Management of net working capital

The three most frequent mistakes in relation to working capital

Working capital management offers great potential, but also presents stumbling blocks. Dr Daniel Maucher and Erik Herlyn, WCM experts at PostFinance, point out three common mistakes in managing net working capital and explain how to avoid them.

  • One of the major challenges of WCM is that it is always caught in the area of conflict between different functions and company units. Procurement, sales, logistics and controlling: they all have an influence on working capital – and they all pursue different goals. The principal goal of sales is to maximize turnover and service quality, for instance, while procurement is mainly interested in guaranteeing production supplies and making savings, and logistics handles low warehouse stocks. If a company leaves WCM up to individual functions, conflicts of interest are inevitable. The unit which puts the most effort into working capital management will ultimately have the greatest influence on working capital. Avoid making this mistake by developing and implementing a binding cross-functional strategy for your company.

  • In the course of our activity as WCM advisors, we regularly discover that companies are not taking advantage of the best creditworthiness along the supply chain to optimize their working capital. Avoid making this mistake by analysing creditworthiness along your supply chain so that you can detect any relevant potential. Depending on whether it is your company itself, one of your suppliers or one of your customers that has the best creditworthiness, you have the following bank-independent or bank-dependent solutions available to you:

    Solutions in working capital management
  • We find that WCM is often regarded merely as a project within companies. This results in the following behaviour: The company establishes that working capital has risen unexpectedly. Alarm bells ring. The company then analyses the figures, launches a project, appoints a project manager and implements measures. As soon as the chosen WCM solutions have brought about the desired results, the company turns its attention to other matters. And the circle begins again: working capital increases until it is time for the next WCM project. Does that sound familiar? Avoid making this mistake by putting WCM on your agenda as a permanent topic, and by making WCM a line issue.

Have we sparked your interest in WCM?

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.

Erik Herlyn

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.

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