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Improving working capital with LiquidityIQ™

Working capital optimization: Speed to insight

Efficient working capital management is of the utmost importance and central to an organization’s financial and operational health. Working with a multitude of large and small clients across various industries, we utilize LiquidityIQ to develop insights that can help drive working capital optimization. Explore how we can assist your organization to fundamentally enhance its processes, policies, procedures, and technology to enable improved working capital performance.

Improving working capital with LiquidityIQ methodology

LiquidityIQ is our proprietary working capital tool that utilizes a demonstrated methodology for the implementation of working capital improvement and performance. LiquidityIQ first performs a rapid assessment of the current working capital process through our analytics tool and process maturing solution. It then selects targeted areas of improvement and it prioritizes initiatives and embeds process changes organizations can undertake to sustain performance improvements identified. Understand learning points and assess possibilities for ongoing improvements.

Our time-tested methodology includes four components that assist the organization through transformation to assist in embedding the benefits into the DNA of the business:

Upcoming webcast: Putting cash on the table: a guide to building sustainable working capital partners
November 3, 2020 2:00 PM ET
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Creating shareholder value

One of the core philosophies in creating shareholder value is structured in asset efficiency, which includes accounts receivable, accounts payable, and inventory. To better manage these asset accounts, organizations should seek to control and enhance the working capital cycles that those assets are set in. Organizations can unlock significant value by defining their strategy for each working capital cycle optimization, including:

  • Forecast to fulfill (inventory) strategy in order to reduce the investment through optimizing the sales and operational planning process
  • Procure to pay (accounts payable) strategy in order to obtain the better terms given the price trade-off dynamics, as well as determine the appropriate level of stretch
  • Order to cash (accounts receivable) strategy in order to accelerate the cash inflows to the business through improved billing, timing, dunning activities and collection efforts
  • Cash flow strategy for increased visibility and cash focus across the business

By generating momentum through rapid value changes, an organization can build and strengthen its capabilities and implement structural changes to increase value capture. When identifying achievement paths whereby an organization’s working capital can be enhanced, a number of tactical, operational, and strategic levers are available to organizations:

Rapid value. Implement the quick wins that generate significant benefits and are controlled by the company. Typical benefit improvement is 5 to15 percent of net working capital (NWC) and time to benefit of less than four months.

Build capabilities. Build the core capabilities to deliver incremental benefits and sustainable results. Typical benefit improvement is 10 to 20 percent of NWC and time to benefit of from six to 12 months.

Structural change. Fundamentally change the business model to deliver step-change improvements. Typical benefit improvement is 20+ percent of NWC and time to benefit of up to 12 months.

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Overview of working capital enhancement services

Deloitte brings a specialized team focused on cash generation using specialized tools and methodologies to help clients more efficiently generate cash. Our three-pronged approach to rapid liquidity and working capital enhancement can help you stay one step ahead in a fast moving, dynamic situation.

How Deloitte working capital optimization services can help

Deloitte has assisted a number of companies in various industries with different levels of working capital maturity. No matter how well-run the organization is, there are always working capital optimization opportunities. Whether the company is in need of capital to invest in new markets, or preparing for mergers or acquisition prospects, or it wants to build resilience in uncertain times, we are here to help your efforts to improve working capital.

Working capital is the cheapest form of investment capital you can generate for a company.

—Kirk Blair, Principal, Deloitte Financial Advisory Services LLP

Explore our insights on how to improve working capital and liquidity

Beware of the Working Capital safety net. Could government stimulus be creating a false sense of security
Regardless of where an organization sits in its response to COVID-19, effectively managing working capital will likely continue to be paramount for finance and other leaders as the uncertainty persists around the pandemic’s continuing impact on liquidity.

Strategies to Counter Supplier Risk, Preserve Cash
As the uncertainty around the impact of the novel coronavirus persists, so does the heightened awareness about working capital management.

Don’t wait for a liquidity crisis to scrutinize cash
A strong focus on liquidity often drives the development of processes, controls, and tools that can enhance cash flow and support good business decisions in any economic cycle.

Optimize working capital to strengthen cash positions
With a focused effort on sharpening working capital, organizations can tap into the most inexpensive investment capital available.

Rework culture to fortify working capital processes
To optimally manage working capital, collaboration among its many stewards and influencers is critical. Aligning incentives with goals can help build a culture that promotes continual diligence.

View on demand: Learn the latest on Market Liquidity from IMPACT 2020: The TMA Annual Experience and Turnaround Management Association.
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Get in touch

Kirk Blair

Kirk Blair

Partner | Deloitte Financial Advisory Services LLP

Kirk serves as a partner in Deloitte Financial Advisory Services LLP, and is the national practice area leader for Bankruptcy Accounting and Compliance services within the Corporate Restructuring Grou... More

John Little

John Little

Principal | DTBA LLP

John leads the Deloitte Risk & Financial Advisory Company Advisory service area within the Deloitte Corporate Restructuring Group. He has more than 30 years of management and leadership experience, an... More

Anthony J. Jackson

Anthony J. Jackson

Deloitte Transactions and Business Analytics LLP

Anthony Jackson has more than 20 years’ experience advising clients on debt restructuring, working capital improvements, vendor diligence, liquidity and cash flow modeling, store closure analysis, con... More

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