Control Requires Visibility

Working Capital Optimization

Working Capital Shareholder valueEvery CFO knows the importance of managing working capital. Cash that can be freed-up from excess inventory or taken-in from compressing or extending payment cycles can be redeployed into more productive areas.

What may seem like a simple task can mask a lot of complexity. Aside from getting the policies right, like any strategic initiative that touches many parts of a complex organization, it requires data – for justification, motivation, monitoring and enforcement. Capturing, harmonizing and presenting this information which must be pulled from multiple systems across the organization and presenting it in a useful way is a major task in itself and often prevents comprehensive and effective implementation.

Visibility – Metrics and Dashboards

Key Working Capital Performance MetricsEvery initiative aimed at improving working capital requires information at various levels within the company. First, information is needed to look for optimization opportunities. With the right metrics, executives can benchmark divisions and groups against each other, and against other companies. From these insights, savings opportunities can be identified and appropriate policies and targets can be set. Once new policies are in place, the task is to monitor compliance to the policies and to ensure that the policies are having the desired effect – all of which requires access to data from multiple systems all compiled into a set of consistent and always available metrics.

Although the specific policies and how they are implemented will vary, the most common metrics of the cash conversion cycle (CCC) are well understood, days sales outstanding (DSO), days sales in inventory (DSI), and days payables outstanding (DPO) against annual operating plans and forecasts as well as trending information. This information along with supporting detail must be available at the company level and for all the divisions and groups that make it up.

Magnitude Solution for Working Capital Optimization

Magnitude delivers solutions that combine connectivity to extract data from various applications, then harmonize the data to normalize differences in data between different sources, then prepare the data and working capital metrics for publication to a number of popular BI reporting platforms.

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Request a Working Capital Optimization Demo

For every $1B in revenue, working capital optimization can result in $20-60M annual benefit and 5,000 analyst hours returned.

Find out how Magnitude CPM for Working Capital can provide visibility to comprehensive information in a format that’s easy to understand, while also supporting detailed analysis – with our packaged analytics, pre-built dashboard and reports and actionable drill down to transaction level. Request a demo today.