Managing working capital is a top priority for many leaders in the year ahead

NEW YORK, February 16, 2022 /PRNewswire/ — Nearly half of senior and other executives say working capital management will be a high priority for their organization in the coming year, with 33.6% keeping it a top priority and 14.7% making it a higher priority, according to a Deloitte survey.

Additionally, 33.5% of leaders surveyed describe their organization as being in “growth mode” following the disruption caused by COVID-19 – a rate almost triple that of July 2020 (13.2%), if it was slightly below the forecast at the time, which had reached 45.1% in “growth mode” at present.

“It’s encouraging to see many leaders staying focused on managing their organization’s working capital,” said Anthony Jacksona Deloitte Risk & Principal Financial Advisory which focuses on working capital and liquidity services, Deloitte Transactions and Business Analytics LLP. “As leaders battle to bring their organizations back to what they see as ‘new normal’ operations, the sustained commitment of a number of leaders working closely together will remain critical with so many economic, geopolitical unknowns and society to come.”

Should finance and treasury teams coordinate more on working capital management?
Respondents report that CFOs (55.9%) and heads of treasury (15.3%) are most likely to be responsible for improving the organization’s working capital. However, not everyone sees the finance and treasury functions partnering closely on working capital; 25.6% of executives surveyed say their organization’s finance and treasury functions could work more closely together (25.6%)—and 5.8% of respondents report that no such collaboration is occurring.

“It’s worth noting that leaders who describe their organizations as being in ‘growth mode’ are also more likely to say their finance and treasury teams work as closely together as they should,” said Niklas Bergentoft , Deloitte Risk & Financial Advisory, leading treasury advisory and director, Deloitte & Touche LLP. “Refined forecasts and improved visibility into improved liquidity and cash generation can better inform executive decisions and help position organizations for growth and improved performance.”

Are accounts receivable practices overdue for improvement?
When it comes to Accounts Receivable (AR), 40% of respondents’ AR teams wait after invoice due dates to request payment of invoices – with half waiting 1-10 days after the due date (20, 6%) and the other half waiting up to 10 days. + days later (19.4%) to do so.

Jackson continued, “Sometimes even simple analyzes and process improvements can be executed to help improve working capital. For example, proactively analyzing customer payment behaviors in a way that goes beyond typical days-in-progress (DSO) sales can help identify opportunities for financial process and improvements in the financial position of the organization.”

About the online survey
More than 1,700 senior and other executives were surveyed online during a Deloitte webcast titled “Working Capital Recap: A Resilient Response Q1 to Q2 21” on November 16, 2021. Response rates differed by question. A similar online survey was conducted in July 2020.

About Deloitte
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