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Working Capital

Working Capital Optimization

Working capital is the difference between a company's current assets and its current liabilities. Current assets are primarily cash, accounts receivable and inventory. Current liabilities are primarily accounts payable. Working capital is the cash the organization requires to run its business. It is usually made up of cash obtained through collections, equity from owners and credit sources. As cash is collected or borrowed it is used to pay the costs related to running the business like employment expenses, interest, and supplies.

The degree of waste within the system affects the amount of cash available to pay its operating expenses. Timing is important and when the timing between paying its bills and collecting its cash is large yields a large spread, debt or equity additions are required to pay bills and keep the organization functioning.

The McQuillan Group will examine the organization’s uses of cash and identify where waste exists. We will then aid the company’s leadership in minimizing this waste through process improvement initiatives. We examine operating and administrative processes, credit and collection processes, inventory management effectiveness, and accounts payable policies. We provide our client with a detailed assessment of their organization. Through this assessment, we find and then engineer solutions to minimize or eliminate the uses of cash and waste that exist. By minimizing this waste, more money is available for strategic uses and the company becomes more sustainable. This is a comprehensive process that takes time. In order to create sustainable changes working capital engagements will run approximately a year and often requires numerous changes in how the company operates. Changes are proposed and implemented on s step by step incremental basis, working with the Company’s leadership and staff. As with any change, buy in at all levels is important and that is why our engagements include a focused analysis, documentation and report out process. Our processes educates and trains as it evolves.

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