Six Quick Working Capital Wins



At the Working Capital Management Forum 2008 in London, SSON convened a roundtable debate on the impact of the credit crunch, and ways organizations can limit that impact. This extract from the end of the debate includes one suggestion from each of the participants for quick wins – simple steps companies can take to protect themselves from the worst effects of the economic downturn. 

Gavin Jones, Ahold Finance Group:  Build a good, strong cash-flow forecasting culture and approach, so that you can identify early the periods when you need cash and have that dialogue with either your customer, your own supplier base, or your bankers, to get you through that period of cash-negativity.

Brian Shanahan, REL: Fix basic processes sustainably, so that even though you might be in trouble now and you might have to weather the storm for the next few months, you make sure that you’re in a state of financial health to take advantage when the market comes back up again – because it will, strongly.

Annie Guerard, former Finance Director, Diesel: Identify where you’re cash-thirsty; understand whether you have the right model; and renegotiate.

Stuart Reynolds, Sainsburys: Look at projects: see where your organization’s going, and really focus on the biggest projects with the biggest returns. Prioritize: in times when you haven’t got unlimited resource and unlimited cash, make sure as an organization people know where your priorities are and work on those.

Steve North, Royal Mail: From a procurement perspective, in terms of vendor relationship management you need to have a very strong infrastructure and strong VRM processes to understand which of your vendors are going to be at risk through the downturn; I think one of the things that will keep CPOs awake at night is thinking which vendors – strategic vendors – are going to have problems which means they might not be able to deliver. So understand your vendors and understand where that risk lies.

Simon Graham, Atradius: Identify – in terms of your debt book and DSO [days sales outstanding] – where a supplier being a few days late moves towards becoming a real risk. And use a debt collection agency…