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“Cash is king” is a fairly typical expression when discussing working capital optimization. It means that cash flow is important for the health of a business: without sufficient cash flow, or working capital, a company cannot pay its employees, suppliers or short-term debt in time. Therefore, a business needs to have cash at all times. In a tough financial climate, cash flow becomes even more important as lenders may be unwilling to provide more capital.

Working capital optimization is important as it has a direct impact on the company’s enterprise value. Too much working capital lowers return on investment and therefore has a negative impact on the value of the enterprise, while too little working capital quickly leads to dangerous dysfunction. The right level of working capital significantly improves cash flow and releases capital from the balance sheet. The released capital is important to, among other things, reduce debt, pay dividends and reinvest in growth.

This whitepaper focuses on working capital optimization through improved store operations and presents key enablers for improving working capital in store.

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