized initiative focus throughout the organization
- Cross-functional team with mandate to execute activities
- Secure high project pace to keep momentum
We present several concrete actions you can take to ensure the minimum of tied-up capital in each interface of your business.
- Supplier interface: negotiate payment terms, cancel all non-essential purchases, review indirect purchases and negotiate
- Inventory management: sell off excess inventory, ensure proper stock composition short-term, evaluate if reduced delivery precision is possible
- Customer interface: review overdue to accelerate collection process, offer discounts in exchange for early payments, assign standard terms for smaller customers
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