Working capital enables a company to function smoothly and pay its bills in a timely manner. Most companies understand the importance of managing their talent, however achieving an optimum balance is rare for two reasons. First, most companies don't have specific experience in optimizing their working capital, so they don't give it enough attention. Second, it wasn't considered a source of profit for the company.
MICROEON is a leading global strategy and operations consulting firm, offers advanced outsourcing consulting services that set us apart from conventional sourcing advisors. Unlike traditional sourcing advisors that focus on optimizing the best price for the "deal", MICROEON outsourcing consulting team focuses on optimizing process performance for the client and achieving the optimum solution that balances, speed to benefits and risk mitigation. Our outsourcing consulting approach is predicated around the development of long term BPO service provider relationships to assist the client in their journey to world-class performance.
One of the primary goals of working capital optimization is to achieve superior management of all of the processes that create working capital balance. In the vast majority of cases, companies don't have a specific focus on working capital; it's typically part of the bigger financial management of the organization. But this management takes some effort. Until recently, focus on working capital has been lacking because, when times were good, managers focused on the big picture and profits were easier to come by. Now that times have changed and are more challenging, management needs to focus on areas where profits are harder to come by.
MICROEON has identified the specific focus areas and can provide you with the tools and techniques to optimize your working capital balance. Through this process you'll be able to squeeze more profit out of your current operations, regardless of the economic environment.
The goal of AR management is to reduce the balance of the account by more quickly converting it to cash. Most of the focus in this area will be to dramatically improve the efficiency of the collections process. By creating a full-cycle process which better ties the AR and collections processes together, we can significantly improve the bottom line.
The goal here is to reduce the amount of inventory on hand while still meeting the demands of customers. Sometimes there's a mismatch between the amount of product ordered and the amount of product the customers are demanding. Our goal is to optimize the levels of inventory while still maintaining a smooth running operation.
Accounts payable management focuses on three areas. First, take advantage of vendor discounts. Some vendors will offer discounts for early payment, however many AP systems are not set up to move things along fast enough to meet the deadlines. Second, pay to agreed-upon terms. If AP management
Can be reconfigured to pay to agreed-upon terms, then cash will be freed up. The third area is to push out payment on current vendors. Some vendors will extend terms if a company can meet specific performance guarantees like production plans and purchasing forecasts.
The vast majority of companies have effective management in these three areas and continued focus on these areas is essential to successful operations. However, effective management doesn't necessarily mean efficient management. By improving efficiency in these areas, the cash account on the balance sheet improves and creates greater opportunity for profitability improvement. Our skill in managing these areas may enable you to do things you have never done before.
To ensure the success of any new project you must be able to measure its effectiveness. At MICROEON our experts will provide specific performance metrics that are tracked to ensure the efforts of working capital optimization will create enduring results for your business.