{"id":382,"date":"2025-09-22T11:31:31","date_gmt":"2025-09-22T11:31:31","guid":{"rendered":"https:\/\/niallcooter.com\/?p=382"},"modified":"2025-09-22T11:31:32","modified_gmt":"2025-09-22T11:31:32","slug":"stories-from-the-front-line-of-consulting","status":"publish","type":"post","link":"https:\/\/liquintel.com\/?p=382","title":{"rendered":"Stories from the front line of consulting"},"content":{"rendered":"\n

Stories from the Front Line: Working Capital Myths and Misadventures<\/strong><\/p>\n\n\n\n

After decades in consulting, I\u2019ve learned that working capital isn\u2019t just about numbers – it\u2019s about the stories behind them. And some of those stories are too good not to share. So here goes….<\/p>\n\n\n\n

\n\n\n\n

\u201cIt\u2019s just BAU – everyone\u2019s got this under control\u201d<\/strong><\/p>\n\n\n\n

An audit partner once told me working capital management was a routine, business\u2011as\u2011usual activity and that all their clients had it nailed.

The reality?<\/mark><\/strong> Around three\u2011quarters of companies could improve, and two\u2011thirds of those are significantly underperforming. In 35 years, I\u2019ve never seen a business without opportunity – it\u2019s a mindset thing.<\/p>\n\n\n\n

\n\n\n\n

\u201cThe client only sells to blue chip and public sector – no opportunity there\u201d<\/strong><\/p>\n\n\n\n

Another partner dismissed the idea of improvement because bad debt was minimal. The assumption seemed to be that working capital is only about receivables and avoiding bad debt.
The reality?<\/mark><\/strong> The big prize is often in improving cash flow – reducing late payments, optimising payables, and managing inventory.<\/p>\n\n\n\n

\n\n\n\n

\u201cMy DSO is 45 days, terms are net monthly – so my customers are paying on time\u201d<\/strong><\/p>\n\n\n\n

A finance director proudly shared this. I can see why they might think so – after all, a customer paying to terms on net monthly would be taking around 45 days of credit. But this is not the same as DSO
The reality?<\/mark><\/strong> DSO is usually measured at month end. It is a snapshot in time. If all customers paid on time to net monthly terms, DSO would be 30 days. At 45 days, roughly 30% of receivables are actually overdue. Not quite the picture\u2011perfect performance it seemed.<\/p>\n\n\n\n

\n\n\n\n

\u201cWe make to order – no scope to cut finished goods\u201d<\/strong><\/p>\n\n\n\n

A CEO trusted their plants implicitly, despite holding 70 days of finished goods inventory.
The reality?<\/mark><\/strong> In a make\u2011to\u2011order business, anything much beyond 15 days starts to look like a make\u2011to\u2011stock business. At 70 days, inventory levels are more likely a by\u2011product of chasing production efficiency for an extended period of time, rather than meeting customer demand.<\/p>\n\n\n\n

\n\n\n\n

\u201cWe\u2019re extending the warehouse \u2014 we\u2019ve run out of room\u201d<\/strong><\/p>\n\n\n\n

On an Inventory walkthrough, an FD apologised for the building work due to the extension to the warehouse.
The reality?<\/strong> <\/mark>The real issue was the company was producing more than could be sold. The fix wasn\u2019t more space – it was immediate tactical measures to manage production down and liquidating slow\u2011moving inventory, and longer term strategically rightsizing the manufacturing footprint.<\/p>\n\n\n\n

\n\n\n\n

\u201cI post all invoices as due today – we need to pay our suppliers on time\u201d<\/strong><\/p>\n\n\n\n

An AP clerk explained that invoice approval was often delayed, so this way the early\u2011paid invoices probably balanced out the late ones.
The reality?<\/strong> <\/mark>Process inefficiencies were hidden, controls undermined, and the cash flow picture distorted – masking opportunities to manage payments strategically.<\/p>\n\n\n\n

\n\n\n\n

\u201cWe send out our invoices at the end of the month – it\u2019s more efficient\u201d<\/strong><\/p>\n\n\n\n

A Billing Manager thought batching invoices monthly saved time.
The reality?<\/strong> Cash inflow was delayed by weeks, effectively giving customers a free loan. Efficiency for the admin function resulted in inefficiency for working capital.<\/p>\n\n\n\n

\n\n\n\n

Final thought:<\/strong><\/p>\n\n\n\n

These aren\u2019t stories about incompetence – they\u2019re about perspective. People optimise for what they\u2019re measured on, and sometimes those measures quietly work against healthy working capital. The best leaders don\u2019t just look at the KPIs; they get curious about the stories behind them.<\/p>\n\n\n\n

Ready to unlock the cash trapped in your working capital?<\/strong><\/p>\n\n\n\n

Contact me today to discover how I can help your business achieve greater financial clarity and growth.<\/p>\n\n\n\n

Let\u2019s start the conversation\u2014reach out now!<\/p>\n","protected":false},"excerpt":{"rendered":"

Working capital is serious business\u2026 but the stories behind it can be comedy gold.
\nOver the years, I\u2019ve heard CFOs, CEOs, and finance teams say things that would make a cash flow manager\u2019s eye twitch.
\nThey\u2019re funny \u2014 until you realise how much money they\u2019re costing.
\nHere are seven of my favourite myths and misadventures from the field.<\/p>\n","protected":false},"author":1,"featured_media":377,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-382","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t