As a turnaround in interest rates seems more and more likely, it is time to follow a new path which will have a major impact on your company’s working capital. While some companies have mainly concentrated on releasing as little liquidity as possible in recent years in order to avoid negative interest rates, from now on companies need to prepare for a reduction in working capital. This is because working capital management projects take at least six to twelve months to deliver results. An overview of potential solutions can be found at postfinance.ch/wcm (Your options for action).
High time for an in-depth WCM analysisThree reasons to optimize your working capital now
Dr Daniel Maucher and Erik Herlyn, WCM experts at PostFinance, explain why now is the right time to introduce measures in your company to ensure efficient working capital management.
From e-bills to smart contracts based on blockchain technology, from track-and-trace systems to demand planning with big data analytics, from e-payment to e-procurement and software-aided liquidity management or cash pooling: in areas relevant to WCM, i.e. accounts receivable, inventories, accounts payable and liquidity, there are more and more possibilities for digitization – and for reducing manual activities and achieving significant efficiency gains. As shown by the Working Capital Management Study 2017 conducted by the Swiss Post Supply Chain Finance Lab at the University of St. Gallen, Swiss companies have correspondingly high expectations of the digitization of WCM. They are hoping for an automation of processes. At the same time, the implementation rate of digital approaches remains low overall. Although the top 20 percent invest 1.8 percent of their revenue in WCM digitization projects, the figure is just 0.1 percent for the remaining 80 percent. Close this gap and prepare your company’s WCM for the future by adopting digital approaches. It can make sense to start off with small measures based on your WCM strategy.
Supply chain finance instruments are on the rise in Europe. They rely on cash flows along the supply chain, and aim to optimize payment deadlines and control liquidity in a targeted manner. Examples of these instruments include accounts receivable financing (factoring), financing of supplier invoices (reverse factoring), and dynamic discounting (flexible discounts). If we look at factoring in more detail, for instance, we can see that factoring is increasingly common in Europe, while it remains in the shadows in Switzerland.
Factoring market: a comparison between Switzerland and Europe
This is particularly clear in comparison with Germany: in relation to gross domestic product, the use of factoring in Switzerland in 2015 was 50 times lower than in its neighbouring country
You should not allow yourself to become dependent on it, but should also make use of SCF instruments such as factoring, reverse factoring or dynamic discounting. You can find out how they work at postfinance.ch/wcm (WCM in practice).
Is it the right time for working capital management in your company?
PostFinance can provide a professional WCM team to help your company analyse and implement WCM measures. Your direct contacts are Dr& Daniel Maucher and Erik Herlyn. Both are proven WCM specialists with sound specialist knowledge and many years of practical experience in the field of WCM.
Dr Daniel Maucher
Project Manager Working Capital Management
Dr Daniel Maucher has been working as Project Manager Working Capital Management at PostFinance since 2013.
He also passes on his knowledge of WCM as a lecturer at two universities of applied sciences. In addition, he is an active member of the WCM working group at the International Association of Controllers.
Before joining PostFinance, Daniel Maucher worked as a research assistant at the Chair for Logistics Management at the University of St.& Gallen and as a project engineer for the BMW Group.
Daniel Maucher graduated in economics from the University of St.& Gallen and studied business engineering at the Karlsruhe Institute of Technology (KIT) and Munich University of Applied Sciences.
Working capital management
Erik Herlyn has been analysing potential for optimizing working capital in large and medium-sized enterprises on behalf of PostFinance since 2012. Based on these analyses and studies, he has developed and integrated customer-specific solutions in the fields of finance and logistics which now represent part of the WCM range of services available from PostFinance and Swiss Post.
He also contributes his WCM know-how as guest lecturer at the University of St.& Gallen and at various universities of applied sciences, as well as via directorships.
As a qualified engineer in production technology (Dipl. Ing.), he previously held positions as CFO of private and US-listed oil exploration companies. On graduating he headed the KPMG Switzerland insurance company as consultant.