The management of working capital is one of the key elements which defines the success or failure of the enterprise and it is one of those things where a large number of organisations face problems. Profits in profit and Loss account does not automatically mean that the company has cash to meet its operational requirements.
Working Capital management is a complex exercise in tracking, controlling and managing the conversion of cash from its investment in inputs for creation of the final product or services to making or creating the product or services , stocking the products, marketing the same, selling it to the client, efficiently managing the credit period and collecting the receivables and depositing in the company’s bank as cash.
Finance Optima helps the organisations in setting up workable and practical systems and processes to manage each and every element of the Working Capital to ensure that the organisations maximise its Working Capital Cycles.
Finance Optima helps organisations in improving their working capital management and its expert offerings involve:
- Study the current working capital management structure available in the company
- Identifying areas of improvement and structuring processes to bring about the same.
- Effective Cash Management & Cash flow forecasting
- Receivables Management
- Payable control
- Steps to improve Working Capital Cycles
- Review of current Working Capital Facilities and suggest improvements
- Assist in setting up or increasing working capital facilities with banks
- Re-align working capital products to bring in greater flexibility to the organisation in meeting its working capital needs.
Cashflow Management & Forecast
Efficient Cash Management is essential in every organisation to ensure that the organisation has enough cash to meet its day to day working requirements and meet any contingencies. Many profitable organisations face cash crunch. This is mainly because in spite of the profits, its cash is locked up in various forms of current assets which results in cash jam and risk of business getting stuck or collapsing. The efficiency of any organisation is gauged by the fact of how efficiently they are able to rotate the limited cash in its business to keep its wheels moving. Managing cash in difficult conditions becomes even more problematic. A pandemic of epic proportions like the Covid 19 effects every business and it has a cascading effect on every business it is linked with. Cash management in these conditions takes an even more complex nature.
Finance Optima cash management experts help you structure projected cash flows and help you monitor them to ensure that your organisation has adequate cash inflows to meet any contingencies. We help you analyse each receivable to ensure that collectable dues are collected on time. Managing payables is equally important to ensure that the company preserve its cash for any eventuality. Ensuring effective inventory management is important to ensure that unnecessary cash is not locked up in inventories. We help you re-structure your cash management with the banks for efficient and cost-effective products to improve your cash flows. Finance Optima helps you to manage your cash resources for efficient and effective long-term functioning of your business.
Inventory Management
Inventory is one of the most important components of the working capital. Organisations need to stock inventory either for using it in its manufacturing process to make finished goods or for re-selling in its trading business. In both cases the amount of inventory to be procured and stored at any point of time would determine the efficiency of your inventory management. Organisations often stock high inventory for the fear of running out of stock or in their quest for strictly managing its inventory, often end up short stocking the same and end up with a stock out situation. Excess stock invested in inventory is effectively cash locked up which cannot be used. You also run the risk of the inventory losing its usability because of passage of time, technology obsolescence or plain damages in stocking or in transit. All these lead to cash leakages and losses for the organisation.
Finance Optima helps organisation in their Inventory management efforts by bringing its knowledge of the best practises in the inventory management to ensure that excess cash is not locked up in inventory nor does the company run the risk of stock out situations. We help organisations structure the process of ordering, storing, movements and warehousing of inventory to optimise inventory cost to ensure that there is no stress on its working capital owing to faulty inventory management.
Receivables Management
Receivables is the money locked up with the clients of the organisation. Unless managed efficiently this would lead to your clients using your money to run their enterprises while you borrow more to service your working capital requirement. The longer the delay in collection and converting the receivables back into cash, the risk of bad debts increases.
Finance Optima helps you to analyse your sales order to cash cycle to understand the areas which is leading to the increasing receivables. We help you understand the problem areas and devise processes and solutions to remove the bottlenecks involved in collection of the receivables on time. We also undertake projects to clean-up of old Accounts Receivables. Many a time, there are accumulated unresolved Accounts Receivables either through lack of proper follow-up due to lack of manpower or sometimes companies end up with these backlogs due to poor Accounts Receivable Management.
Payable Management
Accounts Payable is also one of the most important components of the working capital. Organisations usually do not take Accounts Payable with seriousness beyond simply delaying payments to suppliers as much as they can but there are a lot of areas in Payable Management which needs to be taken care. Manual data entries & inefficient invoice processing, lack of purchase order, Unauthorized purchases, errors & duplication in vendor payments, Matching errors, Fraud and theft are just few of many issues in the payable management.
Finance Optima helps organisations in formulating Accounts Payable Policy and streamlining the entire payable workflow. We help you to implement an effective Procurement to Payment policy and also to have an effective procurement mechanism through Purchase Committee. Our AP Management services help organisations to achieve efficient invoice processing, Three way matching of invoices (matching of invoice with the purchase order and that the goods or services actually received), accurate payment processing and maintaining internal controls around the procurement process.
Working Capital Facility
Indian economy runs on the wheels of Micro, Small & Medium Enterprises (MSMEs) which contribute to more than 40% of total industrial output. But usually, this segment struggles for funding whether for the working capital requirements or for capital expenditures. All organisations whether big or small; start-ups or well-established ones need funding at reasonable rates and at the critical times to be competitive in the market with their goods or services. However, we believe that MSMEs and Start-ups require hand holding and expert advice to get funding arranged.
Finance Optima brings its expertise to in helping you in applying for and setting up fresh working capital facilities; augment existing facilities or re-structure facilities to improve you working capital needs. We help companies in laying down processes to fulfil all compliance requirements of the funding institutions in relation to the funding done by them.
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