8NOVEMBER 2023Translating Cash Flow into Working CapitalBy Marck Dorvil, Head of Treasury Management Product, Capital OneIn the decade after the Great Recession, money was essentially free, allowing treasurers to take a gradual approach to tightening cash-flow management. But in the aftermath of the pandemic, a jump in inflation followed by a rise in interest rates resulted in the restriction of working capital for many businesses. As a result, cash-flow management initiatives are now an urgent imperative. Managing working capital using traditional approaches has been difficult, given the speed and magnitude of these economic changes. Companies have found it challenging to raise prices and cut expenses fast enough to offset their reduced purchasing power. Given our recent history of supply chain disruptions, slashing inventory to just-in-time levels is no longer an option. In these circumstances, the least expensive way to sustain working capital is by managing cash flow -- and the most efficient way to fast-track cash flow management initiatives is to collaborate with an experienced treasury management team.A Tailored PlanNot every bank has a treasury management group with the experience, expertise and technology to help their customers develop an individualized strategy for helping optimize their cash flow. Treasurers should look for a banking relationship with the tools to deeply analyze their payments and receivables ledgers, master the inflow and outflow of funds benchmark their activities against peers and work with them to develop a meaningful strategy with measurable metrics to achieve their priorities and goals. Marck DorvilIN MY OPINION
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