In a recent webinar, Global Finance magazine called 2013, the Year of Living Dangerously. With IMF forecasting a meager 3.3% global GDP growth, the dragging uncertainty on US economic policies, Europe mired in debt and Asia slowing down, 2013 appears to be stormy as per many economic forecasts.
Forecasting the economy may be tricky, but the best companies are making certain their focus on working capital management, cash flow management and cash reserves. Over last few years, the top companies have adapted themselves to the tough economic climate with the use of technology and their laser focus on streamlining operations for improving working capital metrics. This improvement is reflected in the growing multi-trillion dollar cash reserves that US companies have built to brace for any economic crisis.
The challenge is for companies that do not have proper control on working capital processes. With lower valuations, tight commercial credit markets and declining revenue markets, companies that do not have enough cash reserves or cash from operations can be at a greater risk of bankruptcy or losing sustainable competitive advantage, more than ever before. Unlocking trapped working capital from receivables is the cheapest way to improve working capital. Deploying receivables management technology to manage and monitor customer payments daily and weekly can enhance control on cash inflows. Cash Forecasting Dashboards focused on cash from collections can give timely insight into cash flow issues and can help drive better business decisions to tackle customers. Credit risk can also be mitigated in a timely manner.
So those companies worried about living dangerously need to put tighter corporate focus on working capital process transformation sooner. Further, with technology becoming more accessible and affordable with cloud and Software-As-A-Service (SaaS) models, there is every opportunity to adapt faster than ever before.
