Effective working capital optimization techniques can help ease liquidity pressures in the immediate term — and in the longer-term, companies with optimized working capital management should be better positioned to shift their focus towards growth.

1. Optimizing Working Capital for Today’s
Challenges
Effective working capital optimization techniques can
help ease liquidity pressures in the immediate term —
and in the longer-term, companies with optimized
working capital management should be better positioned
to shift their focus towards growth.
Throughout the COVID-19 crisis, we have witnessed significant
volatility and dislocations that have roiled cross-border supply
chains, financial and commodity markets, and the cost and
availability of funding. While governments and central banks have
unleashed significant firepower to ease the supply of credit, the
operating environment remains fragile and prone to ongoing
uncertainty.
These headwinds are of particular concern to companies that fall
into sectors that are most impacted by the ongoing dislocations —
such as energy, transport and hospitality. Within those and other
impacted sectors, companies with high debt-to-earnings ratios that
are simultaneously grappling with material revenue pressures will
continue to feel the most stress as they seek to stabilize their balance
sheets.
Drawing on lessons learned from the global financial crisis, we have
seen a strong correlation between proactive working capital
strategies and earnings per share (EPS) growth over the cycle, as

2. companies with the most efficient cash conversion cycles registered
EPS growth rates 1.5x compared with their peers between 2008 and
2011.
Taken together, this suggests that effective working capital
optimization techniques can help ease liquidity and funding
pressures in the immediate term. Whenever the recovery begins,
companies with optimized working capital management should be
better positioned to shift their focus towards growth.
There are times when additional working capital must be found to
fund obligations to suppliers, employees, or other third parties while
waiting for payments from customers.
So, consideration of all these components can avoid less than ideal
cash flow hiccups.
When it comes to setting out your short-term and long-
term working capital strategy, here are some points to
consider:
1. Digitize, digitize, digitize
The acceleration of digitization is emerging as one of the dominant
themes since the start of the crisis. In this context, you could explore
the following:
 Use bank platforms or industry tools

3.  Migrate to direct presentment
 Utilize e-invoicing and e-bills of lading
 Use online receivables management tools
 Shift from check to electronic payments
2. Mobilize for quick-wins
There are likely solutions you have in place today that could help
drive incremental working capital improvements. Examples of these
include:
 Explore discounting Letters of Credit (LCs) or Bills
 Re-launch dormant Single Use Account (SUA) or card
programs
 Ramp up enrolment in Supply Chain Finance (SCF)
programs
 Expand existing Accounts Receivable (AR) programs
3. Build for the future
You could also start an analysis to prioritize opportunities that can
potentially deliver the greatest benefit for your organization, such
as:
 Investigate Export Credit Agency (ECA) support options
 Review entire receivables portfolio

4.  Implement integrated payables solutions
 Explore off-balance sheet inventory financing
Be bold!!! Challenge yourself!!
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