Average figures for the Swedish manufacturing industry indicate that inventory constitutes about one third of a company's total physical assets. In fact, inventory alone usually totals more than buildings, equipment and machinery combined. This means that inventory provides major potential for reducing the asset side of the balance sheet, saving capital and boosting profitability.

In a recession, companies often work concurrently and intensely with cash management. The focus here is on cash flow and transferring balance sheet item Accounts receivable to Cash and bank balance where the money can do more good. Working capital rationalization reduces the need for liquid funds in order to buy materials for instance, while the aim of cash management is to increase cash flow. Accordingly, there is a natural correlation between these two areas.

Although we at United Logistics Group put the limelight on traditional working capital rationalization, we want to emphasize that the combined effect is extremely interesting. This is why Establish has expertise in both of these methods, methods that we believe will see an escalating demand.

Working capital rationalization is not just a way of reducing the need for capital but also a practical way of improving an organization and streamlining its operations. There is a huge need for this at present but streamlining activities create new, critical provisions for being prepared and successful when the business upswing eventually comes.
 

How can we help you?

Call us att +46 8 555 183 00 and ask for Peter Magnusson or Stefan Brundin

Or send an e-mail to peter.magnusson@establish.se or Stefan.brundin@establish.se