Working capital optimisation : our positioning
Working capital optimisation : approach and content
Optimizing working capital is, simply said, optimizing each one of its three components. And an Akeance Consulting client sometimes asks us about the whole thing, sometimes just on one of these components.
Optimizing customer account refers, at Akeance Consulting, to missions of several kinds. Some missions make it possible to occasionally reduce particularly high customer receivables.
Others have a more long-term vocation: review the invoicing process in order to reduce delays or make the issuance of invoices more frequent, review management rules regarding payment reminders (include sales representatives or not, reminders frequency, …), processing unpaid bills beyond 3 months… Even more successful, the implementation of an incentive for immediate payment is sometimes part of Akeance Consulting’s missions.
Optimizing inventory covers sales forecasting and the supply chain. Thus, Akeance Consulting missions have a different “thickness”. Sometimes it is a matter of identifying the only “slow movers” and implementing an exit process for these product inventories. Sometimes it means reviewing the order forecasts, reconciling sales reports of the different products and deducing optimal inventories from them.
Optimizing suppliers account does not only consist in extending the payment terms of its suppliers. The implementation of “reverse factoring” which allows suppliers to benefit at a lower cost from payment of their outstanding customer or even the implementation of payment terms with the suppliers are all the different types of missions carried out by Akeance Consulting.
Working capital optimisation : some convictions
The abundance of liquidity and zero rates hinder the optimization of wcr
Invoice recover and reduction of outstanding receivables often leave to be desired
To simplify, these observations are threefold. The invoice payment dunning process is neither clear nor formalized and it is often up to the accounting department to dunning the invoices (and not to front line salespeople).
Second observation: the workaround solutions are sometimes confusing: the implementation of a “write off committee” to write off certain receivables. Finally, the lack of management of these outstanding receivable: in general, only the DSO appears in a given dashboard and hardly gives rise to comments.