Publication: Working Capital Management

Working Capital Management – Better use of internal liquidity reserves! 

Experts from STU MANAGEMENT PARTNERS report from the field. 

For many German companies, the future success of the company is dependent on the realization of further growth. In many cases, the investments in equipment, research projects and staff are necessary, but the projects often fail due to missing financial resources, according to many corporate leaders. Here, German companies often ignore their own possibilities. 

According to a study of the accounting firm PWC, German companies could release a high three-digit billion-amount for growth and investments, if they would optimize their working capital. By analysis of PWC, German companies have reduced their capital tied-up in current assets in recent years. However, in international comparison, they are still lagging behind. 

Stefan Ulrich, managing partner of the consulting and management firm STU Management Partners, confirms the situation: “Many companies are concerned simply with their insufficient working capital. Not only companies in difficult times miss valuable opportunities to optimize their internal financing scope, healthy companies often show significant potential to catch-up.”

STU supports companies in the areas of growth / internationalization, operational excellence and turnaround / restructuring. The managers of STU have in-depth experience in the successful working capital reduction of companies. 

Important starting points for optimization initiatives can be found in the following areas:

  • Debtors payment terms and receivables management 
    Agreeing on adequate payment terms with customers and implementing a consistent demand process
  • Storage
    Intelligent cross-linking of functional areas along the entire value chain
  • Vendor payment terms and supplier management 
    Agreeing on adequate payment terms with suppliers and implementing a tailored supply process

STU experts describe the following five points as decisive for a fast, effective and sustainable reduction of working capital:

  • Involvement of experts to determine the need for action and to push optimization initiatives
  • Rapid identification of potentials and levers on the basis of systematic analysis and industry benchmarks as well as derivation of quantitative targets
  • Operationalization of objectives, derivation of specific measures, definition of responsibilities and establishment of a tight implementation controlling
  • Permanent anchoring of optimization approaches by appropriate revision of internal processes and policies
  • Integration of relevant indicators and benchmark levels (e.g. DSO, DIO, DPO, WCR) in management information systems
German publication in pdf format: Download here