With the economy still in shaky recovery stage and companies doing everything they can in a tight credit environment to free up their cash flow, attention has turned to the area of working capital management.  I am finding that many companies have begun giving serious attention over the past year to this area, which previously flew well under the radar in headier days.  Now many of my customers are looking at their payables, receivables and inventory (the 3 pillars of working capital -- Receivables + Inventory - Payables = Working Cap.) to ensure that they are as nimble as possible with as small a working capital need as possible.

 

Which brings me to the question, do you know where your working capital is?  How do you stand in general and against your peers in particular?  Are your payment terms optimal, or is there room to move them out?  What about your receivables?

 

Well, in case you are curious about where your company's performance stands compared to industry and competitive benchmarks, I thought I would pass along a very interesting working capital profiler I came across recently from Booz & Co. (one of the world's premier working capital consultancies). Click on this link and type in your company's name to see how you stand in comparison to your industry:

 

http://workingcapital.booz.com/

 

So, how well are you managing your working capital (or is it managing you)?  If you are falling short of your industry's best practices, particularly in the area of Days Payable or Days Receivable, I'd love to have a dialogue with you about some options for improving your standing.  Ariba's Working Capital Management suite of solutions offers a variety of tools to help you positively impact those measures and maximize the value of your working capital.

 

Drew Hofler

Sr. Product Manager, Working Capital Management Solutions