Working capital management and cashflow optimisation are seen as one of the most important value creation levers in private-equity-owned enterprises by leading private equity houses. An effective working capital optimisation can rapidly release liquid sources from non-profitable assets, contribute to an improvement of free cash flow and to a permanent reduction in inventory and capital costs. Thereby liquidity is increased for new or strategic investments, debt reduction and dividend payments.
Especially in small and mid-sized enterprises (SME) working capital management is out of permanent focus due to missing incentivising mechanisms and limited human resources. As a result, SMEs usually tend to have higher inventory levels due to capacity bottlenecks and unoptimised production processes, turn less attention to payment conditions with suppliers and do not fully leverage (existing) ERP-systems to increase efficiencies of all working capital related processes.
COMMON WORKING CAPITAL ISSUES IN SMALL AND MID-SIZED ENTERPRISES
- Business growth drives the need for additional funding due to
increased working capital requirement
- Lack of visibility on working capital performance across the whole
enterprise and the operating cycle
- Lack of awareness as well as appropriate and efficient tools across departments, with no working capital targets and incentives
- High level of overdue receivables and write-offs, missing standards in dunning procedures
- Sub-optimal management of payment terms and conditions of customers and suppliers
- Inefficient Sales and Operations Planning process and poor stock
visibility Underdeveloped customer service and OTIF
HOW BCMC CAN HELP TO IMPROVE YOUR BUSINESS
- Enabling comprehensive and automated transparency with a data-driven approach on all working capital areas of the company to perform benchmarking and identify improvement areas
- Quantification of working capital optimisation potential: identification of quick-wins and long-term operational improvement potential
- Generation of a detailed action plan to realise the liquidity potential; review and redesign of relevant processes and guidelines to make sustainable process improvements
- Implementation of the defined measures and realisation of the cash potential
- Provision of the management with a customised working capital monitoring and controlling system to ensure ongoing daily working capital management and enable derivation of strategic goals as well as incentivisation.
Base Camp Management Consulting is experienced in working together with private equity investors and portfolio companies to achieve sustainable improvements in operating performance.
OUR CORPORATE PERFORMANCE
MANAGEMENT PLATFORM ENSURES
Does Your company face liquidity shortages due to high level of overdue receivables, too narrow payment deadlines or uncontrolled inventory? Do You desire a fully automated solution to increase efficiency in Your daily business? As a C-level or an investment manager, do You wish complete transparency of Your operating business to achieve the highest utilisation of operating resources? Don’t hesitate to get in contact now, to discuss how we together can professionalise working capital management at Your company. Effective and efficient working capital management constitutes a true competitive advantage of a healthy business. Act now to release complete working capital potential at Your company.