rainbow dotted circle


Working Capital Report

A route to effective working capital management

2021 ushers in the hope of revival. And the future belongs to mindful leaders. Of all the variables in business, cash is the key factor. Learn more about the latest industrial landscape of working capital and how you can funnel your capital in strategic initiatives through effective working capital management.

The future of working capital

The pandemic has reinforced that an effective working capital management strategy can improve the liquidity status of organizations and therefore restore companies’ nimbleness in this disruptive era. Our Working Capital Report navigates through the industrial landscape and analyzes exactly how each sector managed its working capital (WC) during COVID-19 and where it is today.

Working Capital Roundup

How has COVID-19 affected businesses?

The COVID-19 pandemic had a widespread impact on the financial health of businesses. Only the life sciences and health care (LSHC) and technology, media, and telecommunications (TMT) industries were positioned to realize opportunities created by new demands.

To weather the storm, companies have cut costs and strengthened their balance sheets. Operational strategies that were unquestioned for decades went through a paradigm shift. Normal lead times and replenishment frequencies are elongated, even for regional supply chains, meaning safety stock and inventory policies need to be adapted. Payment morale, as well as creditworthiness and insurability, are continuing to affect the ability to get paid or trade.

The intensity of losses incurred is still unfathomable. We saw a significant decline in gross domestic product (GDP). Several smaller companies had to close their doors. To stay afloat, others resorted to heavy debts. Total debt increased from $10.5 trillion in Q4 2019 to $11.4 trillion in Q1 2021. Worst of all, the US economy saw record-high unemployment rates.

And how can they recover?

As economies have emerged from stay-at-home orders and started recognizing the impact of vaccinations on the future, data indicates a strong recovery by the end of Q1 2021. While all industries except LSHC experienced a reduction in Q2 2020 revenues, it is encouraging to note that all sectors reported improvements by Q3 2020. This indicates that companies made prompt changes to their ways of working, which had a positive impact on their financial performance.

But due to market volatility, the road to recovery will not be smooth. As a proactive measure, companies need to be crystal clear on their levels of liquidity. Looking ahead, they must reconfigure key operational processes, such as WC performance, to ensure they are fit for their immediate purpose and can also deal with prolonged uncertainty.

The keys to optimizing working capital performance

The right people, processes, and systems can create a culture that improves WC performance and frees up capital that can be used to lower debt and invest in the business. This flexibility can lead to greater returns and sustained performance in the future. Leaders must put in place measures that build a cash-conscious culture, where an employee assesses every decision through a liquidity lens.

hand making a graph on window

Find out how we can help

Disruption is inevitable. Now, companies can either be at its mercy or become disruptors themselves—but only the latter will thrive. With our leading-edge technologies, insights, and experience, we help clients design a robust cash governance framework and move towards becoming an outcomes-driven organization.


Learn how to valuate and improve your working capital >

Fullwidth SCC. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.