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Working Capital in the ‘New Normal’

How companies can leverage working capital management to build business agility as the economy recovers from Covid.

By T&R Staff | August 05, 2021 at 03:07 PM
Stock illustration: Money on a stopwatch

If anything positive has come out of the Covid-19 pandemic, it may be companies’ new focus on working capital management at every level of the organizational structure.

The Hackett Group recently released its analysis of 2020 trends in the corporate cash conversion cycle. The results are not surprising given last year’s business climate. Among the 1,000 largest publicly traded U.S. companies, excluding the financial services sector, days sales outstanding (DSO), days payables outstanding (DPO), and days inventory on hand (DIO) all increased—by 1.5 days, 4.4 days, and 4 days, respectively.

Payments are taking longer to arrive and inventory is spending more time on shelves, but those are not the only interesting results of the study, according to The Hackett Group’s associate principal Craig Bailey and director Istvan Bodo. Treasury & Risk sat down with both thought leaders to discuss how companies managed working capital through Covid and what they should be doing as we emerge from the pandemic economy.

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