Leading UK companies waste 25 billion a year through lousy cash management. Or so said Ann Cairns, Head of Working Capital Business Management at ABN AMRO, in a speech at The Economist group’ s CFO Europe conference for Chief Financial Officers held in London today.
Echoing comments from a report published by AT Kearney, Cairns said that significant savings are available for FTSE-350 companies who implement more aggressive cash flow controls. “Process improvements (including centalisation and netting), treasury optimisation (improved cost and risk management) and total working capital management (increased forecasting, proactive risk management and cross silo collaboration) can all impact positively on cash flow, profitability and shareholder value,” said Cairns. “Working capital is the lifeblood of corporates and massive savings are available for companies who implement these disciplines, which can unlock significant wasted capital.”
Her views were supported by another recently published report from REL Consultancy Group, which concluded that US and European businesses tie up 30-40 per cent more working capital than necessary via excessive receivables, superfluous inventory, lack of purchasing clout, high operating expenses and insufficient cash to meet corporate obligations and strategic initiatives.