Growing Problems: The 2007 Working Capital Survey

July 1, 2007 from CFO Magazine – “Maybe it's globalization. As U.S. companies source more goods from the far corners of the world, it makes sense that they would stock more inventory as a guard against potential breakdowns in their supply chains. Or maybe it's economic priorities. With corporate coffers bulging like overloaded transpacific freighters, finance executives could be taking their eye off second-tier metrics like inventory, payables, and receivables. Whatever the explanation, 2006 marked the first time in five years that the 1,000 largest publicly traded companies in the United States (excluding automakers) failed to decrease the amount of cash they had tied up in working capital relative to sales.”

180 View – Check this article out for an explanation of working capital problems, metric definitions as well as actual metrics across industries. One of our methodologies for any system upgrade or replacement is to link key metrics with critical success factors. It would also be useful to compare your metrics to your industry. Unfortunately, the metrics provided are based on large public companies. However it’s not clear to us whether the metrics of smaller companies will vary significantly. On the one hand, larger companies can afford more sophisticated technology. On the other hand smaller companies can be more nimble.