When we start thinking about levers for improving working capital, our attention is naturally drawn to Accounts Payable (A/P) and Accounts Receivable (A/R). They’re the functions closest to cash, and the teams with the greatest ability to bring more cash into the business, fast. (Inventory Management deserves a mention here too of course, but nothing happens quickly in Supply Chain…)
What is Accounts Receivable? The process, KPIs and metrics that matter
Procurement is often overlooked in conversations about working capital. But in many cases, A/P is simply tackling the symptoms of problems created further up the chain. And once you start digging into the issues that slow payment cycles, many can — in some way — be traced back to the procurement function.
What is Procurement? The process and KPIs that matter
That’s not a mark against procurement’s name either. They’re the first point of contact for suppliers, and they shape the contracts businesses depend on. Their influence over working capital may be indirect, but it’s significant — and the leaders that recognize that could have a huge positive impact on their business.
With 2021 set to be the year where cash takes center stage once more, here’s what you can do as a Procurement professional to help free up working capital — and have a positive impact on your organization.