However, before undertaking any strategic changes to your procure to pay cycle, it’s important to note that there is a limit to how much positive working capital an organization should hold at any one time.įinding the Right Balance in your Cash Flow Management Most businesses aim to achieve a positive level of cash flow on a consistent basis, and by optimizing your procure-to-pay process, you will have a significantly better chance of achieving this. The pandemic exposed a lack of adaptability to disruptive external events that still need to be addressed. ![]() At industry level, many sectors saw significant deterioration in NWC days. Current liabilities range from accruals to current income tax liabilities, accounts payable, and short-term loans.Īn organization’s procure-to-pay process can play a major role in improving cash flow management by optimizing the buyer’s cash conversion cycle without hurting their vendors’ cash flow needs.Īccording to PWC’s annual global Working Capital Study, net working capital days, the number of days required to convert working capital into revenue, increased to record highs during the pandemic. The level of cash flow available to an organization can be measured by comparing current assets against current liabilities.Įxamples of current assets include short-term investments, inventory, foreign currency, and prepaid expenses. As we mentioned in a previous blog, organizations of all sizes should treat cash flow management as a major priority, given its potential impact on long-term financial health.
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