In accounts receivable:

Review credit and collections processes continuously to ensure agility in capturing changing payment behaviors for consumers and businesses, minimizing bad debt exposure.
Review credit risk management processes, and tighten policies if uncertainty (inflation, recession, and geopolitical risks) remains present.
Review pricing, payment terms, and contractual milestones. Also, consider bringing receivables management to the forefront of the contracting process.

In inventory:

Review end-to-end supply-chain processes to ensure you can recognize and act on changing demand signals.
Conduct frequent risk and contingency planning.
Ensure tight integration of commercial and market intelligence processes with planning and manufacturing operations.
Identify and incorporate changing consumer behaviors and demand patterns into supply-chain planning and product portfolio management.

In accounts payable:

Monitor and revisit sourcing, location, and working capital strategies—particularly in light of the Build Back Better plan.
Assess and consider the relevance of supply-chain finance initiatives in light of recent GAAP rule changes and the current banking environment.

Finally, we cannot emphasize enough the importance of visibility and agility in managing through unpredictability and improving working capital performance. Simply put, it is impossible to recognize and respond to changing conditions at scale and speed without the assistance of technology. Companies that have invested in technology—as well as the supporting infrastructure, processes, and skills to use it—are able to forecast more accurately and more efficiently adapt to change.

Instant Insights /

Eye on Working Capital Performance: Median Companies Are Falling Behind

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