Cash flow and working capital management

Optimising these three components is central to effective working capital management, which directly impacts a company’s liquidity and resilience.

Our commercial accountants work with working capital on a daily basis, understanding how it flows through businesses and where the pinch points and areas for improvement often are. Our approach is a pragmatic one. We design and embed processes and tools that can be implemented quickly, giving improvements in cash flow to short order.

We work alongside both finance and treasury functions reviewing and improving processes to improve cash forecasting and drive improvements in working capital cash flows.

We understand the challenges with forecasting liquidity in the near term. We take a pragmatic approach and provide management with a fit for purpose solution, designing and building 13 week rolling cash flow forecasts but often improving upon what is already in place.

Whether it is a new build or improvement to an existing Short Term Cash Flow (STCF) we would ensure the following are in place:

- Ability to perform the update for actuals efficiently at the start of each week
- Variance analysis showing week to week movements
- Ability to run scenarios, sensitivities and mitigations in real time
- Outputs to help monitor and improve forecasting accuracy
- Outputs to support analytical review of the forecast
- Bridge to a medium term monthly model to ensure forecasts are consistent

It is essential for the STCF to be valid and that it is produced, reviewed and reported on a timely basis. In order to achieve this, the business requires an efficient STCF process.

We develop robust processes where the forecast is owned by the finance team and is supported by the unwinding of the underlying ledgers (e.g. AR, AP etc.). We ensure that the process is fit for purpose so operators in the business can submit their information on a timely basis and automation is leveraged wherever possible to extract and collect information.

We ensure that the tools are in place to rapidly review the output, understand key variances to prior forecasts and determine whether these variances are timing differences or permanent in nature. In the case of the former we ensure that they are included in the forecast and reported to the Board and stakeholders.

The STCF will identify the areas of focus for the treasury team. We provide experienced commercial finance support to assess each area and develop plans and actions to drive efficiencies. We work alongside management to execute these actions and drive improvements in weekly cash flow.

We roll up our sleeves and support the finance and treasury teams with anything that needs doing from analysis and standardisation of credit terms to prioritising debtor control.