Transform Your Working Capital Management for the Post-Pandemic Era
The global supply chain experienced unprecedented complexity during the COVID-19 pandemic, exposing instability — with the biggest impact on cash flow and working capital requirements — and its inconsistency in supply bases during a time of increasing demand. Although recovery has started, many companies are still struggling to return to pre-pandemic working capital levels, even as stability improves and inventory levels decrease.
As businesses strive to recover and stabilize, optimizing working capital remains crucial. Our comprehensive guide explores three critical actions companies can take to reduce inventory value and improve cash flow, ensuring long-term financial health.
What Effect Did the Pandemic Have on Working Capital?
During the pandemic, many companies increased their order quantities to manage supply and demand variability, leading to a heavy reliance on working capital to mitigate shortages and maintain operations. This resulted in tighter cash flow, longer accounts receivable timelines and increased excess and obsolete inventory as demand normalized post-pandemic. Despite the reduction in supply chain instability and excess inventory levels, companies continue to struggle with elevated working capital requirements due to inflationary pressures and the need to reinstitute optimal practices. Achieving pre-pandemic working capital efficiency will necessitate a comprehensive approach involving cross-functional collaboration across sales, operations, procurement and finance to address excess inventory, cost increases and ongoing inflationary impacts.
Key Strategies for Optimizing Working Capital:
- Enhance sales and inventory strategies and operations planning
- Improve procurement efficiency
- Streamline order-to-cash and procure-to-pay processes
By leveraging lessons learned during the pandemic and implementing strategic approaches to inventory management, procurement and process improvements, companies can achieve pre-pandemic levels of working capital efficiency.
Ready to transform your working capital management? Download our comprehensive guide and discover actionable strategies to optimize your working capital, improve cash flow and drive sustainable growth.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.