Managing working capital

Overcoming the crisis

In light of the COVID-19 pandemic, many companies have experienced demand or supply-side disruptions that have reduced the flow of products as well the flow of cash and credit. A well-designed and executed cash strategy can help limit the impact of the crisis.

Are you a survivor or a winner?

In our dynamic world, companies continuously face new challenges and opportunities. In order to capture these and optimize shareholder value, cash is crucial. Our research shows evidence that there is a significant untapped potential in working capital reduction to improve overall cash positions. Given the current COVID-19 times, the way in which a company manages its working capital will determine whether it merely survives the crisis or emerges from it as a winner.

Working Capital in the Industrial Products industry: a key competitive advantage in times of Covid-19

A robust approach

Once the rebound begins, some companies may find that they are not as financially strong as they were before the pandemic. A cash strategy for the recovery phase is just as important as it is during the crisis. For example, it may not be wise to replenish depleted inventory positions for slower-moving products (or even typically fast-moving products where demand has not yet returned) that could tie up valuable cash in assets that will not move quickly. In addition, customers and suppliers may require flexibility, creating longer (or smaller) receivables or shorter payables. 

Deloitte can help companies create a flexible and creative balancing of working capital by identifying levers to release the pressure from working capital on the receivables, inventory and payables side. We can also identify quick-wins to deliver rapid, tangible cash flow benefits.

Addressing the financial impact of COVID-19: Working capital solutions for businesses with urgent cash needs

Good constraint management is achieved by creating a plan to manage these constraints, understand their impact on financial performance, and avoid lost opportunities.

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