Little has changed in companies' working capitalmanagement over the past year—which means that companies have ahuge opportunity for improvement. This is the key take-away fromthis year's “2014U.S. Working Capital Survey” from REL, a division of TheHackett Group.

In this year's iteration of the annual study, REL and CFO Magazine analyzed the 2013 financialstatements of the 1,000 largest public companies that haveU.S.-based headquarters and are not in the financial servicessector (the “REL 1000”). They separated the companies into industrygroupings, then organized them into quartiles within each industryin terms of days inventory on hand (DIO), days sales outstanding(DSO), and days payables outstanding (DPO). For every companyoutside the top quartile in one of these metrics, REL and CFOcalculated how much additional cash the organization would haveavailable if it improved efficiency enough in its inventory,accounts receivable, or accounts payable processes to bring theassociated metric in line with the level achieved by the topquartile of businesses in its industry.

This analysis revealed that the total opportunity for improvingworking capital among the 1,000 companies in the study is $1.020trillion—which separates into a total accounts receivable (A/R)opportunity of $331 billion, a total accounts payable (A/P)opportunity of $266 billion, and a total inventory opportunity of$423 billion.

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Meg Waters

Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.