Sources and Uses: Working Capital Reserves

For many businesses, the recovery from the pandemic cannot come soon enough; the impact of the events of 2020 will likely linger for years to come, with significant casualties across the industry. Transitioning to a new normal with the impending recovery will be determined by an organization’s ability to rapidly reflect the new reality in their operating frameworks, processes, management systems and organizational structures.

Working capital will also be a critical component in how organizations are positioned to take advantage of the new opportunities arising as a consequence of the pandemic. For those mired in formulating recovery plans, optimizing Working Capital Management strategies and the flawless and rigorous execution of those strategies is crucial to future success.

Experience shows that taking advantage of opportunities presented by an economic recovery, or when launching new business lines, starting-up new operations, or activating new global supply sources, invariably presents new challenges. The COVID-19 recovery will be no exception; in fact, it will likely be even more challenging. It will not be as simple as everyone continuing to do what they have always done and expecting different outcomes. Transitioning to a new normal with the impending recovery will be determined by execution excellence. It will take longer, require more collaboration, and cost more than you expect. Recovery from the pandemic cannot come soon enough. Demand on, and for, cash will only become more critical.

Working Capital Management is an area that Audere Partners regularly help clients with, regardless of industry, economic cycles, or global pandemics.

We help them assess their working capital for prospective sources of free liquidity. Take a recent example from one of our clients.

Our team promptly connected with the relevant internal functional teams (Finance, Sales etc.) to get access to relevant data and sources of data/information, determining accuracy and reliability of data and developed initial data models. With access to market intelligence and internal expertise, seven days into the process, we were able to conduct a first-pass analysis, developing statistically valuable insights to identify opportunities that would potentially deliver meaningful benefits and results. The analysis confirmed several levels of opportunity, at a 90+% confidence interval, to free up more than $10.0M in free cash. Some in the very near- term and the remainder achievable within 6-9 months.

Cash is still king and the lifeblood of every business, which is even more true during the COVID-19 crisis. For those doggedly formulating and implementing their recovery plans, it may be worthwhile considering a quick Working Capital Analysis.

Our approach is low touch with high leverage of expertise and data warehouses. Audere Partners experts will test the findings, explore options and precedent, formulate potential solution straw models, and provide perspective quickly. Whether $1.0M or $200.0M in free cash, it is possible to get the answer at a 90% confidence interval in fewer than 21 days.

A calling card of Audere Partners is our ability to leverage our expertise and information repositories to discern how much of your potential we can turn into reality.

Everything we do is rooted in our Core Values and our mission to Drive Client Success.

In these challenging times, companies must explore any and all channels to potentially add to the available reserves by releasing trapped working capital. An added advantage is that most companies can achieve that objective in a fairly short measure.