Survey: Cash Flow in Manufacturing

A recent survey provides insight into the cash flow management at manufacturing and distribution and distribution companies.

Recently, financial and senior executives from manufacturing and distribution and distribution companies were surveyed about their cash flow practices. Only 46% of them had implemented a working capital plan, despite the fact that 88% believe more efficient working capital management would boost profitability. Shockingly, 7% of respondents had no intention of developing a strategic plan for optimizing working capital.

“Working capital management requires ongoing awareness and consistent, standardized practices throughout an organization,” says Bart Kelly, who led the study. “That can only happen if senior leaders identify working capital management as a core objective.”

Here are some of the obstacles Kelly identifies:

• Obsolete inventory due to poor scheduling processes
• Long supply chain lead times
• Delinquent receivables and lax invoicing

Though there are many economic factors beyond manufacturers’ control, those three factors should be within their control to change. See the full article for more insights from this study.