Financial executives have tried many ways to increase free cash flow and reduce working capital. DRS Sustainment Systems Inc. (SSI) in St. Louis, Mo., did it with a lot of help. The defense and aerospace contractor essentially enlisted its workforce in the effort by promoting a "culture of cash."

It was time for action. Between April 2007 and May 2008, SSI's working capital grew 41%, more than twice as fast as the 19% increase in its revenue. Free cash flow had fallen to just 78% of operating revenue, 13% below expectations.

SSI didn't really have a treasury problem or need a treasury-directed fix. As a division of DRS Technologies, now a subsidiary of Italy's Finmeccanica, its treasury was a remote corporate function, little involved in improving working capital at the SSI level. The unit had a pervasive business operations problem, and the solution lay in mobilizing the whole workforce to think and care more about cash, explains Shane Hegarty, director of engineering services and logistics.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.