Managing Your Cash Flow

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How can businesses drive working capital amidst the coronavirus crisis?

4 Mins

Spencer Tuttle, VP EMEA at data firm, ThoughtSpot shares his thoughts on how businesses can drive working capital during a pandemic…

It is undeniable that we are all living in unprecedented times due to the COVID-19 pandemic. In tandem, every business is having to figure out and navigate their own rapidly evolving economic conditions which have been shaped by global supply chains being disrupted, consumer confidence falling and the closure of businesses on a scale never seen before.

It’s a well-worn mantra that cash is king, but now more so than ever. While the Government business loan scheme looked set to provide some quick relief, it has quickly become clear that the incentive is not helping companies fast enough and many have suffered whilst it has got off the ground.

With this in mind, it is vital that organisations know what working capital they have in order to get an accurate snapshot on financial health. They need to understand what they owe, and what is owed to them in order to minimise uncertainty and future-proof operations – no easy feat, especially as businesses move up the enterprise scale.

This information lives within the business, hidden inside granular data. It can be a lengthy and extensive process to extract it, particularly if an organisation is reliant on a third party to do so.

While the obvious answer might be to enlist the help of an accountancy or management consultancy firm, there are strong technologies – namely, search-driven analytics – that don’t rely on specialists and that can decrease the ‘time to money’ considerably, sometimes by days at a time.

It’s a method that allows non-technical workers within the businesses to drill down into their real-time data by enabling them to ask questions on business challenges they’re facing: in this instance, working capital processes.

It makes sense that these workers should be empowered with data too – recent research from Harvard Business Review found that the businesses that empower frontline workers broadly stand to benefit from greater organisational performance as well as increased customer and employee engagement, and better quality products and services.

If the finance and management teams are clear on what financial levers they are looking to control and direct in economically uncertain times, they can ask the right questions and create the best forecasts possible, without gut-based decisions that won’t match up to the clinical reality of the numbers.

These insights can then be built into easy to digest dashboards and pre-built reports that allow the findings to be delivered to internal stakeholders as required.

Teams can then extrapolate on the initial insights and ask how these will change as other levers are pulled. For example, what the result would be if inventories were liquidated, the terms of accounts receivable changed and extensions requested on accounts payable? Asking questions in the moment leads to a variety of possible outcomes – planning for the best, average, and worst-case scenarios the future may hold.

Having this ability to pivot and adapt according to real-time insights is critical in these volatile times. Decision-makers are fighting every day to get visibility and clarity, so driving efficiencies in capital structure can mean the difference between surviving and thriving.

The silver lining is that data and analytics can provide crucial information towards determining the true situation many businesses are in, and help them to meet the needs and outcomes required for employees, customers, stakeholders and the business itself.

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